WB’s Strategy For Boffo VOD

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Warner Bros. has been on the forefront of the cable
industry’s push to get movie titles to premiere in the
video-on-demand window the same day they appear
on DVD on retail shelves. The studio was also the
first to delay movie titles from premiering via DVD
mail-order company Netflix and DVD kiosk company
Redbox for 28 days after their VOD debuts. Warner
Bros. Digital Distribution vice president of marketing
Michele Edelman recently sat down with Multichannel
programming editor R. Thomas Umstead to
discuss the video-on-demand movie business and to
talk about the movie studio’s upcoming on demand
plans. An edited transcript follows.

MCN: Why has Warner Bros. been so aggressive in
pushing and building the cable video-on-demand business?

Michele Edelman: We saw that the industry had this intuitive
way to get movies to the consumer and we weren’t
using it to our best advantage. We left it in the hands of the
individual operators, but the messaging
wasn’t consistent, the marketing wasn’t
offered to a nationwide group, so it made
sense to surge it to the point where everyone
was on the same road map.

MCN: How has cable’s ‘The Video Store
Just Moved In’ marketing campaign benefited Warner Bros. in particular from a
performance perspective?

ME: We’re still doing a lot of the calculations,
but we saw a nice surge at the beginning
— around 20% to 25% — but the
great news is, despite all the competition
in the marketplace, we didn’t decline.
While the road hasn’t been as robust as
we initially saw, we haven’t gone under
year over year, which — despite such
a competitive market with Netflix and
Redbox — shows that we’re holding our own.

MCN: Where does the industry go from here?

ME: It’s in the hands of the cable operator. It’s going to be
the [development] of guides, search capability, and the
amount of HD content that they make available. Many
years ago, we were getting complaints about the length
of windows. Now we’re day-and-date [with DVD sellthrough]
and before DVD rental, and we’ve moved the
rental window to 48 hours. It’s now in the hands of our
distributors to get the interface up and running a little
bit nicer and really talk to our customers in a way where
[cable operators] are now the new rental store.

MCN: Has it been frustrating for you that all of the
cable operators are still not on the same page?

ME: People are coming on. I feel like people are doing
things in their own way — we know this business and we
know everyone has a way of speaking to their customers.
Some have adopted this faster than others, and we’ll all
get there.

MCN: Are you surprised about the rapid decline of the DVD
rental and sell-through business over the past few years?

ME: It’s really hard. I work in home entertainment and I
would love people to “try it, like it, buy it” — try it on VOD
and then buy the DVD because you love the movie so much.

MCN: Is the economy the biggest detriment to DVD sales,
or is it that people are finding other ways to watch movies?

ME: I think there’s just so much out there. I think Facebook
is a competitor to me, because it takes time away
from what people were doing when they used to buy
and rent movies. So it’s my goal to figure out how to take
those components and make entertainment a piece of
that time spent.

MCN: You’ve mentioned before that operators have
to provide movies online to reach a younger audience,
but how do you do that without undercutting your main
television-based business?

ME: It’s a household, so within the household you’re going
to have the parents in one room and
the broadband connection to the kids
room — it’s about maximizing the full
service. So Mom and Dad and the kids
are watching movies, but it’s just from
a different screen. It’s about taking advantage
of the full offering to the family
— Mom and Dad want the big screen,
Johnny wants the computer, and Debbie
wants the handheld. We’re doing
broadband deals and linear deals at
the same time.

MCN: Do you foresee a time when a
premium window that provides movies
to operators a short time after their theatrical
runs will be viable for studios?

ME: Everyone is talking about it now, so
we’ll see where it goes. The only thing
that makes something viable is if the revenue works out.
Everyone is assessing that, but it’s all over the place right
now. Th e cable operators are very high on it, and it’s something
that they want to do — we’ll see if it’s the right thing.

MCN: What are Warner Bros’ next steps within the VOD

ME: We’re about content strategy. We’ll continue to go
down the road which mimics that of DVD so that we’re
trying to make the VOD rental more robust. We’re rolling
out HD-plus to get people to purchase up to the HD
version. The catalogue business is also way more robust
than people really think. We need to be more competitive
in that space as well.
We’re also back into the event business with virtual tickets.
TV screens are better, and HD resolution is amazing,
so for parents who don’t want to go to a Wiggles concert we
can bring it to them. We will present the Wiggles concert
in November, and we’re looking into a lot of other opportunities.
It’s really about taking the events you buy tickets
for and bringing them on-demand.