Problem area and purpose

Nowadays, 2006, the downloading of music and movies is an increasingly more burning issue. But while the music industry has made great progress in using the Internet as a distribution channel the film industry has been at a standstill for several years. Recently however there has been progress in the form of a few film companies beginning to offer their customers legal ways to acquire films over the Internet. But with this progress one central question arises, which this report will try to answer; what are the important factors for selling films as the Internet moves from primarily being a information channel to also functioning as a distribution channel? The purpose is to examine what the consumers find important when purchasing film, and to establish to what degree there is a substitution effect between DVDs and downloadable films.

Method

The report is first and foremost based on an Internet survey with a total of 383 participants. The respondents are divided into two separate selections, the first consisting of people already with a genuine interest in film (both watching and purchasing) and the second selection consisting of people with a more average interest. To get a wider perspective, but also to get an in-depth view of the business, we interviewed a Swedish journalist with strong connections both with the film companies and with the consumers.

Theory

The survey is based on three theoretical concepts; added value, differentiation and substitution. Together these concepts form two variables, Inclination to purchase DVD and Inclination to pay for downloading. Depending on the respondents’ answers to the survey, different values are given the variables, which in turn shows how inclined the different groups are to substitute DVD with downloaded films.

Result and conclusion

The report’s result shows that the first selection is not very inclined to replace DVDs with downloaded films, while the second selection shows slightly more interest. In conclusion, the most important factors for the consumers when, or rather if, downloading films are low price and an easy and functional system. When looking at the industry today this is not what the companies are offering the consumers, which puts the film industry’s role as Internet distributor in question.