Here’s the 6 Reasons Why You Don’t Know More About VOD Numbers

Here's the 6 Reasons Why You Don't Know More About VOD Numbers

Video on demand is the future. So why doesn’t anyone want to talk about it? 

We all know when there’s a VOD blockbuster, like Roadside Attractions’ “Margin Call” or Magnet Releasing’s “Black Death.” However, if extracting the numbers that quantify their success is difficult, getting any information about the thousands of other VOD titles — the performers that create the averages, which inform the strategies for indie filmmakers — is impossible. 

All of this makes for an awkward reality: As VOD continues to grow across multiple platforms and it becomes the outlet where many indie films will have their best chance of finding an audience, it’s happening with an opacity that denies reality checks. 

So when will people start sharing VOD numbers? After asking the major players in the industry, we have an answer: Not until they have to. 

Here’s a breakdown of why you don’t know more about VOD.

Because they don’t want you to. As Rentrak chief research officer Bruce Goerlich said, “The barrier is a business structure; it’s not a technological structure.”

Goerlich said that the lack of public reporting on VOD data comes from the way the technology was founded. “The reality is that we do have the information,” he says. “But we are constrained by what we can report because of arrangements between the operators and the content providers.”

According to Goerlich, when VOD began about eight years ago, it was a way for cable operators to provide value-added service for subscribers. There was little interest in reporting transactions. 

Today, of course, VOD is big business. According to a report by the Digital Entertainment Group, VOD spending in 2011 increased by 6.7% from the previous year to approximately $1.87 billion. Goerlich estimates that Rentrak gathers data from about 80 million set-top boxes across 35 major operators. And while some believe that data is too disparate to easily collect, Goerlich said that’s not the case. 

While it’s more complex than, say, gathering ticket sales from movie theaters, the third-party data warehouses that collect the numbers have just a three-day lag time in reporting. 

Like theatrical box office, the transactions are a private financial arrangement between the operators and their providers. Unlike theatrical box office, said Goerlich, “they don’t want it reported.” 

Distributors know more, but not as much as you might think. While Rentrak has a three-day window, it can be weeks or months before distributors receive their reports. “It can sometimes take six months before you have a real picture of what’s going on,” says Gravitas Ventures founder Nolan Gallagher. 

Part of the problem is while a ticket is a ticket, VOD refers to dozens of different platforms, from Comcast, Time Warner Cable, Cox and Verizon, to iTunes, Amazon, Vudu, Sony Playstation and X-Box. “The word ‘VOD’ is so broad,” Gallagher said. “A per-screen average is such a simple tool to measure. But in VOD, it’s like comparing apples to oranges.”

Some distributors want this to change. Dylan Marchetti, founder of theatrical distributor Variance Films, has worked with several companies on titles’ VOD releases; he calls the lack of of transparency “stunning and infuriating.

“I know filmmakers who have been surprised to receive $600 after being on VOD for six months and filmmakers who have gotten $100,000,” he said. “The surprise is not appropriate.”

Some distributors suggest that it may be as simple as a fear of the unknown. “I don’t think anyone wants to be the first,” said Nancy Schafer, executive VP of Tribeca Enterprises, parent company of theatrical and VOD distributor Tribeca Film.

Gallagher took that chance at SXSW earlier this month when he released a document that showed the breakdown of the VOD numbers for a handful of Gravitas-released films, including a detailed numbers behind films such as “The Bill Hicks Story” as well as the narrative film “5 Star Day” and the documentaries “Billionaire” “Elephant in the Living Room,” “DMT: The Spirit Molecule” and “Fat Sick & Nearly Dead.”

But a lot of distributors don’t. IFC Films, which said it releases about 50 VOD titles annually, declined to make any further comment for this story. And Eamonn Bowles at Magnolia Pictures, which and pioneered the “ultraVOD”  model (i.e., films released on VOD before their theatrical dates) argues that simple number-crunching isn’t good for the business.

“It’s such a simplistic abstraction,” says Bowles. “It doesn’t account for money spent and all the other parts of the equation. It doesn’t reflect economies of scale. If we go down that reductive road, it doesn’t help us. There’s no context for those numbers.

“We’re not about bragging,” he continues. “That’s the problem with the industry, all the dick-wagging that goes on. When you start going to the lowest common denominator, it makes it harder, not easier.”

Bowles also notes that the indie films’ numbers aren’t terribly attractive compared to their studio counterparts. “You don’t want to be lumped in with the ‘Twilights,'” he said.

