Advanced Television

Premium VOD pricing undermines demand

April 6, 2011

Premium VOD services which offer restrictive rental windows are priced too high to support significant demand, according to a report from The Diffusion Group (TDG).

The report names the new ‘Home Premiere’ VOD service as an example. The premium service, which joins pay-TV operators in the US and Hollywood studios such as Warner Bros, Universal 20th Century Fox and Sony, distributes rentals 60 days after their theatrical debut (compared to the current window of 90 days). Consumers are expected to pay around $30 per title, compared to $5 for a non-HD rental in existing release windows.

TDG examined the two premium VOD scenarios of same-day and week-after theatrical release and found that just 8 per cent of consumers are highly likely to pay an extra $20 to rent a DVD or on-demand title the same day it appears in theatres.  However, 21 per cent are described as being highly likely to spend an extra $5 for a same-day rental.

“The tactical terrain between theatrical debut and the 90-day rental horizon is vast, so the industry has a variety of timing and pricing options available,” said Michael Greeson, author of the report. “And, yes, the 60-day model may have a future, but not at these price points.”

Categories: Articles, Markets, Premium, Research, VOD