Google's Data Shows Hollywood's Headache: Netflix Searches Booming, DVDs Fading Away

Here’s a very nice explanation of why Hollywood is so freaked out about Netflix: A chart that shows Web searches for the movie rental service booming, while queries for “DVD” are plummeting.

The graphic and the data come from Google, via a research note the search giant published this month. Analyst Rich Greenfield reprinted the report, and if you’ve got time (today could be a very slow work day for many of you), you should register for a free account from Greenfield’s BTIG Research shop so you can check out the whole thing.

A couple notes:

• Google says query volume for “Netflix” peaked in February 2011, but grew more than 90 percent in both 2010 and 2009.
• That growth isn’t simply a result of Netflix adding more subscribers–it’s the result of Netflix subscribers using the Web more frequently. Google says queries per subscriber grew more than 40 percent last year, presumably as people looked to see what they could stream.
• DVD sales finally peaked in 2007, but Google queries kept climbing through 2008. Google’s explanation for this is confusing: “The shift in online behavior driven by the increased ability to buy and research DVDs via the Internet compensated for the decreased desire to own physical DVDs. The result was strong growth in search activity for terms including ‘DVDs,’ ‘new movies on DVD,’ ‘new DVD releases,’ among related other generic DVD terms.”
• Google’s chart also shows “free movie terms” declining after 2009. Does that mean piracy is declining, too? That seems hard to imagine. Here’s Greenfield’s thought: “We wonder if the key change is that piracy is increasingly being driven by linking sites versus consumers simply searching for torrent links (meaning consumers know to start at a particular site to search for pirated movies versus searching Google to get to the linking page itself). In addition, we suspect social media is increasingly driving piracy as consumers are simply posting links to storage locker locations to stream/download files illegally, mitigating the need to search Google itself.”

Netflix, by the way, reports Q1 earnings on Monday.