Still, looking for change? Watch TV. As the VOD market matures, “data analysis will be increasingly important,” Gallagher said. “And the market will demand better data to make better decisions.”

As to when that moment will come, it probably will be after VOD data for TV is made public. Goerlich said he believes that TV VOD reporting will mature faster because it has to: networks rely on viewer statistics to support ad revenue. “In an advertising-supported business, they need to have more transparency,” he said. “There are no hidden numbers in those businesses.”

However, since movie VOD is a transaction between cable operators and film companies, there’s less incentive for that information to be made public. “And going from a closed market to an open market doesn’t do anything to help the cable operators,” he said.

In the meantime, filmmakers can do it for themselves. If companies won’t educate filmmakers about the revenue VOD generates, Marchetti suggested that producers should share that information amongst themselves. 

“The one thing that I always preach is that filmmakers do eventually get their numbers, so the more they put that information out there, we can create a database of information,” he said. “If filmmakers can say, ‘This is exactly what I made,’ this will be able to help other filmmakers plan better, market better and cash-project better.”

Marchetti also said that the more information there is about VOD grosses, the more theater owners might feel less threatened about theatrical and VOD day-and-date releases. “It’s not necessarily an antagonistic relationship,” he says.

But industry sources suggest that it’s still going to take time for companies to come forward. “My philosophy,” says Tribeca Film general manager Todd Green, “is that I’m not concerned with how other companies are doing. I know VOD is working for us. And when the industry is ready to share, it’ll happen organically.”

But when we asked Green about what kind of numbers Tribeca’s top VOD success, the reality TV horror film “Grave Encounters” grossed, he replied, “I’m not going to answer that.”

This Article is related to: Filmmaker Toolkit and tagged ,


Comments

brian fantana

it is kind of humorous to see the rants about transparency about the VOD #'s – why aren't these same folks ranting about transparency about TV revenues or Netflix/Amazon/Hulu streaming revenues (I won't include Snag in that as apparently there are no revenues there) or DVD or airline/hotel revenues? Movie ultimates (and the success and failure of all movies) are based upon all of these revenue streams and only one (Box Office) is listed in the trades – Rant about transparency around all revenue streams – that is what will give you the better picture of success/failure – the successful companies/films that aren't being "transparent" all look to have happy filmmakers and movies showing up in top categories in iTunes, on pay tv, on DVD, etc etc etc – why isn't Anthony Kaufman taking the studios to task for not releasing all these other revenue streams to the public – they are just as meaningful and to not understand these basic economic principles of the movie business and merely holding up transparency of VOD reporting is very simplistic

Orly Ravid

Folks! We published real numbers including VOD (and the very ones used at the SXSW panel which I moderated) in the book SELLING YOUR FILM WITHOUT SELLING YOUR SOUL (www.SellingYourFilm.com). Thanks again to the filmmakers of American: The Bill Hicks Story and Gravitas and all the others who were transparent about their numbers. The REAL NUMBERS can be found here too (via this PDF link):

http://www.thefilmcollaborative.org/sxsw/American_VOD_SXSW2012.pdf

May all the distributors and filmmakers be transparent for the betterment of the filmmaking community as a whole. Happy Trails.

Dave

I must say that, as a writer-producer-director (ie, a "filmmaker"), I am greatly offended by those who would say I wouldn't understand how to interpret VOD numbers.

Anyone with a brain & experience in this business understands that Box Office figures are not a final indication of a film's profitability and knows what the cash really goes through when trickling back.

So, it's likewise our job to learn how these different VOD venues work and understand them. But we're not stupid nor incapable of figuring it out.

Let's have the information. These figures are essential for us to perform our jobs as producers.

Judging from the situation at the moment–and setting all the rhetorical doubletalk aside–we can at least make the "qualitative" observations that [a] VOD revenues are much better than anyone is fessing-up to, though they certainly may not overall be up to the DVD sell-through days–but you knew that was going to end anyway (okay, the majors obviously didn't but that's no surprise), [b] a studio/distrib makes more money from a VOD transaction than a disk sale because it does not have to manufacture a tangible item, and [c] Redbox and S-VOD (ala Netflix) are undermining decent film revenues for everyone.

One thing not mentioned here so far is that fact that there are often too many middlemen involved in the VOD process. When one aggregator has to go to another aggregator who has to go to yet another to place a film on a single service, it goes beyond the absurd. And THAT has got to stop.

