Julia Stoll
Research expert covering TV and video media
With theaters closed during the coronavirus crisis, producers and film studios had to adapt their strategies to generate revenues and compensate production expenses. Even in the early stages of the pandemic, major studios like Universal began to sell their first-run movies via premium video-on-demand (PVOD) – releasing content on streaming services and in cinemas at the same time or shortly after the movie’s scheduled for theaters. Although this business model is not an entirely new concept and had already been experimented with a decade ago, during the pandemic PVOD quickly became an appealing option for film fans forced to stay at home. In fact, a survey held in June 2021 found that one third of the U.S. population had already paid to watch a film that skipped its cinema run due to the coronavirus, up from 19 percent as of July 2020.
Prices for premium content on streaming services
PVOD is typically part of transactional video-on-demand (TVOD) services such as Vudu or FandangoNow, where users access content on a pay-per-view basis. During the COVID-19 pandemic though, subscription video-on-demand (SVOD) platforms got on board as well. Disney for example premiered its live-action adaption of “Mulan” in September 2020 for a premium fee of 29.99 U.S. dollars on its SVOD platform Disney+. This is higher than the standard price of PVOD content, which tends to be around 19.99 U.S. dollars on average. However, some consumers would be willing to pay more than the standard rate, with a survey from October 2021 among U.S. adults finding that nine percent were prepared to pay an average price of over 20 U.S. dollars for PVOD. In general, households with kids are more likely to pay for premium content on VOD services. As of May 2020, 39 percent of consumers with children at home paid to rent PVOD content, compared to just 22 percent of the total survey sample.Revenues of PVOD movies
In 2021, a report revealed that retailers generated an estimated 525 million U.S. dollars in revenue from premium releases, excluding Disney+ Premier Access. However, Disney separately reported a revenue of 933 million U.S. dollars from the combined PVOD sales of the movies “Widow,” “Cruella,” “Jungle Cruise,” and “Raya and the Last Dragon,” as well as the UFC pay-per-view fights on ESPN+. This marks an increase of 70 percent from the revenue generated in the prior fiscal year, clearly demonstrating the importance of providing theatrical movies on streaming platforms, despite theatrical movies still contributing the lion share to studios’ generated revenues.Is PVOD here to stay?
Although studies investigating post-pandemic media consumption have found that about one third of consumers are likely to quit some streaming services once the public health situation improves, the end of the pandemic will not necessarily mean the demise of PVOD. Over half of respondents to an October 2021 survey stated to prefer streaming first-run movies at home over watching them in theaters. Furthermore, experts believe that PVOD could be complementing the cinema business and resulting in a shorter theatrical window. Universal, for instance, announced that most of its movies would be made available on Peacock as early as 45 days after their release in cinemas taking effect in 2022. With people returning to the cinema again, this would involve that PVOD could stay as an option for consumers watching new releases digitally at home.
