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Analysis: Business model of the film industry moving towards VOD

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Copyright David Bond

VOD is becoming the standard

From VHS to DVD to Blu Ray and now VOD, the film industry is experiencing a technology shift that is changing distribution for filmmakers and audiences.

The physical media format is quickly fading away as more consumers seek a quicker, easier way to consume content online and this having a big impact on the business model of the film industry.

Companies like Netflix and Youtube now account for 50% of all web traffic in North America; a staggering figure that is set to rise as more people opt in for subscriptions to high quality streaming content.

Competitors like Amazon Instant Video, Love Film in the UK, and Hulu are all vying for subscribers and even producing their own TV shows to give audiences more choice.

With that in mind, the business model of the film industry is also adapting to this change of consumption and that also affects how filmmakers are approaching film production and distribution. It’s no secret that George Lucas and Steven Spielberg have predicted a film industry implosion, but that implosion is in actual fact the “re-positioning” of the audience and where they consume, particularly with smartphones and tablets that provide us with content on the move.

Another significant shift that’s making VOD more prominent as a format is the huge success of Kickstarter in the US and in the UK which is making collaborative filmmaking possible. It is also establishing a trend where people are now marketing their projects and selling them online. This fits perfectly in the VOD distribution arena as there are many online distribution outlets for indie filmmakers to choose from. It’s also seamless as social media is the perfect tool for marketing online content to audiences who want to watch films on the web. This is also happening in developing markets such as Africa, where the advantages of video on demand are bringing audiences closer together.

In addition to this, Youtube and Vimeo are also experimenting with VOD. Youtube is developing premium content channels with a subscriber model whilst Vimeo is giving creators the ability to sell their films directly to their audiences through their platform. This brings both creators and audiences closer online but also, as we merge our online experience across devices (smartphones and tablets) we are able to consume the content in more places. So again, the position of the audience is changing, which also affects how the content is distributed. There is also the issue of discussion and how that is becoming an in-built part of the watching experience. People are tweeting or on Facebook while they watch TV shows or movies. There is the combination of social and content, which is happening when people watch cable, and when people watch films. But as the two come closer together, VOD again, brings discussion and content in the same place, which is why the format should be the focus of the film industry for revenue generation in the coming years.

Check out a recent interview we did with a first time feature filmmaker in the UK, who is using VOD to bypass traditional channels. This approach gives him full control of the distribution cycle, but also allows him to integrate his final project with his online fan base.

In conclusion, the ‘business model’ of the film industry is shifting towards content that targets big audiences, who can connect with that content online. The seamless connection between films and social, and across devices makes VOD the ideal format for filmmakers and studios to focus their efforts on in the future. How will you be approaching VOD?

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