Survey: 73% of Consumers Never Use Transactional VOD4 Dec, 2013 By: Erik Gruenwedel
Nearly half say they prefer Netflix, 34% are considering cord-cutting, and 29% use Redbox
Hollywood’s ongoing effort to convince consumers to rent higher-margin digital movies (rather than discs) through their multichannel video program distributor, including cable, satellite and telco, doesn’t appear to be gaining traction, according to a new study.
Nearly 73% of 3,177 consumers surveyed in the third quarter in the U.S. and Canada by Digitalsmiths said they have never rented a movie from their MVPD. About 27% of respondents order one (13.3%) or more (6.7%) movies a month. The data supports a similar finding from Frank N. Magid Associates that found less than 10% of Internet users opt for transactional video-on-demand through a broadband service.
Transactional VOD (and later iVOD) has been at the forefront of home entertainment strategies ever since Warner Bros. became the first studio to offer digital access to new release movie rentals the same day as their retail release.
“While [27%) may be a small portion of the overall audience, when multiplied by millions of subscribers, there is a significant revenue impact,” said Digitalsmiths. “However, there is clearly still work to be done to keep these numbers increasing.”
Principal complaints about transactional VOD is finding a movie, especially catalog. Nearly 26% of respondents cited searching for a title as problematic — up from 23.4% in the second quarter.
Meanwhile, more than 48% of respondents said they use subscription OTT services such as Netflix and Amazon Prime, with more than 57% of this group spending between $6 and $11 a month. Netflix alone saw an even higher increase in adoption than all other services, according to the report. Other services included Hulu Plus (9.4%), Redbox Instant (2%) and Blockbuster (1.8%).
Redbox kiosks remain the clear leader in the disc rental space, but iTunes and Amazon also saw increases in iVOD adoption. More than 51% of respondents said they spend $3 to $11 per month renting discs or digital content from sources such as YouTube (1.3%), Vudu (1.2%) and CinemaNow (0.8%).
The report said 60% of respondents cited convenience as the top reason for using third-party video services such as kiosks. Indeed, more than 61% of respondents who use Redbox do so because of convenience. Another 48% said third-party video services are cheaper than those offered by MVPDs.
“This contradicts the perception of the cost in time and money of driving to the store, possibly waiting in line, and then having to go back again to return the rental. This is a far greater time investment than simply accessing a VOD title directly from one’s TV,” read the report.
The study suggests MVPDs make VOD options more prominent with easier search functions, similar to what Netflix, Hulu and Amazon employ, thereby enabling consumers to find titles which were once buried and previously overlooked.
“In an era of intuitive touch screens and voice navigation, scrolling through a long list of titles and having to go to numerous screens via a remote control is not the answer,” read the report.
Finally, the Digitalsmiths found 23.4% of respondents favor video services that allow portability of content to connected devices, notably on tablets. The report said it is “crucial” MPVDs offer these TV Everywhere options, in addition to making subscribers aware of these services through a combination of digital marketing and more traditional methods. Similar to video viewing, awareness is built through marketing across multiple channels.
Indeed, 28% of respondents said they watch movies on a tablet, followed by 22% who watch repurposed TV shows, and content previews. From 20% to 26% of those surveyed said they watch 1-2 hours of TV programming or movies per week on a tablet. Interestingly, more than 36% watch TV shows on demand on a smartphone, while another 30% watch movies — with 37% viewing 1-2 hours a week.