Window Shopping Gives VOD a Boost

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Pay-per-view and video-on-demand content distributor In Demand enjoyed a record-setting
performance in 2011, generating $1.3 billion in gross retail revenue and generating some 175
million on-demand movie buys. CEO Bob Benya spoke to MultichannelNews programming
editor R. Thomas Umstead about improved on-demand windows for blockbuster films, how he
deals with rivals Netflix and Redbox and about cable operators’ renewed effort to market new
on-demand theatrical releases. An edited transcript follows.

MCN: How has the on-demand movie business developed
in 2011?

Bob Benya: If you look at movies, we’re doing a lot of
things with the windows and trying to get more and
more movies. We’re also trying to give customers a 48-
hour [rental window], so it’s a little bit more convenient
for them.

We’re doing a lot of packaging of new releases with library
films, which we call stunts. That does a couple of
things; one is that it provides a nice value proposition to
the consumer because if you see a new Batman movie or a
Harry Potter movie and you can get two or three others at
the same time for a lower price, that’s nice value. It’s classic
packaging 101.

We also want to work with the operators to make sure
that package is prominent in the menu, and then you want
some marketing support to generate awareness.

MCN: How influential or important have the developments
with your competitors been to your overall performance,
particularly studio deals that delay on demand
movie premieres on Netflix for 28 days?

BB: We think it’s critical that we have that window. And
we have seen directionally some fairly significant differences
in performance on titles that we get 28 days ahead
of Redbox and Netflix … like high double digits into the

Right now around 40% [of
movies have the 28-day window].

MCN: With that advantage,
do you think that the industry
was effective it getting
that message out this year,
particularly through the
CTAM Movies On Demand

BB: Absolutely. I think,
again, that’s the consortium
coming together,
making a good media investment.
In Demand was
creating all the spots. That
messaging was featured
prominently in all the creative.
And then, of course,
what we do is we take all
the commercials that we
now have cut for all the
operators — I think it’s
like 10,000 commercials a
year or something like that
— with a lot of those spots
having that 28-day messaging
sniped into the bottom
of the video.

So it’s very clear that the
message has got ten out
there. And I think it’s really
been a very important contributor
to the growth this
year. Basically, there’s five things. One is day-and-date,
which is we’re virtually at 100% day-and-date with DVD
releases. The second thing is increasing the number of
titles [available] for [48-hour rentals].

Third is the [Netflix] hold-back. We’ve been talking with
the studios about trying to increase that hold-back. Some
studios have actually mentioned
that there’s a possibility
that they’re going to
go to as much as 60 days.
We think that that’s really

And then I think the last
thing that a lot of people
may not know about is that
independent film has become
much, much bigger
on the VOD platform. We
are now working with 50
independent film studios,
and we’ve seen a substantial
increase in the overall
independent film business.

A big part of why it has
become prominent is because
we’re getting those titles
same day as theatrical
release. When a guy like Ed
Burns is on [Late Show With
David Letterman
] and the
Today show, and he’s touting
his new indie fi lm, he is
also now saying it’s not only
in art houses in select cities,
but it’s also available on demand
at the same time.

MCN: As well as the category
did this year, some
people will look at it and
say, “Given all the advantages
that you have, you probably should have done
even better.” So the question is, what needs to be done
in 2012 not only to keep the momentum up, but also to
drive higher revenues and make people more aware of
the advantages that VOD has?

BB: Well, a few things. First, we’re going to continue to
drive on those areas I mentioned because we think that
they really make a difference. We have been re-upped
as our role as agency of record for the CTAM [Movies
On Demand] consortium.
So that
big consortium
and big national
budget, we’ve
been renewed as
the agency of record
to create all
of the materials,
the campaigns and
all those kinds of
things. We think
that that’s going to

The other thing
that we’re going to
be doing next year
is we’re going a lot
broader and deeper
on price testing
and really looking
at it in a much
more sophisticated
way than the industry
has in the
past. There has always been some dabbling here and there
but we want to put together a much more comprehensive
price-testing strategy that allows us to take advantage of
periods during the course of the year where you want to
do some discounting to move volume. We’re not only going
to look at that from the standpoint of Movies On Demand,
we’re also going to look at that as it relates to all of
our other products.

MCN: Is the industry willing to take a lower revenue
split in order to test different pricing options?

BB: Given the landscape of the marketplace, what we’re
seeing is definitely a greater willingness to partner with
us on marketing, not just with the affiliates but also the
suppliers. We’ve made some progress in that area, so it’s
not a zero-sum game, it’s much more of a collaboration
to try to continue to move the business, especially given
the challenging landscape.

MCN: Do you think we’ll see more attempts by studios
to offer a premium VOD window closer to a movie’s
debut in the theaters?

BB: I don’t know how long the premium-window concept
is going take to come to fruition. It’s a fairly complicated
set of issues and barriers. But I think that the
studios are definitely interested in optimizing the return
on investment for movies, and I think they’re going to do
things earlier. I don’t know if it’s necessarily going to be
the same type of timeframe as the premium home theater,
but I think that there’ll be attempts at doing things
earlier than day and date.

MCN: The other new development that we’ve seen is a
couple studios offering 10-minute previews of movies to
allow viewers an opportunity to watch before purchasing.
Are you in favor of that and do you think we’ll see
more of that next year?

BB: We are big-time in favor of it and we’ve seen some
directional results that make us believe that it’s going be
really good for our business. We think we’re going to see
a lot more of it next year.