By now, we’ve all heard the news that YouTube will be offering digital movie rentals online. First, let me say this: a giant like YouTube jumping into the rental game is a major validation for monetized premium content distribution. This is a great day for the business.
Interesting side note for Digitalsmiths here: Writing in this morning’s edition of “The Hollywood Reporter,” Andrew Wallenstein cited the results of our Digitalsmiths/The Diffusion Group survey.
He wrote,
Last year, the whispers of YouTube rentals spurred ThinkEquity analyst William Morrison to gush, "If Google is able to offer access to newer movie titles to its roughly 400 million users globally, we believe that it could become a billion-dollar business for the company within a few years."
Other estimations of the potential for online movie rentals are more sobering.
A Digitalsmiths survey in September found that 43% of online video viewers polled were either unlikely or unwilling to stream a rented movie for $2-$3. Piper Jaffray found that only 1% of total movie rental revenue in 2009 came from the Internet, compared with 54% in retail and 13% for VOD.
We published the survey results for all to use, but I have to say that’s a particularly narrow reading of the stats. What the survey really revealed was that nearly 60% of respondents said they WOULD BE WILLING TO PAY to rent premium video content online.
In addition, 60 percent of those surveyed said if they have the opportunity to use advanced “Google-like” search capabilities in video to locate specific scenes, segments, dialogue, characters, actors, or locations within an online movie or television series then they will be more likely to use a particular video site. Over 41 percent also said they will be more likely to visit a video site if they have the ability to create customized clips from online films and television programs to share with friends, post to video sharing sites or create mobile ringtones – demonstrating that consumers want the ability to interact with and customize their favorite content.
This is huge! And that’s why this rapidly growing market matters to YouTube. ThinkEquity’s Morrison is right: this is a massive business opportunity, and Google is wise to capitalize on it.
Mr. Wallenstein, I’ll be on a panel NATPE next week. I love talking about this exciting and rapidly evolving market. If you have time, let’s grab a beer and discuss.
Sincerely,
Ben
