Commentary

Off The Red Carpet, Movie Studios Are Driving Revenue

There is never a lot of industry buzz around the movie studio’s on-demand rental business. This is when audiences at home are prompted to rent and/or buy a film through their television provider via pushing a button on their remote control. While the rental window lacks the sex appeal, budgets and the excitement of opening weekend at the box office, studio executives are now starting to pay more attention to monetizing the digital distribution of their releases. 

The rental window is a studio’s last major push for revenue. By the time a movie reaches the rental window, millions of dollars have been spent against generating awareness for its theatrical debut, the movie has played in theaters for weeks, reaping in cinema scores and moviegoer reviews. Now at the finish line in the movie’s life cycle, the biggest obstacle for studios is transitioning from a broad, theatrical planning mindset to a more focused, direct-response strategy to optimize the on-demand rental window. While this window focuses on promoting the same movie, the approaches to support the theatrical and on-demand rental window are completely different. The target audience is not even the same.  

Unlike the theatrical window, households with a strong affinity for the movie are not always the target. A household that has previously rented a movie on-demand is five times more likely to rent again compared to the household that has never watched a movie on demand. Advertising to the renter yields an average 50% higher conversions. The planning for on-demand rental pivots from focusing on the film’s strengths (talent, genre, fan base, etc.)  and refocuses on identifying households with the propensity to rent movies on demand. The challenge then becomes where, how and when to reach the renter.

The theatrical planning mindset would favor a heavy national TV campaign to quickly generate excitement for a release. For an on-demand rental, national TV is not effective because there is already awareness. Now is the time to drive an action.

In the U.S., there are more than 200 cable/satellite operators; 45 of them offer the ability to rent movies on demand. However, only 20% of these operators generate 95% of all rental revenue generated. Rather than using national TV with a “Now available on demand” message, addressable/targeted tactics are more effective to help isolate and target only households with a known propensity to rent. On average, households exposed to the rental message rent the movie within five exposures to an ad.

The theatrical planning mindset would suggest focusing on highly rated programs and leaning heavily on running alongside premieres and finales. While these shows do capture the attention, a renter is less likely to tune away from high-profile programming. Messaging alongside content in the free on-demand space has proven more effective.

The biggest shift in the planning principles along a movie’s lifecycle is the role TV plays in the campaign. For theatrical, TV is a mass reach tactic charged with driving awareness for an upcoming release. For an on-demand rental, TV’s role is not about scale, it’s about making a connection with the right households.

Next story loading loading..