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by Anthony Kaufman
April 4, 2012 12:37 PM
16 Comments
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Here's the 6 Reasons Why You Don't Know More About VOD Numbers

"Margin Call," "Black Death"

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."

“The barrier is a business structure; it's not a technological structure. The reality is that we do have the information."- Bruce Goerlich, Rentrak

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."

16 Comments

  • brian fantana | April 10, 2012 11:00 AMReply

    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 | April 6, 2012 9:05 PMReply

    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 | April 5, 2012 2:36 PMReply

    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.

  • J. Courshon | April 16, 2012 12:24 AM

    "[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..."

    Actually, that's not true. Unless it's a significant Premium VOD transaction. The studios' DVDs and Blu-rays at wholesale price to the retailers (and rentailers) -- even after deducting the cost of manufacturing and shipping -- is quite a bit more than their share of the $5.99 price of a new release on VOD from Vudu or YouTube rentals or the cable/satellite/telcos platforms. DVDs and Blu-rays are still the largest revenue generating market for the studios.

    http://www.Distribution.LA

  • Benjamin | April 5, 2012 5:44 PM

    I think you might be taking this too personally. No one is condescending and saying you're too ignorant to interpret VOD numbers - it's just that there really is nothing to interpret. Honestly. You pretty much answered why that is with your tirade against having too many aggregators. No one is hiding information from producers either. If you have a deal with a distributor or an aggregator you will get a report on how well your film did and the money you are entitled to. If you want to make that information public - that's up to you and whomever you made an exploitation deal with. What were talking about here is something akin to a weekly Box Office report that's officially reported by the trades. The box office reports are useful in determining which markets to open in, the life of a film after it's theatrical run and how much to further spend in theatrical marketing. VOD reports really wouldn't aid in any of this. Because of the number of entities and wildly different deals that people have right now - I'm not even sure what numbers you would want reported for which platforms or how that would assist you in your job producing films in any way. On the one hand you're saying VOD revenues are up and on the other you are saying that too many people have their hands in that pool. You're answering your own argument.

  • Rania | April 5, 2012 12:23 PMReply

    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 | April 4, 2012 5:38 PMReply

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

  • Laura | April 4, 2012 8:35 PM

    Here you go! It's the American: Bill Hicks case study
    http://www.indiewire.com/article/you-want-vod-numbers-weve-got-vod-numbers

  • Brian Newman | April 4, 2012 3:43 PMReply

    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.

  • jingmei | April 4, 2012 9:40 PM

    You said it. 8)

  • J. Courshon | April 4, 2012 3:29 PMReply

    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 | April 4, 2012 3:25 PMReply

    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 | April 4, 2012 3:11 PMReply

    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.

  • Benjamin | April 4, 2012 5:39 PM

    Well of course it isn't brain surgery but the process is, in fact, quite byzantine. In order for anyone to make sense of VOD numbers they would have to process them against what has been spent on marketing and put that in relation to a specific distributor's agreement with a specific VOD platform. And since every distributor has a difference relationship and a different deal with many different platforms - this comparison is almost impossible to calculate. As a producer you have the right to audit every report that is given to you - that report should have title specific VOD information on it anyway. But even that won't allow you to really see how your film is doing vs. another. I don't think any producer or distributor in their right mind would want to make a film's financials, in their entirety, public knowledge. Also the VOD audience is vast - you're actually NOT going to be after the same audience (hypothetically speaking) as another film in a different genre.

  • James Glasscock | April 4, 2012 3:02 PMReply

    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 | April 4, 2012 2:09 PMReply

    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.