PVOD Resonating With Consumers; Jury Still Out for Hollywood, Pundits

Premium video-on-demand, the expensive version of transactional digital movie rentals offering consumers in-home early access to theatrical titles, continues to see a renaissance.

With 65% of major theatrical markets shuttered due to the pandemic, new data through Feb. 1 saw $19.99 PVOD releases Greenland (STX Entertainment), News of the World (Universal Pictures), Promising Young Woman (Focus Features), The Croods: A New Age (Universal/DreamWorks Animation), Our Friend (Gravitas Ventures) and Fatale (Lionsgate) rank among the Top 10 digital movies rented by consumers across Apple TV, FandangoNow, Spectrum TV and Google Play.

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After a failed 2011 attempt by Universal Pictures to jumpstart PVOD by offering actioner Tower Heist directly in the home for $59.99, the distribution channel made a less-expensive ($19.99) comeback last year early in the pandemic when the studio disclosed it had generated $100 million in revenue from 5 million transactions in 28 days offering erstwhile theatrical sequel Trolls World Tour directly to consumers at home.

Thus, Universal took PVOD firmly by the horns, hammering out shortened theatrical window agreements with AMC Theatres and Cinemark in order to get its movies into home entertainment channels faster — and with good reason. Studios keep about 80% of all digital transactions, compared with 50% of theatrical.

“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD. As soon as theaters reopen, we expect to release movies on both formats,” said NBCUniversal CEO Jeff Shell.

Indeed, Universal released the Judd Apatow comedy The King of Staten Island on PVOD in June. It also rushed out early transactional VOD access to The Invisible Man, The Hunt, Emma and Never Rarely Sometimes Always, among others.

Other studios have tepidly followed, with Warner Bros. Pictures debuting Scoob! on  May 15, and Disney launching Mulan into the home on Labor Day weekend  — the latter initially as a $29.99 purchase-only option to Disney+ subscribers.

“The silver lining to 2020 from a theatrical perspective is that studios have had the opportunity to test the feared PVOD window, with the results not as compelling as many had expected, and not as damaging to the exhibitors as feared,” Michael Pachter, media analyst with Wedbush Securities in Los Angeles, wrote in a note.

Indeed, as PVOD has become normalized, scant information exists about actual sales generated by consumers. Nielsen recently announced it would begin tracking PVOD across living room televisions. Just released industry data from DEG: The Digital Entertainment Group did not include PVOD transactions among the $2.3 billion consumers spent renting movies and other filmed content through digital retailers in 2020 — up from less than $2 billion in 2019.

“We think that PVOD is here to stay, and it really is a big part of our business,” Fandango SVP Mark Young told a recent industry panel. NBCUniversal-owned Fandango operates transactional VOD services Vudu and FandangoNow.

Yet major theatrical distributor Imax believes PVOD remains a fluke driven by rollercoaster consumer behavior during a pandemic.

“To be unequivocal, PVOD is a failed experiment,” CEO Rich Gelfond told a virtual investor confab last September. “The numbers haven’t worked in a pandemic, so how would they work in a non-pandemic? Of the movies that were postponed, very few went into PVOD or streaming, and I should be clear I’m talking about the blockbuster movies — the movies that Imax does.”

Wedbush’s Pachter contends studios largely agree, continuing to postpone major releases into 2021 and later, showing they prefer a theatrical release over PVOD.

In the meantime, more movies are likely to go to subscription VOD platforms flush with cash and willing to spend it licensing content.

“We expect more films to shift to streaming as subscription services seek more video content after heightened consumption [and subscriber growth] coupled with several months of halted productions in the pandemic,” Pachter said.

Universal Pictures: 2020 PVOD Revenue Soared, Theatrical Plummeted

Universal Pictures’ decision to release select theatrical titles directly into premium VOD channels was lauded by Comcast Chairman/CEO Brian Roberts. Speaking on the Jan. 28 fiscal call, Roberts said the strategy has proved to be “profitable and the right move for us.”

