Stratagem North - VOD Trends

Who would have thought that there aren't enough movies in Hollywood? According to exhibitors, it's a growing problem. There's not enough content released by major studios to fill theatres. Since the recent announcement that films on vod will be released only 45 days after theatrical release from what used to be 3 months, exhibitors are really starting to feel the pinch.

As theatrical distributors, we are thrilled to support exhibitors, and, in fact, alternative markets by opening the door for independent films, documentaries, and even foreign films in major theatres across North America.

I expect with the onset of 3D, the future success of theatres will be based on the quantity of qualified content, regardless of whether films fall under a major or alternative bracket.

Priti Ramjee, CEO, Stratagem North

More and more fine foreign films are trying to reach US audiences. It's really not that difficult today to reach the US market since 90% of internet users in the US are watching films online.
Therefore, for exposure to the US market, you need online promotions.

Peepli [Live] is the latest upcoming Indian Film being compared with Slumdog Millionaire, and trying to "break into the US market" according to Newstimes.com. Under the Midas touch of Aamir Khan Productions, it can only be a box office success in India. It's not surprising to see a budget of Rs. 100 million (approx. $2.1M) including marketing, and Peepli raking in Rs. 70 million (approx. USD$1.5M) on its opening day.

For the Midas handshake, Peepli needs to promote online to reach its US viewership.

-- Priti Ramjee, CEO

As I was having coffee with friends yesterday, it became clear that the investment avenues of choice after the real estate market tanked, were entertainment and technology. Better yet, entertainment technology combined.

What exactly is that? Broadcast and cable rights of video on demand (VOD). This is the next real estate with increased value upon completion of a film project. That means purchase the rights when the film is not yet completed but is 100% financed to minimize risk. And sell at a higher value when the film is completed.

Even better major studios won't even issue a distribution contract anymore without the inclusion of VOD rights. Think about it. Your choices are either resell the rights, or you license the rights for income in perpetuity. Either way win win.

Oh, and, the shopping is easy. We have a portfolio of a wide variety of films with VOD rights for sale if you are interested. -- Priti Ramjee, CEO

Picture this, you plug in your laptop to your mega screen tv, and friends and family come over for an entertaining evening of 3D sports, news, concerts, movies, television shows, all from the comfort of your home, on your time. There's just one thing wrong with this picture. Those awkward 3D glasses. Personally, a bunch of people roaming around in those glasses, reminds me of something out of a 60's sci-fi movie.

3D is being pushed at the FIFA World Cup games as FIFA and Sony are showing 25 matches in 3D. Despite the prediction that 3D will take off, currently, in order to have the benefit of 3D, we must have a 3D television set, a broadcast carriers, and also those awful 3D glasses.

Content owners see the growth potentiial which will increase the number of carriers. However, until 3D can be viewed without the clumsy glasses, experts believe home viewing will not be so popular. I have to agree.

The 3D effect in our homes is predicted to become popular from 2015 as costs, technology and content continue to progress. Meanwhile, hang on to your glasses. The future generation will have something to smile about. -- Priti Ramjee, CEO

It's not surprising but still fascinating, the growth in VOD.

According to Infonetics Research, in the fourth quarter of 2009, spending on VOD and streaming content servers was up to $113 million worldwide. That was up from $106 million in the third quarter. As a comparison, the 2008 total revenue was $407 million. It was up to $460 million in 2009.

-- Priti Ramjee, CEO

The Independent film business may be facing tough times trying to secure theatrical distribution. But, I see this as giving them an edge over the majors.

Traditionally it was thought that video on demand release could hurt theatrical box office take if released at the same time. True, but, in fact, it reduces the profitability with VOD and DVD instead. Since profits from theatrical and each ancillary avenue belong in part to the producer, a collaboration for all revenue streams to work together would be to the filmmaker's benefit, you would think. But, the problem is when you're not independent, you don't have control. And, a major studio doesn't need to share.

Independent films, on the other hand, are just that -- independent. They have seen first hand the benefit of the Tribeca Film Festival as it set a new standard for video on demand by making it available to people who couldn't make it to the screenings in New York. The collaboration amplified the buzz and filmmakers recognized that they were able to capitalize even more on the screenings from the festival!

I think VOD will be dominated by the independent film market. And, more importantly, independent filmmakers are about to enjoy a new avenue of profitability. Looks like VOD could be the independent filmmakers new BFF. Ka-ching! It's about time!