Rania

To add to this discussion, check out this story on digital distribution, which includes interesting quotes from filmmaker Morgan Spurlock and Snag CEO Rick Allen.

http://www.indiewire.com/article/digital_distribution_gigantic_exposure_pathetic_revenues

Ellen

Where's Gallagher's document with the info he shared? Anybody have it?

Brian Newman

This is a great start of the conversation, and IndieWire should keep pushing on this. Internet VOD is a big part of this, and it would, ahem, seem like a good place to start is with Snag.

J. Courshon

From this article:
"Bowles also notes that the indie films’ numbers aren’t terribly attractive compared to their studio counterparts. 'You don't want to be lumped in with the Twilights,' he said."

This is not a reason for not releasing VOD numbers, but of course it's true that indie films do not typically perform anywhere close to the Studios' films. Lack of advertising money spent by the indies, lack of awareness (if the film didn't have a major theatrical release), and lack of being on some VOD systems. DirecTV, for example, rarely offers indie films on their (roughly) 75 VOD channels. Maybe a couple times a month, they'll offer a film that didn't have a major release (or any release), and DirecTV has a huge subscriber base. This is going to have quite an impact on an indie movie's bottom line, on these cable/telco/satellite systems.

It's vitally important for Producers & Directors today to think about strategy and approaches prior to making deals with VOD providers, or exploiting the VOD landscape if DIY'ing their film. It is not enough to simply have your film up on the VOD platforms, and hope people will find it & buy it.

JC
———-
"THE SECRETS TO DISTRIBUTION: Get Your Movie Distributed Now!"
http://www.Distribution.LA
http://www.facebook.com/FilmDistribution

Richard Atkinson

Our latest award winning indie Dogs Lie starring Ewa Da Cruz, Samrat Chakrabarti and Frank Boyd will be released 4/24/2012 by Vanguard Cinema. http://www.dogslie.com. As producer and director I too have had trouble with previous films getting a handle on VOD revenues and thought your article informative and realistic.

eliz

I'm a producer, and if there are any numbers out there, on any platform….I wanna see them….I wanna know where to put my energies, and to do that I need as much information as I can get about my audience…..because it is already a moving target……one can work backwards from the numbers and try to figure out what they actually mean at any given point in time….we re not talking about brain surgery or space travel….without numbers we're really working in a vacuum. Sure its hard to compare performance of films in that each one is unique….but we all want the same thing,we 're going for the same audience, we want as many people as possible to watch our films and we wanna make enough money to make more films….and pay the rent.

James Glasscock

I've studied VOD title data from Rentrak for nearly 6 years.
Lots of good points in this article.

Here is the 1 sentence synopsis.
Transparency does not benefit distributors who have overheads and distribution/marketing expense line items they prefer you not be able to correlate to granular revenue or order volume.
Ok and a 2nd sentence: creative filmmakers do not usually have a strong understanding of distribution economics and consumer behavior. If they did, there would be less filmmaking and less film investors in the market. Distributors much prefer a model of where content supply > demand.

The good news is transparency is a natural evolution for this business. Many DIY models, albeit small, already have this. The Hollywood Accounting model is an endangered species. God bless the filmmakers who are long due deserving this!

Benjamin

I think this article is an excellent jumping off point for further discussion. But it attempts to cover the spectrum of film distribution in relation to potential VOD reporting.

To begin with – Box Office reporting is already somewhat misleading in regards to the profit of the film vs. how much was money was spent on the backend. I think what filmmakers really want to know is: "how much money am I getting back?" A very valid question / concern indeed.

But I don't see that reporting VOD in any official fashion is going to aid them in the answer to this query. In fact, it could serve the opposite purpose.

But it all depends on what type of film we're talking about and the distribution model it went through.

There's a MAJOR difference between Magnolia's process of distribution vs. Variance – a major difference between having a reputable company distribute your films vs. a service deal or even being on your own.

If any sort of "information center" on VOD numbers were to be created it really would only serve those using the self-distribution or service deal model. But based on the sales at Berlin, Sundance and SXSW it seems that filmmakers/producers would rather have an experienced company behind them as said companies have potent relationships in both the theatrical and VOD landscape.

If the established companies who specialize in independent distribution or otherwise were to report it could potentially confuse filmmakers and other distributors alike whose deals with different VOD outlets are going to be radically different. The numbers would simply not be that valuable in determining the profitability of the film.

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