The studio made waves last year when it took erstwhile theatrical release Trolls World Tour and instead offered it into homes for $19.99. The animated title went on to generate $100 million in 28 days. That success prompted revenue-sharing agreements with major exhibitors AMC Theatres and Cinemark to significantly shorten the theatrical window on select titles.

“While we look forward to when we can [again] enjoy the theatrical release of many franchise films … we will lean into what has become a successful hybrid distribution model,” Roberts said.

Meanwhile, Universal Pictures Home Entertainment reported relatively flat financials, despite the lack of theatrical product. The division reported fourth-quarter (ended Dec. 31, 2020) revenue of $266 million, which was down just 3.7% ($10 million) from revenue of $276 million in the previous-year period. For the fiscal year, sales of DVD/Blu-ray Disc and digital movies topped $944 million, off a mere 1.3% ($13 million) from 2019.

Top-selling discs in 2020 included Trolls: World Tour and 1917.

Universal contends that with the 18 movies the studio released on PVOD in the past 10 months, it generated four times what it expected to earn in the traditional digital home entertainment window. In total, the combined in-home consumer represented more than $500 million, according to Michael Bonner, the newly appointed president of Universal Pictures Home Entertainment.

“Since the launch of PVOD, we’ve learned a tremendous amount, much of which has validated our belief that PVOD is poised to complement the theatrical business in a way that can meaningfully benefit the ecosystem across consumers, distributors and studios,” Bonner said in a statement.

As expected, studio revenue decreased 8.3% to $1.4 billion in the fourth quarter, primarily reflecting lower theatrical revenue and other revenue, partially offset by higher content licensing revenue.

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Theatrical revenue decreased 70%, primarily driven by theater closures as a result of COVID-19, and included the performance of The Croods: A New Age in the quarter. Other revenue decreased 49.6%, primarily due to decreases in revenue from our movie ticketing, entertainment and live stage play businesses, which were impacted by theater and entertainment venue closures as a result of the pandemic.

Content licensing revenue increased 22.7%, driven by the performance of certain 2020 releases that were made available on premium video on demand, including The Croods: A New Age, as well as the timing of content provided under licensing agreements.

Studio pre-tax earnings increased 65.2% to $151 million in the fourth quarter, reflecting lower revenue, more than offset by lower operating costs. The decrease in operating costs was primarily driven by lower advertising, marketing and promotion expenses due to a reduced number of movie releases compared to the prior year period as a result of COVID-19.

For the year, studio revenue topped $5.27 billion, down 19% from $6.49 billion in 2019.

DEG: Home Entertainment Spending Surges 18% in Q3 of 2020

Fueled by the coronavirus pandemic, consumers spent nearly 18% more on home entertainment in the third quarter of this year than in the comparable period of 2019, according to numbers released Nov. 11 by DEG: The Digital Entertainment Group.

DEG numbers do not include money spent on premium video-on-demand (PVOD), which would have taken the home entertainment spending total significantly higher. With theaters shuttered due to the pandemic, studios chose to release several high-profile films digitally, at a premium price.

Even without PVOD, spending rose to an estimated $7.3 billion from $6.2 billion in the third quarter of 2019, DEG says, maintaining that “when new [theatrical] releases slowed as a result of production halts and theater closures … consumers seamlessly shifted their viewing to a broad variety of content, including catalog movies and TV shows.”

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As expected, consumer spending on subscription streaming surged during the three-month period that ended Sept. 30, rising nearly 39% to an estimated $5.5 billion, or 75% of total consumer spending.

With no fresh theatrical product, spending on home entertainment purchases slipped 24.4% during the third quarter, to an estimated $1.1 billion. Packaged media was hit particularly hard due to widespread store closures due to regional bans on “non-essential” retail, with consumer spending on DVD and Blu-ray Discs down 34.3% in the quarter, to an estimated $483.3 million. Spending on digital content, or “electronic sellthrough” (EST), was off just 13.9%, to an estimated $600.8 million.

