Warner Ups South Korea Home Entertainment Profile13 Oct, 2014 By: Erik Gruenwedel
Studio downsized presence in 2008 after shuttering DVD business
Warner Bros. is upping its status in the South Korean home entertainment market by offering select new-release movies on transaction video-on-demand — and not theatrically — through regional telecom operators.
While the Warner branded service, which launches Oct. 16 on KT Olleh TV and separately on LG U+TV), will offer traditional new movies and catalog in the retail window. It is also offering select new releases foregoing a theatrical release.
As a result, romantic comedy Blended, starring Adam Sandler and Drew Barrymore, will be available on VOD but not in theaters. The title has generated more than $126 million at the global box office, including $46 million domestically.
Other titles include Clint Eastwood’s Jersey Boys, which has generated nearly $62 million globally ($47 million domestically), and adult comedy Tammy, starring Melissa McCarthy, which has generated $97 million globally ($85.5 million in the U.S.) since its July 2 debut.
The service marks Warner’s first serious effort to recapture the South Korean home entertainment it all-but-vacated six years ago. The studio was the last Hollywood holdout in 2008 — pulling the plug on its DVD business, which had suffered due to rampant piracy and other issues.
Korea has been wired longer than most countries, with 94% of households reportedly having broadband connections since 2008 when the high-definition channel was still in its infancy. Indeed, Warner used the Korean market to test making new releases available two-weeks ahead of their packaged media retail date — beginning 2009.
Transactional VOD Growing in America
Transactional VOD has been available in the United States for years — largely through cable and satellite TV operators with little consumer traction. That trend is changing. A new Parks Associates study found that 37% of U.S. broadband homes use transactional VOD on a regular basis. Those households also proportionally opt for subscription streaming.
Indeed, about two-thirds of Amazon Prime Instant Video subscribers also rent or purchase titles through the service, and their average expenditures are increasing. By contrast, expenditure on downloads among Netflix subscribers is decreasing, according to Parks.
"Subscription services are the most popular form of OTT video, but a transactional service that offers a wide selection of titles and easy-to-use controls can score with consumers and create new revenues," Barbara Kraus, director, research at Parks, said in a statement.
Kraus added that a lack of engaging content can doom a transactional or SVOD service, which was made clear Oct. 7 by the shuttering of Redbox Instant. The Verizon joint venture had hoped to meld consumer interest in SVOD with its kiosk disc rental business, transactional VOD and electronic sellthrough.
“Redbox Instant failed in large part because only a limited number of titles were available to rent through its streaming library. What the service needed was a large selection of online titles, with easy access for streaming,” she said.
In a survey of 10,000 U.S. broadband households, Parks found that among frequent users of streaming media players, 80% pay for monthly streaming services, such as Netflix, but in addition, nearly 30% stream video rentals and 20% buy electronic sellthrough. These users are typically U.S. broadband households using a streaming media player such as Roku or Apple TV.
Connected Blu-ray Disc players rank just ahead of video game consoles and behind smart TVs and streaming media devices as the preferred option to acquire transactional VOD or electronic sellthrough content.
“Ease-of-use is the key factor driving most households to use a certain device, so developing a rental or download content service that is simple and well integrated with a device's [user interface] could help increase a la carte revenues among streaming content,” Kraus said.