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The “Truth” About VOD

Monday, January 14th, 2013 by

Bob Alexander founded IndiePix Films and has a deep connection with and knowledge of the entertainment industry as a whole.

Anthony Kauffman over at IndieWire is spot on with his selection of “Video-On-Demand” as a topic for his “Filmmaker Toolkit” series.  And as usual, his article provokes a terrific string of comments.  But maybe he lets the cable operators off the hook just a little to easily!

Filmmakers Wouldn’t Understand?  What on earth is this all about?  Kaufman quotes top execs at Tribeca Films, Magnolia Films, and IFC all saying essentially that it would be confusing if they reported their numbers for VOD.  Somehow, filmmakers don’t have the right context to judge these numbers.  That’s an amazing assertion.  Does that apply to HBO license fees?  NetFlix streaming license fees?  Playstation 3 and Xbox 360 deals?  For sure, the costs of distribution and marketing are not the first thing on the filmmaker’s list of books to read and courses to take; but the revenues from VOD are too confusing to report? 

Another Perspective:  The distribution companies may be somewhat embarrassed by the fact that they cannot get decent reporting out of the cable operators.  And without decent reporting from the people delivering the film and collecting the money, there is little way for them to improve their performance in this channel.  That’s my experience.  I lump myself in that category.

Why can’t the cable operators report in real time?  Let’s see:  if you can push a button on your Cablevision remote control and order a film, why is that data not available somewhere more or less instantaneously?  Why can it take Comcast 3 to 6 months to report?  What hang up in the system is there that prevents this technology from becoming the kind of real time distribution channel it could be?

The numbers are really important.  If you are a DIY filmmaker or an indie film distributor, wouldn’t you want to know when and where your title is being ordered (You could select local media, even advertise on the cable TV operator’s network, if you knew where to do that)?  Wouldn’t you want to know what time of day it seems to play better (You could run radio ads promoting its availability right now!)?  Wouldn’t knowing if there is there a day of week when people seem to turn to their VOD cable choices be helpful (You could do a newspaper ad, “now available on your local channel!” just like a movie ad running on Friday for the weekend)?

Don’t the cable operators market?  Just remember that cable operators run monopolistic franchises.  In most locations, there is only one cable operator.  In some areas, there may be more than one, and they may advertise and compete against each other, but that doesn’t mean they are going to promote your film.  Do you think, personally, that the scrolling list of titles really markets a film?  Do you want to know how hard this is?  Just ask anyone who has tried to start a cable channel:  Lifetime Television or the National Geographic or the House and Gardens channel.  The spending is huge because the new channel is trying to advertise around the operator to get to the consumer.  Cable operators don’t market because they don’t have to. 

Everybody has this problem.  Well, maybe not everybody, but the list is big.  From HBO (which is hugely successful but doesn’t know who its subscribers are because the cable operators won’t tell) to the independent filmmaker on a DIY mission.  The cable business doesn’t discriminate.  The pervasive intransigence of this problem is one reason indie film distributors have turned to the internet.

Have you heard the story of Warner Home Video and Time Warner Cable?  Video-On-Demand is a technologically more sophisticated version of the old “pay-per-view” but VOD is an offspring of PPV and they share many characteristics.  In the 1990′s, when pay cable was ascendant, Warren Lieberfarb at Warner Home Video ran a $2+ billion a year business for Time-Warner.  And on the other side, Eddie Blier ran a $30-$50 million a year PPV business for Time-Warner Cable.  In one of the great corporate stand-offs of the time, Home Video couldn’t get numbers from its own sister company Time-Warner Cable.  The arguments were blistering.

Cable VOD has promise, but its business practices hold it back.  The breakthrough results that Margin Call has had with nearly simultaneous cable VOD and theatrical exhibition point to the possibilities that exist if a distributor – like Lionsgate with its track record of distribution innovation – takes on the challenge.  There are opportunities to benefit from the awareness laid down by an advertising campaign, whether it’s a national campaign or a campaign in a specific media market.  But it takes data to work out the economics of those campaigns and it takes a sense that theaters and cable operators are in the distribution business together.  But maybe that’s a pipedream.

It’s not going to be better anytime soon.  These things are built into the way companies work from the local operator to the Multi-System Operator, to etc. and on and on.  None of this is going to change very quickly.  Right now, in my view, cable VOD is not a bad choice.  It’s just an unknown choice that is beyond control and pays slow.  Otherwise, if you have other choices, why not do it?

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