Well this isn't VOD news but it's so bizarre I had to blog about it.

If you're looking for a house in Long Island, New York, the colonial house from the movie The Amityville Horror from 1979 is up for sale. Asking price is $1.15 million US.

It is depicted as a true story with horrific, supernatural events experienced by the owners who claimed the home was haunted as a result of grisly murders that had occurred there.

This would make a great filming location, but to sleep in.... that's a different matter.

We can see how Video On Demand (VOD) is remodeling the television landscape. All it takes is your laptop plugged into your TV and voila! Unlimited domestic programming at your demand.

And what's more, with the FCC ruling, VOD is taking away the theatrical monopoly on first-run films! Let's note forget how VOD is replacing a significant portion of DVD rentals.

VOD has made its statement in the domestic market. It won't be long before we see its global effect. -- Priti Ramjee

Producers today enjoy revenues from domestic and worldwide theatrical revenues as well as ancillary income including domestic online and cable Video On Demand.

Emerging markets such as Brazil, China, India, Chile, Poland, Russia, Mexico and others could soon be adopting online VOD if network technology, content, and competitive advantages can be developed.

This will be a breakthrough for producers to receive yet another revenue stream from films as Worldwide Online Video On Demand. -- Priti Ramjee, CEO

All it takes for VOD to compete with theatres is to have films released on VOD on opening day. And, the time has come!!!

From the New York Times: “[The F.C.C.] approved a request to allow companies that sell movies via video-on-demand services to activate signals that would block the copying or other re-use in home entertainment systems of recent releases.”

This means that movie theatres can release films in a VOD format without having to worry about it being copied hence losing theatrical revenue.

So, now that there are options, on opening day, would you go to a theatre, or would you watch from comfort of your cozy couch? -- Priti Ramjee, CEO

So it doesn't have a major film studio attached to it. Does that make it any less worth watching? I think we give too much credit to the majors.

Today a combination of foreign and domestic theatrical, ancillary, with focus on Video on Demand is what will be the money maker for producers and investors, rather than having major studio attachment. It's true that A-list talent are typically synonymous with major studios, but also with higher costs. In addition, majors will secure all rights including VoD, preventing the additional significant revenue stream from a specialized VoD distributor.

With a theatrical distribution agreement, foreign presales, and a separate Online VoD distribution agreement, a low-budget indy film may be ahead of the game.

Change is imminent and about time.

I came across a great article by Robet Niles of OJR: The Online Journalism Review.
He believes that "video on demand, via the internet, is the future of home video delivery",
surpassing television entirely.

I agree. VoD provides the freedom from broadcast schedules. As soon as it is in VoD inventory it is available. He makes a good point that, "Brand value will shift from the network to individual show". I think it's a true benefit to Producers to get recognition for their own work rather than the strength of the network.

It will only be a matter of time before video news and other entertainment catch on as well, on VoD especially without intermittent advertising.

http://www.ojr.org/ojr/people/robert/201004/1838/

Counter Culture - Independent Filmmakers' Resource made an interesting point in their blog about this year's final season in television.

Aside from the fact that fans will miss Lost and 24 as they end their runs, what's even more profound is that this is the end of "appointment television", and that this is the start of watching tv on your time, on your schedule, at your convenience, online. "...people are currently watching television in a very different way than how they were used to for the past 50-60 years".

In the near future, there may be some questionable looks to the expression, "What time is it on?"

http://countercultureprodco.com/blog/?p=4554&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CountercultureProductionsBlog+%28CounterCulture+Independent+Filmmakers%27+Resource+Blog%29&utm_content=Google+Feedfetcher

Video game adaptations haven't been a big hit in Hollywood. Will "Prince of Persia: The Sands of Time" based on Jordan Mechner's 1989 classic video game franchise change that?

Jake Gyllenhaal, Gemma Arterton (Princess Tamina), Ben Kingsley with director, Mike Newell believe fans of the game will not only be impressed, but that it will will re-invent video game
adaptations. Jake Gyllenhaal stars as Dastan, a street-dwelling rascal who so impresses the local ruler with his skills, adopted as a prince, the heir to the throne. When the world is threatened by an evil Vizier, Dastan teams up with the lovely Princess Tamina (Gemma Arterton) on a quest to recover the Sands of Time and save the kingdom, and the world from the ultimate sandstorm.

