Consumers are accustomed to paying a little extra to their cable TV providers to access video on demand (VOD) movies. Up until now, they usually have had to wait several months before they can access newly-released films. But all that may be about to change.
More movie producers and cable and satellite operations are discussing a premium VOD business model. In these cases, consumers would be expected to pay about $25 to watch a first-run movie at home, about 60 days after release. A recent Reuters report notes that the premium VOD options have been discussed before but the many parties involved have been unable to agree on a fair pricing structure. This year, it appears that companies like Disney are no longer willing to wait. Company chief Bob Iger recently said, “[w]e’re going to become aggressive in experimenting with new windows, including that one [meaning VOD].” Companies like Disney are looking for new growth vehicles now that the purchased DVD market is declining. As a result, options like premium VOD look attractive. Industry watchers expect that some form of premium VOD will be presented to consumers by the end of the year.
However, traditional movie theater owners stand to lose under this business arrangement. The trade association for this group, National Association of Theater Owners, has already been advertising against the proposed changes by taking out ads in industry publications. But if premium VOD takes off, theater owners may need to explore other revenue channels and therefore adjust their own marketing campaigns.
There’s no denying that consumers like the flexibility of watching movies when and where they want. The movie industry may find itself in the same difficult position as the recorded music and published book sectors as consumers opt for entertainment options that are increasingly digital and mobile. As a result, the marketing of movies is certain to change.[Sources: Zeidler, Sue. Adegoke, Yinka. Studios, cable closer to home movie deals. Reuters. 11 Aug. 2010. Web. 19 Aug. 2010]