Thursday, May 31, 2012

Building critical title mass for digital video services

In the on demand video world, title availability can either help or hinder consumer adoption.  Finally ready to try a new digital video service but can't find your favorite more or a new release?  This experience just pushes you back to the physical world ( and Netflix disc rental).  As the content industry is a few years into an effort designed to increase digital sell-thru (vs. digital rental and subscription services) in an attempt to improve their overall margin structure as physical sell-thru continues to decline, they have developed UltraViolet as a way to encourage consumers to build a digital catalog at home, across multiple services, DRMs, and devices, to gain the freedom they experience with physical DVD or Blu-ray.  The most obvious way to do this today is thru Walmart's Disc to Digital program on their Vudu digital video service.

A few weeks ago, while reviewing the Walmart / Vudu disc to digital program, I was surprised at how few titles of my desired catalog were available on Netflix (I had assumed a large percentage of the DVD's in my closet would be available on Netflix).

Intrigued by this, I decided to explore further over the past few weeks and decided to check the availability of titles in a proverbial "Top 100" list for various digital video services. In addition to checking on the Disc to Digital service (still nascent), I thought I would check iTunes, Vudu and Amazon (digital rental and sell-thru) as well as Netflix and Amazon Prime streaming and compare them to what should be the "gold standard"--available for sale on DVD or Blu-ray from

The first step in any good comparison is the source of the data. I combed thru the AFI (American Film Institute), AMC (theatre chain) and IMDB top 100 lists (IMDB does a top 250). I wanted to make sure the list was some what representative of the demographic for digital video consumers, and based on my view of the titles in the list (and the method of selection--IMDB takes consumer voting), I chose the IMDB list. Note of caution here--Amazon owns IMDB.

Not surprising at all, 99 of the Top 100 titles were available for sale on in the DVD format (our gold standard). The only title not yet for sales on DVD was the recently released Avengers movie, which won't release on DVD until this fall. 88% of the titles were available on Blu-ray for sale from indicator that not all Top 100 titles are viewed equally by their rights owners.

Also not surprising, Netflix offers 96% of those titles for physical rental thru their mail-based subscription service.

So, as a consumer, if I can wait 24-48 hours (Prime and Netflix shipping service levels), I can have access to all the titles that matter (pretty much).

But what if I want it NOW? Or if I don't want to deal with the physical good hassle? Your best bet is digital sell-thru (SD), with iTunes in the lead at 82%, followed by Amazon at 77% and Vudu at 73%. This is a factor of the complicated windowing of rental vs. subscription video on demand (SVOD), and in recent years, digital sell-thru has escaped this availability problem.

But what if I wanted it now but don't have $7-$20 of appetite for my entertainment? The best best is digital rental (SD), and here Amazon and iTunes are tied at 72%, with Vudu trailing at 62%.

Have to have it immediately on HD you say? Surprisingly, your better option of availability is digital rental across the board, lead by Vudu at 59%, Amazon at 57% and iTunes at 52%. Oddly enough, digital sell thru for the HD format was held back by security concerns and perceived canibalization of Blu-ray sales.

Really want to own the HD version digitally? Amazon takes the lead here, with 54% of title available, followed by Vudu at 42% and iTunes at 34%.

What if you are that value consumer who is willing to wait until the window opens up for a streaming option? You will be disappointed as a paltry 13% of titles are available on Netflix and another 10% are available on Amazon Prime.

And if you have those Top 100 titles in your closet and want to watch them on your iPad? Before you drive to Walmart for the disc to digital conversion, check your titles on their site as only 42% are available in the SD format and a mere 15% are available in HD (again, the UltraViolet capability is still nascent in the market place).

What conclusions can you draw from this?

- Streaming (SVOD) services are not for new release windows--we already knew that with delays being 45 days to 6 months depending on the title an HBO (or Sky in the UK) exclusivity. But even if you just want to watch some great older titles, they are just not there.

- You can have access to a large number of the Top 100 titles digitally one way or another (70-80% if you are willing to live with SD quality and purchase the title). You will find that most new releases are available for sale in both HD and SD the day of the DVD release while some digital rental is still pushed by 2-3 weeks from that day (encourages you to buy more vs. rent more).

- If you have a collection of the greatest titles in your closet, the industry isn't quite yet ready for you to try to convert it in any meaningful way via UltraViolet.

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