January 12, 2007, 12:00 AM

Movie watchers remain loyal to mail order and stores, for now

Despite the planning by retailers like Netflix and Blockbuster for digital movie downloads, consumers remain loyal to mailboxes and local video stores, a new study says. 48% of consumers said they prefer the status quo over movie downloads.

 

Despite all of the planning by online retailers such as Netflix Inc. and Blockbuster Inc. to introduce digital movie downloads, a new study from ABI Research reports that consumers will remain loyal to their mailboxes and local video stores-at least for now.

The recent ABI Research survey of Internet users in North America found that only 5% of those who watch video on the Internet have rented or purchased a digital movie download; more people indicate they have downloaded a movie free from a peer-to-peer sharing site, ABI says. Movie downloads, both legal and illegal, also remain the least watched genre of online video on the Internet, where short-form content, such as sports and news clips, is watched by nearly 7 in 10 of those that watch Internet video.

"Older users in particular watch primarily news and sports, while younger users are watching more entertainment content, including viral media provided by sites such as YouTube," says ABI research director Michael Wolf.

Customers will remain loyal to more conventional means of renting movies for a number of reasons, ABI says. When it asked consumers why they chose not to watch movies downloaded or streamed from the Internet, the biggest reason was satisfaction with existing cable and satellite services as well as DVDs. Nearly half-48%-indicated they would never purchase a movie online for download because they were satisfied with their current providers and the rental market.

"Despite the growing interest in the pay market for Internet-delivered video, perhaps the biggest remaining hurdle to widespread adoption is that the status quo usually gives consumers a vastly superior and often less expensive experience than Internet-delivered content," Wolf says. "The industry needs to develop reasons and business models that increase overall consumer interest in Internet-delivered video, including allowing for easy transfer and better viewing on the large screen."

The survey, conducted in October, is based on responses from about 1,800 consumers 18 and over.

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