IHS Screen Digest estimates that consumer spending on Video on Demand movie rentals went from an inconsequential $23 million globally in 2006 to $259.4 million in 2010.
Screen Digest predicts that VOD digital sales will grow to 830.3 Million in global sales by 2014.
VOD actually does a better job of buttressing the loss of the physical DVD business than revenue figures show at first glance. Lionsgate has told Wall Street that VOD is growing from 10% of home entertainment revenue three years ago to a forecast 24% this year, but will account for an outsized 35% of home entertainment operating profit.
Hotel entertainment purveyor LodgeNet ended years of declines in per capita VOD movie revenues in June, when the metric rose 4%. The July gain for VOD movie revenue was on track to rise 6%. LodgeNet president of interactive and media networks Derek White attributes the bounce to variable movie pricing (ranging from $4.99 to an early-window fee of $17.99), discounting and better analysis of user behavior.
Warner Bros. is working to encourage the same type of "collecting" mentality for digital movies that exists in the physical DVD business, whether via interacting with Facebook users, creating the app Flixster Collections or supporting studio digital-locker cooperative UltraViolet.
Asian VOD platforms are popping up, and some are programming Hollywood movies. Anyplex, a VOD platform serving Hong Kong and Taiwan, says that Hollywood films -- which it added in March 2010 -- now account for 70% of its revenue. Anyplex offers movies from all six majors. Youku, a video website for China that began providing VOD in 2010, programs VOD movies from Warner Bros., Paramount and other Western suppliers.
Hollywood film distributors particularly warmed to VOD overseas because the once-vibrant physical video businesses shriveled precipitously during the online era in some territories, especially in South Korea and Spain.
There are some indie success stories. VOD platform Gravitas Ventures projects it will gross $500,000 in VOD for documentary "American: The Bill Hicks Story" over two years, compared with $91,000 generated by the film's limited theatrical release.
Gravitas Ventures CEO Nolan Gallagher attributed the brisk VOD sales to the simultaneous 22-city theatrical release that cross-promoted VOD, plus upbeat reviews in print and on movie websites. Cable operators were given copies of the docu in advance, which spurred placement on barker channels.
Gallagher adds that the combined VOD-theatrical release is a growing trend, though making it pay off requires careful coordination.
And while the entire business is becoming viable, it is also has pitfalls, as evidenced by the way Netflix roiled its customer base when it abruptly separated its on-demand and physical DVD services, and raising prices to position itself for growth in streaming. It didn't take long for Netflix to respond to the loud, negative chorus coming from its customers and from Wall Street, and the company quickly reversed course.
Plus, free content will always give paid content a run for its money.
No comments:
Post a Comment