Entertainment giants have till date been careful about making content available online but the scenario may change soon.
Google Inc's YouTube is in talks with major Hollywood studios including Sony Pictures, Warner Bros and Lionsgate, to stream some of their movies simultaneously with their DVD release in rental stores. The deal, if it passes muster, will imply that some of the world’s biggest entertainment giants are finally ready to believe that the internet could become a major channel for movie distribution.
Entertainment giants, note industry analysts, have till date been careful about making content available online, out of fear it would disrupt relationships with major retailers and bring down DVD sales. However, the cost of making DVDs, maintaining stocks of unsold items, and escalating inventory levels, have posed a challenge for most entertainment companies due to plummeting DVD sales. DVD sales were down 13.5 per cent for the first half of 2009 compared to the first half of 2008, according to the Digital Entertainment Group, a trade organisation.
Closer home, rental revenues are up about 10-30 per cent for most companies in India, while retailers, including music retail stores, have been shutting or relocating stores to combat the global downturn.
Chris Dale, a YouTube spokesperson, in an email reply said: "While we do not comment on rumour or speculation, we hope to expand on both our great relationship with movie studios and on the selection and types of videos we offer our community." Sony Pictures and Lionsgate did not reply to the questionnaire sent to them. A spokesperson for Warner Bros (India), in an email reply, said: "As a company policy, we cannot comment on this."
Analysts point out that multiplex attendance is not growing, and the entertainment companies also have to justify the huge expense of producing and marketing movies, which again, are increasingly forced to compete against video games and other forms of entertainment. Also, despite pulling in 5 per cent less traffic than transaction-based websites three years ago, free content sites are now 73 per cent more popular, according to data by global research firm Hitwise.
Several companies offer online movie rentals and downloads, including Amazon.com Inc. and Apple Inc. The fast-growing DVDs-by-mail service Netflix also streams films online. Websites such as Hulu already screens TV shows and second-tier movies free of cost. But with over 437 million visitors a month, YouTube currently dominates the internet video market, and any studio that aligns with it is expected to be advantageously positioned.
Sony Pictures reportedly began to experiment this year with older full-length movies and television shows, including ‘Spider-Man’ and ‘News Radio.’ The shows were free and supported by advertising. Again, YouTube this year reportedly hosted a full-length version of Sony's 1984 film ‘Ghostbusters,’ which reportedly attracted about 680,000 viewers in a week. Disney/ABC Television Group had also reportedly put clips on YouTube this year like video highlights and interviews with the stars of some of its most popular prime-time shows, including ‘Desperate Housewives.’
YouTube's user base, according to demographics available on its website, comprises netizens in the age group of 18-55, evenly divided between men and women, and spanning all geographies. Around 51 per cent of its users go to YouTube weekly or more often, and 52 per cent of 18-34 year-olds share videos often with friends and colleagues. In fact, every minute, 10 hours of video is uploaded to YouTube.