Google Discovers — Again, Though No One Remembers — That People Don't Like Paying For Video Online

from the didn't-we-do-this-before dept

I have to say that I’m a bit perplexed at what appears like worldwide amnesia over the fact that when Google launched its Google Video platform, its main focus was on charging people to “rent” videos on its platform. There was a ton of press and excitement over it, with lots of people claiming that Google was going to remake the video market online, and lots of money would be made. And then… nope. People didn’t pay. Instead, they all jumped over to an up-and-coming site called YouTube that didn’t charge and Google eventually bought them out while quietly shutting down its pay-for-video efforts, which no one missed. And I guess because no one missed it, everyone seems to forget it exists, even though we try to remind people that Google tried this and failed.

But, instead, we get those professional journalists at the NY Times pointing out that this latest very poorly received pay-for-video trials are the company’s “first forays” into charging for video content. Apparently the new test brought in a whopping $10,709.16 over the course of 10 days (and five movies). Google is trying to spin this as “exceeding expectations,” but it’s hard to see how that’s the case. There may be models that get people to pay (Netflix’s subscription model seems to get people to pay simply for the convenience factor), but I think direct charging like this is unlikely to get very far, and Google, of all companies, should know that, even if everyone else has forgotten.

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Comments on “Google Discovers — Again, Though No One Remembers — That People Don't Like Paying For Video Online”

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26 Comments
Alan Gerow (profile) says:

Re: Re:

It’s not really a “paywall”. It’s video rental. I’d pay for a video “paywall” with a subscription to on-line videos … but a per movie rental service is a no-go to me.

It’s the sole reason I have a Netflix account. I get one DVD at a time, which is usually hard-to-find stuff. Mostly I view videos on-line or through the PS3. Netflix’s on-line video offering is closer to a “paywall” than Google’s with YouTube rentals.

Anonymous Coward says:

Netflix still has the best answer.

But why are people looking at youtube/google. Amazon is almost as big of a name, and most people (people who are internet savvy enough to stream video anyway) already have an account there. And they already have their online PPV service on set-top boxes like the Roku.

I’d think if you want to get an idea of the sort of success online PPV could have, you’d check Amazon out. I don’t have those numbers, but since Netflix can do unlimited videos for $9 a month and youtube can do it for ads, I’d guess costs are low. So if we assume it’s 90%+ profit on a streamed movie, I’m surprised Hollywood isn’t all over this.

I think google should figure out a way to give me movies for free for personal information other than my CC number.

The Anti-Mike (profile) says:

Re: Re:

since Netflix can do unlimited videos for $9 a month and youtube can do it for ads, I’d guess costs are low.

In Youtube’s case, there is absolutely no indication that they are even within shooting distance of being profitable, even with the amazing cost advantages of Google internal bandwidth prices and Google’s distributed data center network. Netflix, as they are mixing business models together, may not give us any indication if online movie business is working, as they are offering it for the moment as a value added service as they work to position themselves in that market. Netflix is working hard to have hardware installs on DVD players and TVs that point to them, and in the long run, I am sure the online model will work out for them.

The questions will always remain the same: What rates are companies like this paying for content? That will define the true price point of the industry.

As for this Google test, I would say there are a bunch of things in play here. First, the 5 movies are not mainstream films, but rather entrants into the Sundance Films festival. The price wasn’t cheap ($3.99 per movie), I didn’t see a bunch of promotion, and the time frame was very short. I suspect Google is pleased with the results because they worked with unknown movies, with no real ad budget, and probably netted about $1 per viewing. That is a very good margin, and something that could likely be ramped up with increased volume and turned into a very profitable part of their business.

