March 9, 2021
Transactional VOD, or the digital rental or sale of titles, is here to stay — including the higher-priced COVID-induced newcomer PVOD — said panelists during the OTT.X spring summit.
“It’s still, if you actually include the declining physical part of the business, it’s still a $10 billion business,” said Fandango’s Cameron Douglas, who oversees transactional services FandangoNow and the recently acquired Vudu. “It also was the first year, last year, that you actually saw growth, combined physical and digital business en masse. So I absolutely think that there’s a continued appetite for consumers for transactional video whether it’s Blu-ray and DVD or TVOD.”
“It’s absolutely here to stay, and the reason for that is that is consumers cannot afford to sign up for every single subscription service that’s out there, and there’s no way that you can replicate the selection that’s available on transactional platforms,” added Jill Allen, SVP of Sony Pictures Entertainment. “It’s just ubiquitous. It’s on every platform. And if you want to watch a movie, you generally know that it’s available to rent or buy somewhere. And then in addition TVOD has various benefits in terms of the windows, too, getting the earlier window. So in the near term I see it continuing. Even though it’s definitely benefited from COVID, looking forward I see it still being a very vibrant, large business.”
Transactional services also offer a deeper library of content than subscription services, panelists noted.
“I don’t know how many pieces of content Peacock has or Netflix has but it’s relatively small compared to a transactional platform,” Douglas added. “I think Vudu, at last count, has 225,000 movies and TV shows. I promise you that even the biggest services on the subscription side have nothing that size library.”
The studio leap into premium VOD (PVOD), usually a $20 one-time rental, has been successful as well, panelists noted, with Premier Digital’s Michele Edelman saying that a friend had shared a story about watching a first-run film at home.
“She said, ‘I treated myself to a theatrical movie in my house,’” Edelman said. “’I’d just had dinner, and I watched Barb & Star Go to Vista Del Mar.’ She said, ‘It was the best experience.’”
Edelman noted that “everyone’s screens are bigger,” making watching movies at home more theater-like.
“They’re creating this really great theatrical experience where they are,” she said.
Roku’s Mike Gamboa agreed.
“Consumers love new release movies,” he said. “I don’t think that’s going to change anytime soon, but I think they have been demanding the flexibility to watch either in theaters or at home. And I think from our perspective, the success of Trolls [World Tour on PVOD] and Scoob! [also on PVOD] kind of demonstrated that consumers love new-release movies at home, and the economics and technical infrastructure is in place to support that business model. So we do see opportunity and viability of PVOD and TVOD to support the new-release movies.”
Sony’s Allen, too, noted that PVOD produced changes in how the teams at the studio worked together.
“We’ve never collaborated so closely with our theatrical team,” she said.
Indeed, Douglas noted, PVOD titles were able to benefit from theatrical marketing as never before.
“I’m looking forward to a real PVOD title,” Douglas said. “We really haven’t had one. Premium VOD in its initial incarnation was meant to be a theatrical movie that has a short window to home entertainment. Because theaters haven’t really opened up yet, a real PVOD title is going to be the real test.”
With the windows shifting during the pandemic and studios experimenting with different windows and pricing, the calculus in how to release a title has become complex during the past year, Allen said.
“You now have to navigate around a whole new set of competitive windows and, internally, as a content provider, you have to look at when your content is going into other windows as well, too,” she said. “So it’s become a little bit more complex.”
Allen said she has to look at individual release plans for each of her studio’s own titles and also what windows the other studios’ titles are employing.
“You had Wonder Woman  that had multiple new-release windows,” she noted. “If you’re competing against the third new-release window of that, is that now a big deal? So understanding the competitive landscape, very, very complex. Even within each studio, if you have a title that’s on a subscription service. If I have a Christmas-themed movie, and I have it available on an SVOD service, can I sell that movie right now?”
While new releases have been few and far between during the pandemic as the pipeline shrank to a trickle, TVOD services and studios leaned on catalog to fill the gap, panelists noted.
“We’ve seen huge growth in [catalog] the last year because of the dearth of new release content,” Douglas said, adding the services have noticed “people rediscovering their favorites, collecting them, adding them to their library, including full series of television shows, where they’re buying almost the entire series of ‘Married With Children’ or ‘M*A*S*H’ or ‘The Office.’”
Sony, too, has been mining catalog while production slowed.
“It’s been our lives since COVID started,” Allen said.
Indeed, consumers are responding by collecting digitally, noted Edelman.
“I just heard the other day, someone said, ‘I started building my digital library,’” she said. “’I now have in my library my absolute favorite films, and I’m buying them at these really discounted prices because it was worth it.'”
“It’s the best subscription service you could ever have,” added Douglas.