Study Shows that Consumers Will Pay More for Early-Release HD VOD

A new industry study revealed some interesting VOD information, Consumers Will Pay $7-9 for Earlier-Release, High-Definition Video-on-Demand and Internet Rental Movies, Creating Billions of Dollars in Industry Growth, Oliver Wyman Study Finds.

A study of 2,000 U.S. consumers conducted by Oliver Wyman, an international management consulting firm, found that a price point between $7 and $9 is optimal for the next generation of video-on-demand (VOD) and Internet movie rentals: high-definition (HD) movies released on the same day as DVDs. This premium over today’s $4 price for standard DVD or VOD movie rental would create substantial market growth by 2010.

Rollout of HD VOD and Internet movies on day-and-date of DVD release is a growth opportunity not only because consumers value them and will pay more, but also because this expanded availability will increase overall movie viewership. The Oliver Wyman study found that that these enhanced offers would lead U.S. consumers to watch and pay for an average of three more movies per year than they do today, creating a net annual increase in domestic consumer movie spending of more than $5 billion, from the current base of $50 billion.

Comments

[Wilson]

Mark Cuban promoted this idea some time ago. I'm all for paying the premium provided I get to choose what device I want it on. I don't want to watch movies on my computer...ever. I don't travel so that doesn't appeal to me. Let me download it and put it wherever I want (My 360, PS3, Tivo HD, etc).

I'd be more interested in same day release movies that come out in the theater, because I definitely don't visit the show anymore.

[Tino]

$7-9? Maybe in a hotel room for a single movie. The average Netflix user who may watch 12 movies a month for $18 is not going to pay $100 just to have those films delivered instantly and in HD.

[Complication]

Surveys are one thing, but wait until the rubber meets the road. Having said that, I think there are people that would pay $9 to see HD in their homes on DVD release day for three reasons. First, most people only watch a movie once even if they own the DVD. Second, at present rates $9 would be less than the DVD at the store. And third, they would not have to get themselves up off the couch to go buy the movie. If they made the viewing time about 72 hours and allow it on any TV in the house then rentals would really be good because then one family member wouldn't need to wait for the others.

Like Wilson, I would pay $9 for VOD in HD but only if it was theater release day/weekend and only for very specific films (i.e. LOTR). Most films I would wait for the DVD from Netflix.

The movies that would not do well as VOD on the DVD release day are children's cartoons. Again, VOD instead of the theater would work because the the parents could skip the trip to the theater. Otherwise, parents would opt for the DVD that the young child could play over and over and over and over and over... and over...

[eviltimes]

I already have HD On Demand from Comcast. It's $6 to $10 a film, and I'm NOT going to pay that much. (These analysts must be high.)

[MiniMonkey]

I'm shocked that people would pay that much and really quite skeptical. As others have mentioned, if it was available when the film was only in theatrical release, that would be one thing, but when the DVD/BluRay is out and can be rented for far, far less, $7-9 seems like an unrealistic price point.

[Corey3rd]

I can see a parent willing to pay that much to get the latest Pixar flix in on their HD screen instead of dealing with taking the kids down to the theater. But did the person also get told that for this service, they can't DVR or duplicate the film?

[valhallas]

As a guy who has surveyed consumer sentiments and rental price thresholds, I'll have to call BS on this study. Either their sampling was skewed, or they had an agenda. Right now what I've seen is that consumers have been happy enough with the experience with standard DVD quality to a point that it has affected the adoption rate of HD. When consumers believe they can rent for $4, and buy/own content for around $20, the concept of a price point in between is met with a sentiment of confusion. In addition, a study like this is a person who does not have a way to watch/use HD capable of truthfully answering what they would pay for an HD rental? I mean really? We're still living in a time where 91% of U.S. HH still have DVD. Heck, even VHS had better sales than HD a year ago.

We're still in an early adoption period for HD and the tail on this will be much longer than a year or two. Day and date release meets with apathy in Hollywood. We need to remember that Hollywood moves on 100 years worth of tradition and nothing happens fast. Even if the right hardware and partners were in place, I still think you're talking about changing consumers habits to make this happen and that is difficult unless you have some compelling enough to kick off the lemming effect.