Jupiter Media Metrix recently posted results of research done on one of the most nascent
entertainment-converging-with-technology markets around — video-on-demand (VoD) — and concluded that it will harm current
pay-per-view services.
Jupiter, which said the U.S. VoD market will grow to 641.9 million dollars by 2006, believes that the majority of VoD consumers will
come from the pay-per-view (PPV) audience instead of from video rental or box office audiences. Moreover, Jupiter said movie studios
should work directly with cable and satellite operators as well as with potential content distributors such as Starz Encore and
Intertainer.
“The industry heralded VOD as the entertainment technology that would unseat the VCR from the home and obliterate the video rental
market — that’s unrealistic,” said Lydia Loizides, Jupiter analyst. “The greatest value lies in shifting the pay-per-view audience
to VOD and generating incremental revenues. Studios, operators, cable networks and the rental market must prepare to counter the
effects, both positive and negative, of VOD on their businesses. Failure to do this will result in another blow to the advancement
of interactive television.”
Loizides also said movie studios should cut deals with operators and other distribution partners, such as HBO and Blockbuster, and
become their own distributors.
Jupiter’s study comes at an interesting time for a sector still in its infancy. Just last week, the Wall Street Journal
reported that the U.S. Justice Department was peeping on the movies-on-demand industry for possible antitrust maneuvers — something
it is more deeply scrutinizing the online music subscription service sector for. At issue is whether or not joint-venture services
are being used to block potential rivals in the online-movie business. The government wants to know whether the studios are refusing
to let businesses license their films, or if they are trying to use the partnerships to jack up the fees.
Specifically, two joint ventures — Movies.com (commandeered by Walt Disney Co. and News Corp.’s 20th Century Fox.) and MovieFly
(backed by Sony Corp.’s Sony Pictures Digital Entertainment, AOL Time Warner Inc.’s Warner Bros., Vivendi Universal SA’s Universal
Pictures, Viacom Inc.’s Paramount Pictures and Metro-Goldwyn-Mayer Inc.) are being checked out by the government watchdog. While
neither group has been subpoenaed, the department has also queried potential competitors Intertainer and Blockbuster.
Other findings of note from the Jupiter study:
in the same time period. Jupiter thinks VoD’s ease of use, services, pricing and marketing will help it vault past pay-per-view
offerings
only 11 percent of consumers said that they were interested in viewing movies online. Thirty-one percent of respondents said that
the Internet was too slow to allow them to watch video.