Consumer spending on transactional video-on-demand, or electronic rental, ticked up slightly to an estimated $459 million from $447.6 million in the third quarter of 2019.

DVD and Blu-ray Disc rental spending was off 34.4% as stay-at-home orders limited foot traffic to video stores and Redbox kiosks.

In the first nine months of the year, overall U.S. consumer spending across digital and physical home entertainment formats came in at an estimated $22.2 billion, a 23% spike from the $18 billion consumers spent in the same period a year earlier.

Electronic sellthrough spending was up 15.8% to an estimated $2.2 billion, while electronic rental was up nearly 24% to an estimated $1.8 billion.

Spending on subscription streaming for the first nine months of 2020 is pegged by DEG at $15.6 billion, a 38.7% gain from the first nine months of 2019.

DEG says that among the top titles purchased and rented in the third quarter of 2020 were all three seasons of the TV series “Yellowstone,” from Paramount; the DreamWorks movie Trolls World Tour, distributed by Universal; RLJ Entertainment’s The Tax Collector; MGM/Orion’s Bill & Ted Face the Music, distributed by Warner Bros.; The King of Staten Island (Universal); Force of Nature (Lionsgate); Sonic the Hedgehog (Paramount); Schitt’s Creek: Season 6 (CBS), Harry Potter and the Sorcerer’s Stone (Warner Bros.) and Harry Potter and the Chamber of Secrets (Warner Bros.).

Universal Increases Q3 Home Entertainment Revenue 49% — Thanks to ‘Trolls’

Give it up to crazy trolls. Universal Pictures Home Entertainment Oct. 29 reported third-quarter (ended Sept. 30) revenue of $278 million, which was up 49.1% from revenue of $185 million in the previous-year period. Through nine months of the fiscal year, revenue reached $678 million, about par with revenue of $681 million in the year-ago period.

The studio attributed much of the home entertainment quarterly success to the PVOD and transactional VOD release of erstwhile theatrical release Trolls World Tour.

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As expected, theatrical revenue crumbled almost 95% to $29 million, from $549 million, as the nations movie screens remained closed or impacted by reduced seating capacity due to the ongoing coronavirus pandemic. Through nine months, revenue was down almost 72% to $354 million, compared with revenue of $1.24 billion a year ago.

Universal said “other” studio revenue decreased 44.8%, primarily due to decreases in revenue from movie ticketing (i.e. Fandango) and entertainment and live stage play businesses, which were impacted by venue closures as a result of COVID-19. Content licensing revenue increased 14.5%, due to the timing of content provided under licensing agreements, including transactions with subscription streaming video service Peacock.

Roku CFO: ‘Trolls World Tour,’ ‘Scoob!’ Woke Up ‘Sleepy’ TVOD Biz

As co-creator with Netflix of the subscription streaming video market, Roku has a driver’s seat view of not only the over-the-top video market, but facilitating third-party transactional VOD as well.

Speaking Sept. 15 on the KeyBanc Future of Technology Conference, Roku CFO Steve Louden said the company had a “banner quarter” for the fiscal period ending June 30, with strong SVOD, premium VOD and transactional VOD revenue shares — the latter driven by Universal Pictures Home Entertainment’s Trolls World Tour and Warner Bros. Home Entertainment’s Scoob!.

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“That basically was precipitated by the theaters being closed [due to the coronavirus pandemic] and studios coming out with direct-to-consumer offerings,” Louden said. “It kind of woke up an otherwise sleepy TVOD segment.”

Indeed, consumers spent an estimated $2.99 billion on digital transactional entertainment in the first six months of this year, up 25% from the $2.25 billion spent in the first half of 2019, according to DEG: The Digital Entertainment Group. Digital sales of movies, series and other filmed content was up 57% in the second quarter and 33% in the first half, while transactional streaming, in which consumers rent a program for 48 hours, was up 50% in Q2 and 33% in the first six months of the year.

