Written by: Roshan Dwivedi
With The Interview raking in USD 34 million collections from online VoD collections, which is significantly higher than the USD 2 million it was able to manage in theatres across North America in the first 4 days following Christmas. Is a clear indication that 2015 will be the year when Video streaming sites & Platforms will compete the theatre collections on an equal footing and not to mop up residual value from outgoing content. The Interview as a use case comes to cap a number of attempts earlier to December in 2014 that have given data that simultaneously releasing a movie in theater and over digital has positive effect or at the worst no effect on the nett cashflow on the business the released movies do in their first week of existence with audience in traditional theater format, on the contrary it helps. Lionsgate’s 2012 day-and-date movie “Arbitrage” generated about $14 million in revenue from video on demand. Other films have done well with similar release patterns, including this summer’s dystopian thriller “Snowpiercer,” which generated $8.3 million in video-on-demand sales.
Apart from the distribution advantages, the chance to release films simultaneously in theaters and through video on demand is an opportunity to reach younger tech-savvy audiences and offset declines in the once-lucrative DVD business. The economics of digital distribution works well for studios, which get to keep a bigger portion of the sales from video on demand. Movie studios keep 70% to 80% of the VOD revenue, whereas theater companies get roughly half of the money generated from ticket sales. Theater chains see things differently. They have resisted efforts to shorten the window between theatrical and home release, which is currently about 120 days, down from 150 a decade ago, according to the National Association of Theatre Owners. They fear that showing movies in the home close to when they arrive in theaters will keep consumers away from the big screen.
Much recently Erin Brokovich and Ocean’s series fame Steven Soderberg did a similar experiment with his lone creation of the year called “Bubble” which did raise some red flags because it did make some cartels with vested interest nervous who blocked its entry to their chains for not being given exclusive rights. The movies initials were not good but with the release on Video streaming Platforms the movie was able to get access to a wider audience generating word of mouth helping the movie significantly at the later stages both in the theatre and online. This trend has repeated in various movies that did the experiment in 2014. The common argument that it is profitable to get $10 per head instead of a $6.99 a piece for online viewing which many can consume, is totally flat when you analyse that about 90% of the movies released in theatres fail to reach the magic $10 million mark because not everybody is a Leonardo Di Caprio or a Christopher Nolan to get packed houses cross country for days to make the money. Hence VoD seems like the route for a majority of the movies because they have audiences, which are distributed over a wide area and online can be the only platform where they can be presented the movie.
2015 seems like the year that will bring about the inflection point of VoD collections matching that of box office collections for some movies. Movies like The Interview and Guardians of The Galaxy are pioneering examples ,which is boosting the confidence of other distributors. VoD business will vie for taking that revenue whitespace that DVDs have left which was once a very lucrative line for the distributors before companies like Netflix and Hulu arrived. Certainly more and more will hit the inter webs to fly the movies to their audiences homes as bits. Because the risks are little and the gains are many both in reaching out to wider audience and keeping a bigger share of collections.
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