While PVOD only picked up steam out of sheer necessity following the pandemic-induced mass theater closures, it is now a prominent window for studios’ high-profile theatrical releases as consumers return to the cinema, according to Morning Consult’s latest report, wrote by media and entertainment analyst Kevin Tran.
In 2020, PVOD meant paying a minimum of either US$20 or US$30 respectively for a simultaneous theatrical and on-demand release (such as “Bill and Ted Face the Music”) or a streaming-exclusive release (like “Mulan”). Now, PVOD typically refers to studios charging a minimum of US$20 for at-home access to a film after an initial theatrical window.
However, this business model is still far from mainstream: Morning Consult data from July shows that only 14% of all adults in the United States said they paid a one-time fee of US$19.99 or more in the past month for at-home access to a movie that was still playing in theaters. Still, the PVOD user base is not immaterial, given the types of consumers that constitute it.
As studios back away from prioritizing subscription video-on-demand growth at all costs in the post-Netflix correction era, the PVOD release remains a valuable tool for studios seeking to maximize a film’s revenue before heading to streaming services, the report says.
Diving deeper, Morning Consult’s data shows that those who pay for PVOD are more likely to be young, identify as Democrats and hail from high-income households. Furthermore, the bigger the fan of video streaming, the more likely they are to purchase films on PVOD: 7% of consumers who subscribed to one or two video streaming services made a PVOD purchase that same month, but that figure jumps to 31% among those who subscribe to five or more streamers. This also reinforces the researcher’s analysis — namely, that the biggest content consumers will seek out movies from whatever medium in which they are available, rather than letting viewership in one format eat away at viewership in another.
Meanwhile, those who pay for PVOD also tend to have broader entertainment interests. Those who are interested in video games, e-sports and sports gambling are at least twice as likely as the average US adult to have made a PVOD purchase. This is partly attributable to the prevalence of higher earners in these consumer groups: roughly 3 in 10 consumers with a household income of US$100.000 or more reported being either an avid or casual e-sports fan, and the same share of high earners said they had bet on a traditional sport at least once.
It also makes sense that gamers in particular would be more likely to make a PVOD purchase — they are more likely to be interested in cinema, with 55% of self-identified gamers saying they went to the movie theater at least once in July, compared with the 36% of US adults who said the same. Gamer interest in film and PVOD could be further stoked as studios continue to invest in turning gaming franchises into silver screen adaptations.
● RAISING AWARENESS OF PVOD
As inflationary pressures continue and consumers look to trim entertainment expenses, Morning Consult considers it is unlikely that the PVOD user base will expand in a significant way during the remainder of the year. That said, while the user base of PVOD is not negligible, it is still nowhere near that of SVOD — 82% of US adults said they watched content on a video streaming service at least once in the past month — and studios could do more to ensure that they are making the most out of current market potential.
“Firstly, it is too difficult to figure out where to get PVOD release information on social media (Warner Bros. Discovery has over 20 verified Instagram accounts as of this publication), so consolidating the number of studio accounts on major platforms could help streamline information dispersal. Secondly, the current release announcement strategies from studios on social media platforms are not aggressive enough, likely causing studios to lose out on many younger, higher-earning consumers who would otherwise pay for early digital access to these films,” Kevin Tran commented.
While the lean promotion strategies may be due in part to fear that PVOD could cannibalize box office revenue, Tran believes studios should not be overly concerned. Though PVOD revenues are not reported regularly like box office numbers are, most 2021 theatrical films released in North America achieved similar levels of revenue expectations regardless of whether they were available on PVOD, according to Ampere Analysis.
“Any revenue generated by PVOD is supplemental to a movie’s lifetime revenue. These days, getting films to video streaming services as soon as possible is no longer the Hollywood M.O., since consumers are returning to the movies and domestic streaming growth is stagnating,” Tran continued. “Further down the line, we could even see more studios experimenting with charging for PVOD releases on their own video streaming services, rather than just through third-party sell-through platforms like iTunes and Prime Video, if there is enough appetite to pay that premium fee,” he concluded.