VOD Day & Date with DVD Results: Sell-through, VOD Up; Rentals Fall

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Some interesting results from the test releasing movies on video-on-demand and DVD on the same day (that is, doing away with PPV window): it boosts sales of both significantly but cuts into DVD rentals, according to initial results from a two-market test between Comcast and six studios begun last year, reports Video Business. This should make the studios happy, but sucks for Blockbuster, and even Netflix. On average, VOD buy rates were 50 percent higher in the two test markets than in others, while DVD sales were up 10 percent on average and DVD rentals fell 2 percent, according to Warner Bros., which analyzed data from Comcast and Rentrak. Of course the cable company promoted its new releases as being available on DVD and VOD, so that helps push the sales.

If Warner and other studios decide to do away with the PPV window, that could also benefit movie download services such as Movielink, Amazon and Wal-Mart, which all sell rental downloads (considered VOD by studios).

Meanwhile, Warner Home Entertainment Group president Kevin Tsujihara said at a Deutsche Bank conference today that studios generally can expect 15- 20 percent return on each consumer dollar spent in the rental business but should anticipate 60-70 percent when films are more efficiently delivered over cable systems. “We did have marginal impact on rental activity…But it’s a highly inefficient means of distribution for us. We ship product into stores, they have to pay rent, labor. And then they turnaround and compete against me by selling previously viewed…[with VOD] I don’t have to fight through all these inefficiencies for consumers to get 24-hour access to my movies.”

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Suzie Heumann

It's interesting, through no interest of its own, that this whole process of changing how media is delivered to the home consumer is creating a substantial 'Greening' impact. No outrageously high shipping rates per title, no plastic, DVD, case or shrink wrap, no packaging to ship in, no petroleum products to ship, etc. Hence the manufacturing profit of 70-80% rather than 15-20%.
But – it enhances the loss of jobs for shipping, manufacturing, middle-manning, sales clerks and probably things I'm not thinking of. Trade-offs, yes, but probably worth it in the long run.
All as an off-shoot, sort of, for a demanding audience wanting instant gratification.

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