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Google Exits Video on Demand Business

Google recently announced that it's getting out of the video-on-demand business and will stop selling television programming via the Web. The company will stop offering download-to-own and download-to-rent programs today according to an e-mail sent to customers last Friday.

"After August 15, 2007, you will no longer be able to view your purchased or rented videos." the email from Google stated. "To fully account for the video purchases you made before July 18, 2007, we are providing you with a Google Checkout bonus." Customers will be able to use the bonus on other websites that use Google Checkout. A cash refund will be given for purchases made after that date.

Why Would Google Bow Out?

It seems that the retail sector of the site had less success selling content than attracting advertising spending, which accounts for the majority of its revenue. Google’s move might have also been sparked by the sale of Movielink - sold by 5 top motion-picture studios to Blockbuster for around $20 million just earlier last week.

Online video on demand providers are also at a considerably large disadvantage compared to cable providers which offer many free video on demand programming as well as DVR service for a modest fee. Consumers can retieve and record a large selection of television shows, movies, concerts and various other content (some in high definitiion) via a digital cable subscription and can watch the videos through their regular televevision as opposed to a smaller computer monitor.

Google will continue to offer free video streaming via the web site YouTube, which it acquired nine months ago for $1.65 billion. YouTube has grown to become the most visited video-sharing provider on the Web.

Online VOD Quality Still Behind the Times

Video-on-demand via the internet still has plenty of technology obstacles to overcome and is still a long way from replacing traditional television and movie rentals. Some say Movielink's failure to attract a large audience came as a result of the company's refusal to allow users to burn movies they purchased to disc. Concerns exist that the video quality is often inferior to that of digital cable and dvds - even in non-high definition formats.

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