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NPD: Telco Subs Rent More Movies

4 Mar, 2013 By: Erik Gruenwedel

Subscribers of telecommunication multichannel video program distributors Verizon FiOS TV and AT&T U-verse consume more transactional video-on-demand movies than do traditional cable and satellite TV subs, according to new data from The NPD Group.

In 2012, the average telco sub spent $25.29 on transactional VOD movies compared to $13.83 for the average cable sub and $10.33 for the average subscriber of either DirecTV or Dish Network. Total transactional VOD spending on movies among MVPDs reached $1.3 billion.

Telco transactional VOD revenue rose 4% in 2012, while cable transactional VOD revenue fell 4% and satellite TV revenue rose 1%. The data does not include movies rented via online sources.

“Verizon FIOS and AT&T U-verse still considerably lag cable operators in the number of subscribers, however they are actually growing their share of the MPVD VOD-movie-rental market,” said Russ Crupnick, SVP of industry analysis for NPD. “Telecom operators are leading their competitors when it comes to earning additional revenue from VOD movie rentals.”

Warner Bros. in 2008 became one of the first studios to bow new-release titles on transactional VOD at the same time as DVD and Blu-ray Disc. The studio’s rationale was that margins on transactional VOD dwarfed that of traditional video rental stores and kiosks. Scuttlebutt at the time suggested the move could kill disc rentals – a scenario that hasn’t panned out.

Indeed, DVD and Blu-ray rentals at brick-and-mortar video stores fell 24% in 2012 to $1.22 billion, while subscription disc rental — largely through Netflix — was off an estimated 27.8% to $1.26 billion, according to DEG: The Digital Entertainment Group. However, kiosk rentals, mostly via Redbox, rose 15.6% in 2012 to an estimated $1.94 billion.

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