MarketCast Study Reveals Consumer Appetite for a New $50 Day-and-Date Video-on-Demand Service; But Opportunity to Expand the Pie is Limited

First Broad Consumer Study to Examine How Consumers Would Respond to a $50 Premium Video-on-Demand (VOD) Service that Streams First-Run Movies to the Home Simultaneously with Theatrical Debut.

LOS ANGELES, CA, April 12, 2016 – Against the backdrop of industry controversy, a first-ever research study revealed that 1 in 4 consumers say that they would ‘definitely pay to use’ a service that allowed them to watch first-run movies at home on the same date as their release in movie theaters; however, interest was highly concentrated among the highest avidity moviegoer segments and with parents of younger children. There was little to suggest that the service was additive to overall demand for first-run movies.

The findings were reported by MarketCast, a global entertainment research firm, based on a new study among 1200 American entertainment consumers ages 18-64 that explored how moviegoing and home entertainment decision-making might be impacted by the availability of a new premium Video-on-Demand (VOD) service for streaming first-run movies to the home for $50 per movie via a new set-top box costing $150.

“This issue is not cut and dry, it’s actually fairly complicated,” said MarketCast Vice President (and study co-author) Chris Rethore. “Interest in a new premium VOD service was concentrated among those who are the most active in the category. These consumers—especially parents—are more aware of the fully-loaded costs of moviegoing and have additional incentives to want early access to some films at home. But these consumers are also hugely important to the economics of the current theatrical model, and most see this service as displacing existing moviegoing behavior – not expanding their paid consumption of entertainment content overall.”

Among the key findings of the study are:

Home Day-and-Date Release Service Not Seen as a Stand-In for In-Theater Experience…

  • Half of consumers ‘strongly agree’ that they like the experience of going to the movie theater, and that the new service will not be able to replace that.
  • This finding held whether or not the film in question was a big budget action-genre title (only 21% would choose to watch through a premium VOD service) or a less spectacle driven arthouse film (20%).

…But Study Indicates That New Service Could Siphon Some Moviegoers from Theaters

  • The study looked at interest in paying to see a variety of actual upcoming titles, whether in a theater, at home in the “regular” home entertainment window, or day-and-date with the theatrical release for $50 using the new premium VOD service.
  • One-quarter of consumers who expressed interest in paying to see each movie in the study (either in a theater or by renting/buying in the traditional home entertainment window) migrated to the $50 Day-and-Date Premium VOD service when that choice was introduced—with the vast majority of demand siphoning from the theatrical audience.
  • The overall pie, however, did not expand, with overall interest for each movie the same or lower upon introduction of the new VOD choice at $50.

Cost Looms as a Big Barrier to Consumer Interest

  • Predictably, interest in the new $50 premium VOD service is strongest (at 53% ‘definite’ interest) among consumers who perceive the cost of their average trip to the movies to exceed $50—but fewer than 1 in 4 consumers peg their moviegoing at such a high price.
  • Seven in 10 moviegoers estimate their average trip to the multiplex at $40 or below (inclusive of tickets, concessions, transportation/parking, and/or babysitting), and as a result, fail to embrace the value of a $50 service.
  • On average, interested consumers indicate that they would only spend a maximum of $35 per title to see a new movie at home via this service.

Parents See Far Greater Value in Paying For and Using New Service than do Non-Parents

  • More than 40% of parents of kids under age 12 express ‘definite interest in paying to use’ the new service, compared to only 15% of non-parents, in part because they estimate their total spend on a single visit to the theater at a much higher level ($49 per visit vs. $28 for non-parents).
  • Half of Parents ‘strongly agree’ that this new service would be a great way to entertain their kids, and 6 in 10 agree that this service would be a great way to stay current on films they might otherwise miss.
  • Other groups who over-index for interest in the service include people with bigger TVs, those with higher household income, early adopters, and technophiles.

Set-Top Hardware Requirement Turns Off Most Consumers

  • Nearly 8 in 10 consumers express negativity toward the idea of needing to have another piece of equipment in their home, and even among those consumers interested in the service, more than one-third say that even if it were free, they would not want to have another set-top device in their home. 

About MarketCast LLC

MarketCast, a portfolio company of RLJ Equity Partners and GE Asset Management, is headquartered in Los Angeles, with offices in New York, London, Chicago, Boston, and Denver. Through a variety of consulting services backed by rigorously scientific research methods, MarketCast works in collaboration with marketers, researchers, and creative executives in film, television, OTT, and interactive gaming in the development and execution of their product development and marketing strategies, from early concept exploration through downstream distribution windows. MarketCast combines decades-long experience and global, full-service brawn with the innovation mindset and personalized service of a boutique. Our exclusive focus on global media and entertainment has solidified our position as an industry thought leader and trusted research partner.