Fans will undoubtedly be looking for their favourite video game elements. Fans will recognize elements from "Warrior Within" and "The Two Thrones."

So far, the reviews say that the images and trailers look promising.

If this catches on, 3D will have a whole new genre of content.

The one thing on everyone's minds about VoD is, "What about piracy?". Looking back at how the music industry was affected, there is a concern about how it will affect the economy of the growing digital distribution market.

The good news is that groups are pushing for a public policy agenda. The industry aims to make piracy more inconvenient with finding content and downloading with tighter policies on the risk of getting caught and the punishment. On the other side, more simplicity for consumers in acquiring content legally by paying for content that they download.

It can be done. iTunes sold over one million songs in its first week of operation showing that consumers are willing to pay for content if its easy to find, and reasonably priced.

Some statistics from IPTV News:

"The French video-on-demand market grew by 57.7% last year to generate revenues of an estimated €82.4mn, according to NPA-GfK. In 2009, 64.9% of VOD revenues were generated by films, followed by adult content with 30.4%. In the film category, US films took 58.6%, followed by French films with 30.9%, and others with 10.5%. "

For more in this story see http://www.iptv-news.com/iptv_news/april_2010_2/french_vod_market_up_57_in_2009.

Unlike Online VoD, Cable VoD advertising has hit a hurdle with timeliness because its ads are loaded several weeks in advance. Internet VoD advertising is timely and contemporary with ad insertions that can be more efficiently updated.

As of this year 90% of internet users in the US are watching online video, according to a marketing study by emarketer. Consumers are growing accustomed to the notion that they can watch their favorite shows when they choose, not on the days or times that TV networks have scheduled for them.

Be prepared to see a lot more online advertising, fresh and contemporary, in the near future.

India's got the right idea leveraging VoD effectively with theatrical release and DVD making it a win-win-win scenario for producers, distributors, and viewers.

While VoD continues to climb in the US, many theatrical distributors still won't play in the sandbox with anyone else. They continue to hold VoD rights under their distribution contract while they do not have the platform or associations to generate a profitable VoD revenue stream.

Then, there's the question of 'who's on first'. Theatrical distributors only allow DVD release after their release, and DVD will only allow VoD after their release.

By working together, the rush of each film is hot on each theatrical and ancillary avenue to boost sales and as India has discovered, even towards beating piracy. -- Stratagem North

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Producers still taking a hit as numbers show that US DVD rental revenue fell 14% from one year ago according to first quarter data released by Digital Entertainment Group. DVD sales account for about half of the profits of a movie.The fall is mostly due to the closure of stores such as Blockbuster Inc.

On the bright side, Blue-ray and Digital appear promising. Digital distribution revenue including 'download-to-own' and 'video-on-demand' rentals are up by 27%. -- Stratagem North

FIFA World Cup fans have more than matches to anticipate for in June. Thanks to Sony's professional HD cameras, 25 matches will be shown in 3D.

How successful will this be? Here's the challenge. To properly view in 3D you have to have a 3D tv set, the country's broadcasters with World Cup rights having 3D capability, and special glasses. British broadcasters, for example, are not synonymous with rights. For London most of the audience will be in cinemas. Most people worldwide do not have 3d tv sets. And, glasses without their cohort are not enough.

This is supposed to be Sony's marketing edge to sell its 3D technology. Keeping mind that the industry is still in its infancy, for those that are lucky enough to see the game in 3D, will Sony's technology be able to capture fast moving action without nausea inducing blurry images and move us into the next generation of tv?

We'll soon find out. For some game lovers it could be a match made in heaven.

Home Media Magazine shows statistics in the digital media industry. "First off discs are still king as almost 36 million rented a new release, and 31 million choose to buy 'em. Digital actually did pretty good by making up a third of the pie, but of those 32 million households, only 4 million did it via the internet, while the lion's share went to on demand at 18 million."

Emarketer says that from this year, 90% of internet users in the US are downloading videos. We may see a full 360 on the On Demand vs Packaged Media statistics same time next year.

Some viewers believe that product placement is compromising the art of a film, and feel that they are paying money simply to be sold some products. Well, get used to it. The truth is that for film producers, product placement is becoming more and more of a financing necessity as a result of high costs and scarce access to film funds.

Already we see advertisements before films begin. Where will this lead? Will films be synonymous with television's intermittent commercials?

Some might enjoy taking a popcorn break without missing anything. I take product placement over mid-roll advertising any day, if it means making quality films.