Paramount Pictures — one of the last studios to withhold its product from video-on-demand platforms — last week inked a long-term distribution agreement with In Demand to offer its new and library titles on a VOD basis.
The nonexclusive deal is a major coup for In Demand and cable operators, who have been completely shut out of product from the Viacom Inc.-owned studio.
The new agreement covers such box-office hits as Star Trek: Nemesis,
The Wild Thornberrys Movie, Jackass: The Movie, Abandon
andThe Four Feathers.
Terms were not disclosed, but sources said the studio would receive 60 percent of pay-per-view revenues from VOD buys, with In Demand and operators sharing the remaining 40 percent.
In Demand president Steve Brenner did say there were a lot of "digital-management issues" in the agreement, including digital copyright protection, but would not provide specific details.
"Paramount is a great studio, and it means that our shelves are fuller than they've ever been," Brenner said. "This agreement with Paramount marks a significant milestone in VOD and represents a very important moment for In Demand, its cable affiliates as well as for all of our VOD subscribers."
Paramount was considered by many to be the least likely major Hollywood studio to take the VOD plunge, because of Viacom blood ties to home-video giant — and VOD competitor — Blockbuster Video.
But in a statement, Paramount president of worldwide pay television Jack Waterman called VOD an exciting new medium that offers tremendous convenience for consumers.
"We're pleased to expand our relationship with In Demand and its affiliates, and most importantly to develop the VOD experience for consumers by offering legitimate and secure access to our product," Waterman added.
VOD still lags
Pay-per-view revenues have traditionally lagged well behind home-video rentals, but industry observers believe VOD — with its on-demand ordering convenience and VCR functionality — will eventually supersede home video's performance.
Last year, the PPV movie industry generated $1.47 billion, up 18.5 percent from $1.24 billion in 2001. Still, that pales in comparison to the $5.3 billion the home-video rental industry garnered last year, although that figure was down 25 percent from 2001, according to the Video Software Dealers Association.
Factor in the $2.9 billion that DVD rental business earned last year and cable operators still face a major uphill climb in efforts to gain parity with home video.
But with the industry aggressively rolling out VOD — and on-demand buy-rates pacing as much as two to three times higher than traditional PPV performances — industry observers said Paramount needed to join the bandwagon.
"They're seeing growth in the category," Brenner said. "They're seeing that true video-on-demand has an opportunity to become an extremely important part of the distribution chain of a feature motion picture, and want to be a part of that."
The deal leaves Buena Vista as the lone studio holdout. That Walt Disney Co.-owned distributor has yet to ink a long-term agreement with In Demand, but is offering select titles for Time Warner Cable's VOD platform, sources said.
Representatives from Buena Vista could not be reached for comment at press time.