The Video On Demand movie business received a major public relations boost in March when studios and cable operators teamed to promote the category through a $30 million marketing campaign.
Recent, less publicized deals between several Hollywood studios and VOD competitors Redbox and Neflix regarding top movie window release dates may have just as big an influence on VOD’s future business fortunes.
Last month movie studios 20th Century Fox and Universal reached deals to delay distribution of its Hollywood titles to the Redbox $1-a-day DVD rental company and the Netflix mail-order rental DVD service for 28 days after those titles hit Best Buy and Wal-Mart shelves for purchase.
Fox and Universal joins Warner Bros. in protecting its sell-through business by holding off the fledgling rental businesses from offering their titles for nearly a month.
With the lion’s share of DVD and technically-enhanced Blu-Ray DVD purchases occurring within three to four weeks of a movie’s release, the studios can now maximize DVD sales while still providing consumers with low-cost rental alternatives for its blockbuster titles, albeit four weeks after its initial DVD release.
For the cable industry, the Fox, Warner Bros. and Universal deals with Redbox and Netflix help will further illustrate the value of VOD in the eyes of consumers looking to rent movies.
With studios premiering their movies on VOD at the same time or near day and date they hit retail shelves - and with fewer DVD rental stores in the marketplace given the imminent closing of the Hollywood Video chain - operators have a unique opportunity to fill the void for consumers used to running to their mailboxes or their local supermarket to get the latest theatrical movie DVD.
It’s already been proven that titles offered on VOD day and date with its DVD release generate nearly 50% more buys than movies offered via on demand after they’ve been released to stores for purchase.
Studios generate more revenue from a $3.95 to $4.95 VOD rental title than they would if that same title was rented from Netflix or Redbox, so it’s to the studio’s advantage to give VOD some lead time in offering movies to consumers.
Many expect to see other studios to follow the lead of Fox, Warner Bros. and Universal and pull back movie windows for Netflix and Redbox as well, providing even more titles for operators to offer its subscribers top theatrical releases before the they’re available to other movie rental businesses.
For now, the industry should look to educate the consumer on its movie window advantage over Redbox and Neflix so that the intrinsic value of VOD is clear in customer’s minds.
The more the industry can make the movie rental experience the same or better than all other platforms, ultimately the more consumers will look to VOD as their first choice to view movies.