News

On-Demand Buys Top PPV Orders

5/02/2004 8:00 PM Eastern

In another sign that video-on-demand is entering the mainstream, In Demand LLC reports that VOD movie purchases surpassed pay-per-view movie orders for the first time in December 2003.

The movie supplier said it tallied 3 million VOD movie buys across its systems in December, compared to 2.8 million PPV purchases.

“This is a major milestone for [movies-on-demand] and is even more significant given that VOD has been marketed for just a few short years, and was not available in major markets like New York and Philadelphia until the beginning of last year,” said In Demand president and CEO Steve Brenner.

ACCELERATING IN ’04

“We started out the year as a PPV business and ended it as a VOD business,” Brenner said. “Better still, the transformation of the business that began in the fourth quarter has continued and accelerated through the first few months of 2004.”

The VOD buys come from a much smaller base — 9.6 million digital homes versus PPV’s 22.4 million, he said. Also, Time Warner Cable is the only In Demand affiliate with movies from The Walt Disney Co. on the VOD platform.

“The increase in overall buy-rates in VOD are a reflection of the technology,” Brenner said.

And the earlier windows are also helping, Brenner said.

“We’re getting more and more cooperation with the studios,” he said. “It’s all of them getting more and more titles at 30 days.”

In Demand said 15 titles in 2003 had windows of 30 days or less, compared to four 30-day titles in 2002. The average window has declined from 49 days in 2002 to 45 days in the first few months of 2004.

As a result, two of the top five and four of the top 20 performing titles of the year had 30-day windows. Those 30-day window titles have double the buy-rates of titles with longer release dates, In Demand said.

Brenner believes it’s possible that all movies will have 30-day windows by late 2005.

BIG TITLES DUE

Some of the major titles coming up with 30-day windows including Lord of the Rings: Return of the Kingfrom New Line Cinema, which debuts on VOD June 24. It generated $361 million at the box office.

In July, Mystic River, from Warner Bros., and Barbershop 2, from Metro-Goldwyn-Mayer Inc., will be 30-day titles.

Those two movies generated $82 million and $54 million, respectively, at the box office.

The shift in buys also exacerbates a trend in which operators that have launched VOD reclaim most of their PPV channel space for HDTV or other programming needs. Operators tend to carry a few PPV-event channels, but much of the bandwidth is being reallocated, Brenner said.

September