For the
past two years, DTC has noted a slower pace of growth in video on demand (VOD) title
sales among pay TV providers. It's still growing globally, thanks in part to an
overall rise in pay TV subscribers, but the growth rates could be better. The
cause of this sluggish pace is fairly well known: alternatives such as Netflix
are taking their toll. But based on my own recent experience, we can add
another: lousy marketing.
For five
years, I’ve been satisfying my VOD fix with Amazon’s Instant Video
(accessed via my TiVo). My version of Amazon's Internet VOD isn’t all that "instant"
– the Series 2 TiVo doesn’t support streaming, instead, videos are downloaded
to the hard drive. This causes anywhere between a 30 minute to two hour wait,
depending on network traffic and other variables. That's typically not a
problem for the adults in the house, but it does become a hassle when trying to
quickly pacify the children.
Then,
by sheer accident, the family discovered that Cablevision, my cable TV provider,
offered its own VOD service. (You would think someone who spends an
inordinate amount of time in the pay TV world would be intimately familiar with
his own local offerings, but then you haven’t heard the one about the
shoemaker’s children…). As a basic cable subscriber, I thought VOD was either
out-of-reach or too cumbersome to order (anything involving a phone call is a
no-no). But lo and behold we found a modest selection of movie titles for
instant viewing. Not a lot, but enough for our casual needs.
Videos,
particularly new releases, cost about $1 more through Cablevision than through
Amazon but despite my penchant for thrift, I'd gladly eat it (I think of it as
a 'convenience premium').
The net
result of this discovery has been anywhere from a $4 to $10 monthly shift of
rental cash from Amazon to Cablevision.
The
only conclusion to be drawn from this sample size of one is that Cablevision
missed the boat, big time: I've been a cable subscriber for five years and
don't recall a single piece of advertising - online, on TV or in print - that
promoted this service. All that time, Amazon was capturing my VOD dollar (and not
making a profit, amazingly).
There's
good reason to believe I'm not alone. Several consumer
surveys have noted a serious lack of awareness of pay TV VOD offerings.
The industry has even fumbled the more lucrative theatrical release market,
where a film is available simultaneously in theaters and via VOD. According to survey
by the studio Lions Gate, almost 90 percent of movie goers had no idea that the
recent movie Arbitrage was available
for viewing on demand on the same day as the theatrical release.
Clearly,
more needs to be done to get the word out or Netflix, Amazon et al. will
continue to eat the pay TV provider's lunch. Globally, Netflix in particular has
been pushing into new markets. If pay TV providers in Europe and Latin America
and other markets targeted by Internet VOD players want to retain their VOD
revenue, they'd do well to learn from the failures of their North American
counterparts. Or suffer their fate.
