As you likely know by now, DirecTV this week officially announced its premium VoD service, Home Premiere, making it the first PayTV service provider to go live with a VoD service that rents new movies for $29.99 60 days after their theatrical debut. The first title on the service is Sony's Just Go With It, which became available on Thursday of this week. The service is only available to DirecTV HD DVR customers, of which there are around six million. The plan is to make the film available for two weeks only, after which it would disappear until it arrives in the regular VoD window at its regular VoD price. Several other films are slated for April and May release.
The billion-dollar question is, of course, will this model work? In other words, will it attract a sufficient number of consumers to make it worth the trouble for studios and PayTV operators?
According to TDG's research, the answer is a resounding "no" because the pricing is far above consumer tolerance, not to mention their increasing comfort with waiting around for a few months until the title becomes available through Netflix.
TDG recently examined consumer receptivity toward two very aggressive VoD rental windows - same-day and week-after theatrical debut - at specific price points ranging from an extra $5 to $20 above regular VoD rates of around $5-$6 for a new title. At the higher rate (i.e., a total rental fee of $26), only 8% of consumers are highly likely to rent the title. On the other hand, 21% are highly likely to spend an extra $5 for a same-day rental, suggesting that, while they may see the general value of early rental releases, consumers are unlikely to pay the more sizable premiums currently under consideration.
As I noted several weeks ago, the tactical terrain between theatrical debut and the traditional 90-day rental horizon is vast, so the industry has a variety of timing and pricing options available, the 60-day model at $30 per title being just one option. While the 60-day model may have a future, the $30 price point will not, meaning it is highly likely DirecTV and other PayTV operators pushing these new premium VoD services will have to retool after a few months of experiments.
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