Louden said streaming hours spiked dramatically in the first phases of the lockdown and remain above the pre-pandemic levels.

When asked about the omission of HBO Max and NBCUniversal’s Peacock streaming services on the Roku platform, Louden said it comes down to economics. Roku doesn’t charge end-users to access the platform; yet without it many consumers wouldn’t willingly gravitate toward a particular OTT brand, according to Louden.

Analysts contend non-placement on the Roku platform has hurt Max and Peacock in generating subscribers. Comcast just disclosed that Peacock has generated 15 million subscribers since launching in July.

Disney’s rollout of the Disney+ SVOD platform, which saw the media giant “lean heavily” on Roku during its initial launch, underscores the platform’s importance in the OTT video ecosystem, according to Louden.

“We played a good part in getting them a rapid growth in audience and … when they launched Hamilton, we were the number one platform for viewership,” he said. “I think they’ve leveraged pretty much all our audience development capabilities.”

Universal’s ‘Trolls World Tour’ Tops British Home Entertainment Sales Chart for Seventh Time

Universal Pictures Home Entertainment’s Trolls World Tour finished atop the weekly Official Chart through Sept. 16 in the United Kingdom for the seventh time. The animated sequel has sold more than 215,000 units across DVD, Blu-ray Disc and digital download.

This week’s highest new entry, Star Wars: Episode I — The Phantom Menace (Disney) finished No. 2 — with the 1999 movie entering the chart for the first time following its release on a limited edition 4K Steelbook version. Star Wars: The Rise of Skywalker (Disney) at No. 3 sits just a handful of unit sales behind its predecessor after climbing three places up from last week.

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The previous week’s No. 1, Black Panther (Disney), dropped to No. 4, landing just ahead of eOne’s 1917 at No. 5. Sony Pictures Home Entertainment’s Spider-Man: Far From Home, starring Tom Holland, swung up nine places to No. 6; Bad Boys for Life (Sony) rose three to No. 7.

Paramount Pictures Sonic the Hedgehog dropped to No. 8, while Sony’s Jumanji: The Next Level held on at No. 9. Finally, Greta Gerwig’s 2019 adaptation of Little Women returned to the top 10 for the first time since June. Starring Emma Watson, Saoirse Ronan, Florence Pugh and Eliza Scanlen, this adaptation was nominated for six academy awards this year, winning one for Best Costume Design.

The Official Film Chart Top 10 – 16th September 2020

LW Pos Title Label
3 1 TROLLS WORLD TOUR DREAMWORKS ANIMATION
NEW 2 STAR WARS: THE PHANTOM MENACE WALT DISNEY
6 3 STAR WARS: THE RISE OF SKYWALKER WALT DISNEY
1 4 BLACK PANTHER MARVEL FILMS
4 5 1917 ENTERTAINMENT ONE
15 6 SPIDER-MAN: FAR FROM HOME SONY PICTURES HE
10 7 BAD BOYS FOR LIFE SONY PICTURES HE
2 8 SONIC THE HEDGEHOG PARAMOUNT
9 9 JUMANJI – THE NEXT LEVEL SONY PICTURES HE
14 10 LITTLE WOMEN (2019) SONY PICTURES HE

‘Trolls,’ ‘Deathstroke’ Maintain Top Spots on Disc Sales Charts

Universal Pictures’ Trolls World Tour remained No. 1 on the NPD VideoScan First Alert chart, which tracks combined DVD and Blu-ray Disc unit sales, the week ended Aug. 29.

It marks the second week in a row in the top spot for the DreamWorks Animation sequel, and its fourth time at No. 1 in its eight weeks on shelves. Trolls World Tour spent two weeks as the top disc in July as well before Scoob! took over the top spot for four weeks.

On the Blu-ray Disc sales chart, however, Trolls spent a second week at No. 2, barely edged out by the top title, Warner’s Deathstroke: Knights & Dragons, which claimed the top Blu-ray spot for a second week as well.

