Why Hollywood is Joining the Video On-Demand Market

September 20, 2017

8:30 am

The idea of video on demand has been around since as early as 1990 when GTE partnered up with AT&T to create the first VOD system. It relied on the use tapes as the source of video streams. Two years later in 1992 VOD servers were capable of supplying previously encoded digital video from disks and dynamic random-access memory (DRAM).

Fast Forward to the present day and look how far VOD has been driven by a vast number of separate technological wonders. VOD pretty much started out as cable TV and then morphed into hundreds of millions of people globally streaming their favorite movies and shows onto handheld devices.

Hollywood studios are jumping on the trend of the VOD market. For example, Warner Bros. is suggesting offering recently released films on-demand seventeen days after debut for a $50 dollar fee. For $30 Fox is willing to do the same 30-45 days after release, while Universal says they may do it in 20 days. If this does happen, we are looking at another huge industry disruption.

Nevertheless, Hollywood is still finding it difficult to adopt new trends fast enough. This means independent filmmakers are gaining ground against the studios and, in most cases, even surpassing them all together.

VOD Streaming Platforms Are Open for Independent Filmmakers

I am not as bold as to say that by next year, or even in the next 10 years, we’ll see tumbleweeds blowing through the studios of Hollywood. Nevertheless, there is a growing threat from VOD and the freedom it provides. This freedom comes from the option to simply wait until we can find a new box office movie streamed somewhere on the web or available for download from pirate sites. But VOD also provides Indie producers a platform forth which to display their works.

Even as legit VOD sites are steadily gaining speed, movie studios are still seeing their revenues plunge by 30 percent. What this means is, even though Netflix essentially pays for the rights to stream Hollywood movies, it doesn’t even come close to the money studios make from movie theaters.

People in the movie business are getting tired of how slow Hollywood is at adopting new trends, especially in the VOD arena. With Amazon film distribution offering awesome opportunities for Indie filmmakers who want to distribute their works, Hollywood is seeing creative minds leaving and joining smaller filmmaking groups.

For those who are more confident in their Indie film brand, they usually move onto platforms like Hulu that offer income from ad supported platforms (AVOD).

Film-Making Technology Is Crushing Hollywood

Tribeca’s chief creative officer Geoffrey Gilmore said in an interview with innosight.com about Hollywood, “They only want to make a lot of profit.” What he was referring to is how Hollywood only focuses on producing “broad spectacles” that usually cost at least $80 million. This is because the are stuck in numerous contracts and obligations and must produce movies in that range.

On the other hand, quadruple Oscar-winning movie A Beautiful Mind only cost $6 million to make. That movie ended up making over $313 million worldwide. The director of Beautiful Mind Ron Howard is quoted as saying “I wouldn’t be able to get this movie made in Hollywood today.” Back in the day, Howard’s film would have cost him $60 million to produce.

The reason why Howard’s film cost far less to produce than in yesteryear’s is that hi-def cameras and great movie editing tools are cheaper than ever. The amount of groundbreaking, industry-shaking technology there is now is quite more than amazing. It’s at the point where almost anyone with a little technical know-how can produce a movie.

Hollywood is Lacking in VOD Marketing Skills

Paramount Digital’s Tom Lesinski explains, “The way large films are marketed no longer makes sense.” Studios might spend $50 million on saturating the television with trailers, when in reality utilizing social media, much like Indie film producers do, those movie trailers would “whip around the web via Facebook, Twitter and YouTube for no cost at all.” Lesinski continued that this belies “a significant lack of innovation.”

Indie movies are promoted by building them up around a virtual distributed version of a screening event through social media. They take advantage of a fundamental marketing truth that has never died: word of mouth. Social media totally heighten the whole friends-telling-friends factor – it’s more powerful today than it ever was.

To complicate things further, VOD sites such as Netflix and Lulu aren’t simply staying in one country. They are already well on their way to becoming 100 percent global. Though restrictions remain and many countries such as Indonesia are still far from seeing Netflix or Lulu arriving anytime soon, Netflix is already in 190 countries.

What we witnessed happen to both the music and book industries is now bleeding over into the movie industry. Digital technology has allowed filmmakers to produce high quality movies, while marketing and distributing them in new ways. It isn’t just a localized transformation either. It is becoming a global movement.

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Chris is father, husband and all-round computer geek who had privilege to watch technology rising from its bare beginnings and powering life as we know it today. Worked as software architect and developer for some of the biggest brands. Human rights activist and digital freedoms advocate. Also, the green tea connoisseur.

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