Report: Most Adults Willing to Pay $15 for Early Access to Movies

Transactional movie revenue across pay-TV and digital platforms, excluding premium VOD, increased 14% in 2020, exceeding $6 billion for the first time, according to new data from London-based research firm Omdia.

Despite the growth in TVOD revenue due the pandemic, consumer spending was unable to offset declines in box office revenue caused by shuttered theaters. Total spending on movies in theaters, TVOD and packaged media was down 43% compared with 2019, but remained flat with the addition of subscription streaming video, i.e. Netflix & Co.

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As a result of the pandemic, many studios have put greater emphasis on their own direct-to-consumer streaming services as well as experimenting with traditional release windows. This approach has meant that some studios with a D2C platform are able to use new release movies to drive SVOD uptake and generate recurring revenue. However, SVOD availability not only breaks the transactional video window but significantly reduces the lifespan of a movie, according to Omdia.

In a survey, more than 57% of U.S. online adults stated that they were willing to pay extra for early access to new movies with the average maximum spend totaling $15.16 — about $1 more than the average cost of a digital retail movie. However, among households with children, 71% are willing to pay no more than $20.07 for PVOD. Among respondents who frequented theaters more than six times annually before the pandemic, most are willing to pay no more than $28 — about the cost of a family movie ticket.

It is clear that the demand for content is continuing to increase across all consumers and whilst studios are reacting to this demand by providing more new content to SVOD, there is a balancing act that needs to continue,” analyst Fateha Begum said in a statement.

Indeed, about 93% of respondents who sampled PVOD in 2020, nearly 50% said they were willing to repeat the transaction. However, for studios to match the $10.7 billion box office in 2019 through PVOD, each household would have to make at least 5.5 PVOD transactions equating to 700 million transactions within one year. This rises to 17 PVOD transactions per family for households with four children.

“PVOD presents a great opportunity for studios however, it is not a magic cure to recoup lost revenues through the global pandemic,” Begum said. “It should not be viewed as an alternative to the cinema but an accompaniment.”

Increase in Demand for content:

In 2020, consumer demand for online video content increased across all business models. The year saw an influx of new TVOD users, a rise in VOD consumption as well as increased SVOD conversion and uptake. Contrary to popular belief, consumers that engage more with subscription online video services are more likely to visit the cinema than the average consumer, as well as being more likely to purchase or rent via digital video stores.

Omdia found that willingness to pay for premium titles increases with the number of online video subscriptions, in particular among those consumers with 4 or more video services. This highlights the opportunity for studios to use new release movies to generate incremental TVOD revenues while driving subscriptions and retention on D2C services.

“In response to the global pandemic, studios have been able to experiment with theatrical windows and release times, but once things go back to normal, we anticipate that whilst consumer demand remands for new releases, release windows will go back to resemble those pre pandemic,” Begum said.