The ‘R’-rated Deathstroke, a movie compiled from episodes of the CW Seed animated Web series of the same name, outsold Trolls on Blu-ray by less than half a percent. It fell to No. 13 on the overall disc sales chart; all copies of it were released as a Blu-ray combo pack, explaining its relatively higher placement on the Blu-ray-only chart.

No. 2 on the overall sellers list for a second week, and again No. 4 on the Blu-ray Disc chart was Warner’s animated Scoob!, which as mentioned had been the top seller overall for four weeks before Trolls returned to the top spot.

Holding at No. 3 on the overall disc chart, but slipping to No. 6 on the Blu-ray chart, was Screen Media’s war film The Outpost.

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Rounding out the top five on the overall disc sales charts were seasons one and two, in that order, of the Kevin Costner series “Yellowstone,” from Paramount. The third season of the series recently concluded on Paramount Network.

The week’s top new release, at No. 6 overall and No. 3 on the Blu-ray chart, was Universal Pictures’ The King of Staten Island, the latest comedy from Judd Apatow, starring and based on the life of Pete Davidson of “Saturday Night Live.”

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On the Media Play News rental chart for the week ended Aug. 30, The King of Staten Island debuted at No. 1, pushing The Outpost to No. 2.

A Redbox original action-thriller, Hard Kill, debuted at No. 3.

Scoob! slipped two spots to No. 4, and Universal’s You Should Have Left slipped to No. 5.

Top 20 Sellers for Week Ended 8-29-20
Top 20 Rentals for Week Ended 8-30-20
Top 20 Selling Blu-ray Discs for Week Ended 8-29-20
Top 20 Blu-ray Market Share for Week Ended 8-29-20
Sales Report for Week Ended 8-29-20
Digital Sales Snapshot for Week Ended 8-31-20

‘Trolls World Tour’ Returns as Top-Selling Disc; ‘Deathstroke’ Tops Blu-ray Chart

Universal Pictures’ Trolls World Tour returned to No. 1 on the NPD VideoScan First Alert chart, which tracks combined DVD and Blu-ray Disc unit sales, the week ended Aug. 22.

The DreamWorks Animation sequel, which has been on shelves for seven weeks, slipped to No. 2 on the dedicated Blu-ray Disc sales chart after returning to the top spot the previous week.

The top-selling Blu-ray Disc for the week was Warner’s Deathstroke: Knights & Dragons, a movie compiled from episodes of the CW Seed animated Web series of the same name. Released on disc only as a Blu-ray/DVD combo pack (which counts as a 100% Blu-ray market share for the title) it was No. 4 on the overall disc sales list.

No. 2 on the overall sellers list and No. 4 on the Blu-ray Disc chart was Warner’s animated Scoob!, which had been the top seller overall for four weeks.

No. 3 on both charts was Screen Media’s The Outpost, the war film based on the Jake Tapper book about U.S. troops isolated during a battle in Afghanistan.

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Slipping two spots to No. 5 on the overall sales list was Nickelodeon’s Paw Patrol: Dino Rescue, a DVD-only disc release from Paramount.

The No. 5 Blu-ray seller was Arrow Entertainment’s limited-edition Blu-ray of 1980’s Flash Gordon, distributed by MVD Entertainment Group. The new 4K Ultra HD version accounted for 84% of Flash Gordon Blu-ray sales during the week.

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On the Media Play News rental chart for the week ended Aug. 23, The Outpost debuted in the top spot. Scoob! fell to No. 2 after four weeks in the top spot.

Universal’s You Should Have Left slipped to No. 3, followed by Trolls World Tour at No. 4, and Warner’s Deep Blue Sea 3 at No. 5.

