Study Says Premium VOD Would Not Up Market Demand for Movies

14 Apr, 2016 By: Erik Gruenwedel

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Proponents of the Screening Room premium video-on-demand service say offering new-release theatrical titles in the home for $50 as part of a revenue-sharing business model between studios and theater operators would generate incremental revenue from the moviegoing public.

Not so, according to a published MarketCast study that underscores what opponents of premium VOD of long argued: Namely, that enabling consumers to watch new theatrical movies in the home actually reduces the number of moviegoers and their ancillary spending.

The March study of 1,200 U.S. adults age 18-64 did not cite Screening Room specifically, but found that while 25% of respondents said they would use premium VOD, another 33% said they would not. Indeed, 50% of respondents said they enjoy the moviegoing experience. Among naysayers, cost of the movie rental and additional spending ($150) on a proprietary set-top box undermined interest.

Meanwhile, interest in premium VOD was higher (40%) among parents with young children than non-parents (15%) — with the former demo pegging a family trip to the movies around $49 compared with $28 for non-parents. In fact, 50% of parents said the service would be ideal to entertain kids, while 60% indicated it would enable them to watch movies they might miss (apparently ignoring the less-expensive home entertainment window).

About 70% of respondents said a trip to the movie theater cost about $40 when factoring in tickets, concessions, transportation and/or babysitting. The average cost respondents would be willing to pay for premium VOD was around $35.

The last time Hollywood attempted premium VOD was in 2011 when Universal Pictures wanted to offer comedy caper Tower Heist on premium VOD three weeks after its theatrical bow. Unlike Screening Room, Universal would make Heist available to select Comcast Cable subscribers via existing set-top boxes for $59.99. The cabler’s parent, Comcast Corp., owns NBC Universal.

The idea was scuttled when theater groups threatened to boycott the movie.

Screening Room’s achilles heel appears to be the mandated purchase of a set-top box. About 80% of survey respondents said they didn’t want to buy more consumer electronics, including 30% who wouldn’t want the device even if it were free.

“This [premium VOD] issue is not cut and dry, it’s actually fairly complicated,” Chris Rethore, VP of MarketCast and co-author of the report, said in a statement.

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