video on demand and the consumer moviescope
24 FPS Blog

Video On Demand and the Consumer – movieScope

Ernest Bevin, foreign secretary in the radical 1945 UK government, famously described his foreign policy as being able to “buy a ticket at Victoria Station to anywhere I damn well please”.

His words spring to mind after a summer of analysis of dozens of user surveys on consumer attitudes to watching films on different devices. Some of the data comes from a series of BFI-backed experiments in day-and-date releases of films in cinema and on VOD, and sometimes DVD and free-to-air television; these ranged from all-star ensemble piece A Late Quartet to Ben Wheatley’s trippy take on the English Civil War, A Field In England.

Those reports will be released in due course, but in the meantime it has been interesting to take a broader look at consumer attitudes to the emerging on-demand world. And, unlike the industry’s often esoteric debates on the subject, surveys show Mr. and Mrs. Consumer follow the Bevin line; they want to be able to buy a film on any platform and watch it wherever and whenever they damn well please.

So, all aboard the VOD train to a brighter on-demand future, then? Certainly, everyone in film is along for that ride, like it or not. And there are genuine reasons for optimism. Some of the subscription VOD services (such as Netflix, LoveFilm, Sky and even some indies, including UniversCiné) are now paying serious money—and occasionally silly money—for digital rights. The battle for subscribers has also seen the commissioning of some new content; Netflix’s original web series A House Of Cards (below) even earned an Emmy nomination.

House of Cards

House of Cards

On the other hand, it is wise not to get too carried away given that VOD, in all its many guises, is still in its infancy. The best policy is to begin with understanding demand. The surveys reveal more complexity to consumer demand than is suggested in that Martini culture—‘anytime, anyplace, anywhere’—cliché.

Indeed, it is useful to see three different dimensions to demand:

• Experience
• Ownership
• Access

The first of these has, rightly, been getting more attention of late. One fact that consistently asserts itself in research, and which ought to be the exhibitor mantra, is that cinema is not a platform.

Polls show that audiences see going to the cinema as an activity with value above and beyond any individual film. The business model works on creating and maintaining a sense of event and occasion. The year so far has been a mixed bag, with some failed blockbusters on one side and the continuing growth of ‘event cinema’, such as opera and director Q&As, on the other.

Experience is important to all platforms, of course. iPads, Smart TVs, faster broadband, etc., have, and will, improve the on-demand offer. But the foundations of VOD business models and, to some extent, the future of film come down to two trends: ownership and access. While not necessarily mutually exclusive, these are distinct and different.

Four or five years ago, the industry assumed the future depended on digital downloads. Rampant piracy took a big bite out of the notion that a download boom would replace lost DVD revenues. Consumers also found little to be loved in owning a file, particularly when it was generally played on a device that did not match the quality of television.

A second issue for the download market has been space on the hard drive. It has taken the world a long time to understand that disk space is not a free commodity. Notwithstanding the still reliable Moore’s Law about the ever-increasing processing power of a chip and better compression technology, films quickly eat up the bits and bytes.

Finally, the price of a download has been an obstacle. The aggressive—and possibly in retrospect—ill-advised discounting of DVD has dramatically reduced what consumers see as a fair price for a film. As a result, a big change in consumer habits has now set in.

Ownership has, in many ways, given way in the on-demand world to access. Music is now fully engaged with this new reality, and film inevitably will follow suit. Possession of an individual file is becoming less attractive than a subscription which allows permanent access to vast stores of content. And it is the subscription VOD (SVOD) giants, such as Netflix and the now Amazon-owned LoveFilm, that are dictating the pace.

But the industry needs to address issues that this promising new source of finance and revenue throws up. A unified voice would be helpful, although the challenges to different parts of the value chain make that difficult. These are:

• Transparency
• Visibility
• Market confusion
• Interoperability
• Consumer price points
• The effect on download and television prices

The last two are matters in need of further research. The price consumers are prepared to pay for ‘Premium VOD’, simultaneous with, or even before, theatrical release is particularly important if it is to become a key factor in acquisition prices.

Interoperability remains a crucial issue for downloads, with consumers showing little patience for buying film from one source (e.g., iTunes) and finding it won’t play on all their devices. The consumer confusion that comes with 700 services currently available in Europe, for example, will probably resolve itself through failure, acquisition and merger. The visibility of both indie films—particularly those without theatrical success—and of indie VOD sites is not likely to find a quick fix, particularly with the vast amounts of available content; being seen may be a matter of improved marketing techniques and more attractive content.

Crucially, that top issue of lack of transparent data ought to be more of an obsession for the film industry. You cannot base an industry strategy or a sustainable business model on the kind of partial or often non-existent data currently available.

So we circle back to poor old Ernie Bevin. Within a few short years, he found his Victoria station ticket didn’t even get him across Europe, never mind the world. Similarly, there’s a long way still to go until the tensions between consumer choice, industry business models and self-interested platforms and services resolve themselves into a free and open market.