Why Google's Online Video Rental Experiment Was Not A Failure
5 Independent Movies
10 Days
2684 Views
$10,709.16 in Revenue
source: NY Times
Some blogs are trumpeting these results as evidence that people do not want to pay for online video. It is not huge revenue, but I would argue this was a successful experiment. Obviously some people are willing to pay for online video or else Google would not have generated any revenue. This experiment is just one point on the demand curve. A $3.99 price point for an independent movie resulted in an average of 264 streams per day over a 10 day period.
Next experiments:
- Change the price point (I would try $1.99 and a .99 cent experiment
- Try a major release movie
- Experiment with days after a movie release to offer this streaming rental option
- Extend the duration to see the rate of decay of demand
This experiment was a first step in understanding the shape of the market for movie entertainment. I expect there will be an optimal mix of cinema release, online rental streams, part of a online subscription (like Netflix streaming). New knowledge is far from a failure.
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