Top 20 Sellers for Week Ended 8-22-20
Top 20 Rentals for Week Ended 8-23-20
Top 20 Selling Blu-ray Discs for Week Ended 8-22-20
Top 20 Blu-ray Market Share for Week Ended 8-22-20
Sales Report for Week Ended 8-22-20
Digital Sales Snapshot for Week Ended 8-24-20

Universal’s ‘Trolls World Tour’ Remains U.K.’s Longest Top-Selling Movie

Universal Pictures Home Entertainment’s Trolls World Tour remained atop The Official Film Chart in the United Kingdom for the week ending Aug. 26. The animated title’s stint at No. 1 for the sixth consecutive week is the longest-reigning movie chart topper since the Film Chart’s inception in 2018.

Trolls World Tour has held the top spot longer than Queen biopic Bohemian Rhapsody, Marvel Studios’ Avengers: Endgame and musical sequel Mamma Mia! Here We Go Again, which held the top spot for four consecutive weeks. This year, Frozen II and Star Wars: The Rise of Skywalker claimed the No. 1 position for three consecutive weeks.

To date, Trolls World Tour has generated 195,000 sales on digital and disc with 59% of its total made up of digital downloads.

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Meanwhile, eOne’s 1917 climbed back up to No. 2, Paramount Home Entertainment’s Sonic the Hedgehog rose three places to No. 7 and Universal’s Dolittle jumped five spots to fourth.

Downtown Abbey: The Motion Picture (Universal) jumped 10 places to No. 5 — its first stint in the top five since March — while Warner’s Joker moved up six spots to sixth, and Margot Robbie as Harley Quinn ascended seven places in Birds of Prey at No. 7.

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Sony Pictures Home Entertainment’s Jumanji: The Next Level held steady at eighth, as Disney’s Onward fell six spots to ninth, with Frozen II in 10th.

This week’s Official Film Chart featured a sneak peek of musical comedy-drama The High Note (Universal) starring Dakota Johnson and Tracee Ellis Ross, available to buy on DVD from Aug. 31. The movie hit retail shelves in the U.S. Aug. 11.

‘Scoob!’ Leads Overall Disc Sales for Fourth Week, but ‘Trolls’ Tops Blu-ray Chart

Warner Bros. Home Entertainment’s Scoob! again took the top spot on the NPD VideoScan First Alert chart, which tracks combined DVD and Blu-ray Disc unit sales, the week ended Aug. 15.

That marks the fourth consecutive week the CG-animated film based on the classic “Scooby-Doo” cartoon and other Hanna-Barbera characters has been the top disc seller in the United States.

However, its reign as the top Blu-ray Disc seller ended at three weeks, as Universal Pictures’ Trolls World Tour, in its sixth week on disc, climbed back to No. 1 on the dedicated Blu-ray Disc sales chart. It stayed at No. 2 on the overall chart.

Scoob! dropped to No. 2 on the Blu-ray chart.

The No. 3 overall disc seller, moving up a spot from the previous week, was Nickelodeon’s animated Paw Patrol: Dino Rescue, distributed by Paramount.

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Warner’s direct-to-video thriller Deep Blue Sea 3, which doesn’t arrive on disc until Aug. 25 but is available early for sale at Walmart, was No. 11.

The week’s top new release, at No. 38 overall, was Universal’s The High Note.

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The Media Play News rental chart for the week ended Aug. 16 had Scoob! on top for a fourth consecutive week, with You Should Have Left repeating at No. 2. Deep Blue Sea 3, which is available on disc early as a Redbox kiosk rental, was again No. 3.

Newcomer The Wretched, an indie horror sleeper hit from IFC, debuted at No. 4, while Trolls World Tour was No. 5.

Top 20 Sellers for Week Ended 8-15-20
Top 20 Rentals for Week Ended 8-16-20
Top 20 Selling Blu-ray Discs for Week Ended 8-15-20
Top 20 Blu-ray Market Share for Week Ended 8-15-20
Sales Report for Week Ended 8-15-20
Digital Sales Snapshot for Week Ended 8-17-20