Threatened by the growth of movie rental services like Netflix and Redbox, a consortium of cable companies have enlisted Hollywood’s help to launch a $30 million marketing campaign to promote video-on-demand through their set-top boxes.
The effort, dubbed “The Video Store Just Moved In,” aims to educate digital cable customers on the ease of renting a movie with a remote control through a series of TV, print and online ads.
The marketing move is essentially a way to further brand and “expand consumer awareness” of the Movies on Demand service available on at least eight major cable service providers.
The campaign introduces a green Movies on Demand logo that will be used by cable companies and studios in marketing materials.
The logo will enable cable companies to “rally around a brand” and let it stand out from rivals, said Mike Dunn, president of Twentieth Century Fox Home Entertainment Worldwide. “If you create a brand and unifying theme, it creates a way for the consumer to find it and use it.”
That’s important at a time when DVD sales continue to decline and studios are looking for ways to make sure their homevideo divisions remain lucrative moneymakers through various windows.
Warner Bros. has been leading the charge for studios in getting Netflix and Redbox to hold off on renting movies until 28 days after they bow on DVD in stores. Redbox rents movies for as little as $1 a day.
Yet the studio is using the availability of films on VOD the same day as their DVD releases as a major selling point of the Movies on Demand service. It will release “The Blind Side” on VOD and DVD at the same time next week, for example.
Without the need to produce and distribute physical DVDs, Warner Bros. and other studios are able to collect a higher percentage of profits through VOD. The day-and-date availability also enables them to charge more through Movies on Demand, especially if bought in high-definition. Pricing varies depending on the title and cable operator, normally around $5.99 for new releases.
At the same time, studios are eager to keep cablers — which carry pay-TV services like HBO, Showtime and Starz — happy with more exclusive titles.
“Warner Bros was the first major studio to test day-and-date on-demand back in 2006, and the results have been so positive that nearly all of our titles will be day-and-date this year,” said Kevin Tsujihara, president of Warner Bros Home Entertainment Group.
Fox also said it is upping the number of films it distribs via VOD day and date, because its VOD business has increased 33% over the past year.
“We’ve offered three times the number of movies we did a year ago,” Dunn said. “We’ve seen on-demand rentals hit an all time high this past year, and research shows that it will continue to grow.”
Cablers have seen their VOD businesses grow considerably over the last several years. Comcast, for instance, first launched its VOD service in 2003 (but movies still represent just 7% of its business, coming in second to a very robust TV business). Overall, VOD has grown to 350 million views a month.
The cabler started offering movies day-and-date with DVD releases in 2007, beginning with “The Astronaut Farmer,” and offered nine films that way in ’07. That number grew to 35 pics in ’08, and more than 100 last year. Comcast will offer 60 films during the first quarter alone this year.
“Consumers are accelerating their use of Movies on Demand because it’s the easiest and fastest way for them to find and enjoy top new releases,” said Derek Harrar, senior VP and general manager of video and entertainment services at Comcast.
At least eight major cable companies, including Armstrong, Bend Broadband, Bright House Networks, iO TV, Comcast, Cox, Insight and Time Warner Cable are partnering on the new VOD marketing campaign, with eight studios partners that include 20th Century Fox, Focus Features, Lionsgate, Rogue, Sony Pictures, Summit Entertainment, Universal Pictures and Warner Bros.