BobinBaltimore (profile) says:

Re: Re: Re:

I’m betting that Gooogle’s net on this largely unadvertised, niche experiment was higher than TechDirt’s net on the widely trumpeted CwF+RtB experiment last year. Sadly, Mike has refused to reveal the actual fiscal performance of that effort. Hmmmm….

http://techdirt.com/article.php?sid=20091028/0348476705#c368

Mike Masnick (profile) says:

Re: Re: Re: Re:

I’m betting that Gooogle’s net on this largely unadvertised, niche experiment was higher than TechDirt’s net on the widely trumpeted CwF+RtB experiment last year

Well, I would guess that’s not true, honestly, seeing as our net was greater than their gross, but hey…. But the thing is, even if it were accurate, most people recognize that we’re starting from a base that is not even a rounding error on Google’s daily traffic. I’m wondering why you would ignore that. Apples and oranges comparisons (or, really, mountains and dust mite comparisons) are beneath you. I really thought you were above the ridiculous cheapshot, but apparently not.

BobinBaltimore (profile) says:

Re: Re: Re:2 Re:

Meh…just a way to dredge up that you never provided full disclosure on the experiment. So, I guess in that regard it’s a cheap shot, though you did kinda just leave it hanging out there low those many months ago. So your net was greater than their gross…good to know. Of course, that is new information unshared until now. Also, I agree that it is a mountain/dust mite comparison. Glad to read that in this case at least, you agree with me that scale really does matter in the analysis of a business approach and that scalability is a critical factor. Hmmmmm….

BTW, I agree with you on this one generally, Mike. I do think that Google needs to try something at a bit of a bigger scale with mainstream films and widely advertise it. I think the results will be much better. Whether they will be good enough to spawn a profitable service offering, who knows. You were definitely right to point out that the media has it wrong that this is Google’s first try.

Chris-Mouse (profile) says:

exceeding expectations?

If Google has any sort of realistic expectations as to how much people would pay for movies online, then I have a hard time describing this as anything but exceeding expectations.
Whether or not Google can make a profit on that income is another question. Any simple online movie watching service with a non zero income is exceeding the income level I would expect it to have.

Bradley Stewart (profile) says:

Pay For This Stuff?

OK so I’m an Old Codger and by now I have seen every plot and formula that has or will ever be conceived. I’m not going to start paying for this stuff though I can understand it if you are a lot younger than I am. Then again I do have an Old Codger Friend who just loves watching the latest releases. I think that one day he will get a job at an old actor’s home reminding the senile residents which movies that they were in and the parts that they played.

Alan Gerow (profile) says:

Re: Youtube does not compare

Google Video wasn’t exclusively PPV. It was very much like YouTube at first with user submitted content that broke all kinds of copyright laws. Google made deals with content creators and experimented with rentals, but the heart of the service was very YouTube-like. I still have a couple .gvi files of stuff that was never available on YouTube and sure wasn’t approved by the original creators. 🙂

a-dub (profile) says:

The problem with renting online is that they are still charging too much. I would gladly go to a redbox over renting from something like Zune on XBox live. The whole pricing model on Zune is way too much and you have to pay MORE for the HD version. Compare that to Netflix streaming on XBox Live. When I use Netflix, I can jump around to different TV shows and movies and if I dont like something, I dont continue watching it…I just find something else on Netflix. I cant see myself paying so much for a movie and then not liking it. Paying up to $6 or $7 bucks for an HD rental on Zune is just too much of a gamble.

Roy Weissman (profile) says:

Google and Pay per View

Did Lance Armstrong learn to ride a bicycle in 10 days?

I think that anyone criticizing Google’s Pay Per View efforts is just looking for any publicity. There is no question that Google can be successful with an on demand online offering. The only issue is Google’s commitment to the program. Given that the studios release all the movies to most everyone at once (or will do that shortly), its going to come down to the marketing, business model and promotion to determine success.

One great advantage Google has is its technical prowess. They truly have the strongest and most reliable video platform on the net.

I look forward to lots of great choices online!

Roy Weissman
Octopus

Vastrightwing (profile) says:

Not willing to pay the freight

Satellite offers hit movies for $4.99 and boy is that convenient. I don’t have to go anywhere and all I have to do is use my remote. Guess what? I opt to get in my car and drive to RedBox for $1.00. For the price of one rental on the dish, I can go to RedBox and get almost 5 movies! (yes, I know, the gas). The point is, the publishers think we’re willing to pay for convenience… sure, up to a point. Just not $5! Not $4.00, Not $3.00 and possibly not even $2.00. I’d pay up to 99 cents for renting a movie online. Not one penny more.

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