TVOD makes a Hollywood comeback

In a shifting screen-entertainment category, there’s a standout candidate for comeback player of the year: TVOD.

Over recent years, the category of transactional video on demand had seemed destined for a Hollywood-style fadeout. In 2019, for example. video-on-demand lost ground, with the amount consumers spent renting movies and TV shows on a title-by-title basis sinking 6.9%, to $1.9 billion.

But that was then. More recently, the combination of a health pandemic, higher broadband penetration, and a budding revolution in home theater systems apparently have contributed to a revival.

Last year U.S. consumers upped spending on VOD by 18.3%, reaching $2.3 billion. Meanwhile, spending tied to the related category of electronic sell-through, wherein buyers get lifelong ownership rights to digitized movies and shows, rose 16.9%, to $2.9 billion.

The big jumps upend at least temporarily the theory that subscription-style services, not pay-per-view schemes, were the wave of the future. More growth could yet be in the offing, considering these amounts so far don’t include revenues tied to a new TVOD category, “Premium On Demand.” The “Premium” category has been on the rise lately up as studios including Disney and Universal pivot from theatrical releases to home video premieres or concurrent releases of feature films on their streaming services.

These numbers come from the Digital Entertainment Group, which examines confidential data submitted by member studios and other entertainment sellers. Besides reporting robust growth for digital VOD at large, DEG reported spending for the subset known as “IVOD,” or Internet-delivered VOD, surged 43% in 2020. IVOD is the turf of providers like Google Play, Vudu, and on-demand rental/purchase storefronts operated by Microsoft Corp. and Sony.

A related proof point about TVOD’s resurgence comes from an analysis of actual Internet video streams. The video streaming data aggregator Reelgood, which has visibility into millions of video stream requests, has chronicled a sharp rise in the share of online video streaming that’s devoted to TVOD. Pre-pandemic, TVOD accounted for 9.7% of total U.S. video streams. In Q4 2020, the share rose to 15%. Falling in the share department was the TV Everywhere category, which ended Q4 at just 8%.

The rise in fortune is a counterpoint to Sony Interactive Entertainment’s decision to exit the TVOD category. Sony said in early March it would stop renting and selling video content via the PlayStation store by the end of August. Sony Interactive Entertainment video business leader Vanessa Lee wrote in a blog post that: “At SIE, we strive to provide the best entertainment experience for PlayStation fans, and that means evolving our offerings as customer needs change.” She continued by saying  “We’ve seen tremendous growth from PlayStation fans using subscription-based and ad-based entertainment streaming services on our consoles.”

It’s true subscription models are all the rage. DEG’s data showed spending on Netflix-style SVOD services leaped 37% last year, to $21 billion – more than 7x the amount spent on transactional video. Still, the fact that TVOD showed a resurgence should give remaining players some confidence the category still has legs. If that’s the case, it raises an interesting question: Who stands to benefit if TVOD can sustain the mojo?

One answer is Comcast, which has emerged as a force in TVOD thanks to a combination of acquisitions along with the ongoing nurturing of its Xfinity VOD services. Comcast has spread its wings in TVOD by virtue of:

Rethinking Fandango. Comcast acquired the online movie ticketing platform in 2007, but the bigger move was repositioning Fandango to offer movie/TV show rentals and purchases starting in March 2016. Now Fandango competes with TVOD veterans like Google, Amazon, Microsoft, and Sony Corp.

Acquiring Vudu. Comcast acquired the user-acclaimed but relatively quiet unit of Walmart Stores last April, giving Comcast ownership of a longstanding TVOD supplier that launched in 2004.

Ramping up Xfinity. In addition to the VOD titles available to Xfinity video subscribers using the X1 set-top, Comcast makes hundreds of thousands of movies and TV shows available via integrations with browsers, Android, and iOS-speaking devices.

The result is a wider presence than any competitor in the TVOD category. Consider (among many examples) the 2021 film “Some Kind of Heaven.” Of 11 ways to watch the documentary title shown on a list shared by distributor Magnolia Pictures, Comcast owns three — the platforms listed above. That doesn’t mean Comcast is necessarily making more money from TVOD than anyone else, but it does indicate the company has made a conscious bet on a TVOD category some had given up for dead.

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