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Future of the film industry depends on VOD values

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If VOD is going to bankrupt film producers some difficult decisions need to be taken in the next 24 months to ensure that streaming doesn’t devalue film to the point of no return.

With theatrical windows expected to shorten in the next few years, and businesses looking to retain the traditional model of theater first, unit sales second, some must surely be panicking at the prospect of this being turned upside-down with audiences opting in for an all-digital experience.

It’s no secret that this is already happening. Harvey Weinstein is one of the early adopters of simultaneous releasing, and of course, a lot of theater owners are boycotting his sequel to ‘Crouching Tiger Hidden Dragon’.

Unfortunately (or fortunately) it looks like this future is inevitable, and people are demanding that content be delivered faster than ever before. Streaming sites have been around for a few years, but the film industry has yet to really deal with this fundamental shift in the entire business model.

DVD sales are dying yet making up for the shortfall via VOD isn’t going to happen easily. With streaming services offering a wide range of titles for a fixed monthly fee of around 10 or so dollars, how does one film succeed in an all-digital approach after the box office?

The price of a VHS/DVD versus the price of a streamed film is dramatically different. If film producers are going to get 15 cents for a single view via a major streaming service instead of $15, they’ll need to get at least 1000x the viewership to make up for the shortfall, and how is that going to be realistic?

Budgets are coming down, salaries are falling, yet there is more diversity in content, but there has to be a minimum threshold for the value of a single film viewing that allows people to make a living. Technology has made it cheaper to produce films, but that isn’t going to make up for the fall in pricing per unit if we go down an all-VOD approach with very low rates for streams. Many film production jobs could be at risk in the future if streaming companies start battling each other over subscription prices at the expense of filmmakers.

The other problem with VOD is that it devalues the entity of a film because we can’t feel it, touch it, or see it. It’s a digital asset that has no physicality so we perceive its timeless value with less affection. What I’m saying is that for those collectors out there, DVDs retain more value, they have special features, and they are overall, a much more in-depth product (and of course they sit on a shelf and don’t have buffering issues). On the flipside, VOD is just data on a library that can disappear at any time when licences run out but it is convenient, easy, and fast.

For the film industry to remain profitable I believe that VOD values need to go up. Content quality also needs to be high. 2014 has been a difficult year with lacklustre releases and audiences are starting to expect poor films at the box office so they want to pay less. What happened to the classics? What happened to real storytelling? There are great filmmakers out there, and sure, there are great films, but if they don’t have proper distribution networks that support them financially, VOD could be the format that ends up breaking the film industry as we know it today. This doesn’t need to happen. We only have to look at the music industry to see how far streaming went in the wrong direction.

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