Skip to main content

Why Premium VOD Is Streaming’s Next Big Step

(Image credit: Disney)

Disney’s move last week to shift its $200 million Mulan remake to Disney Plus, available only to subscribers paying an extra $29.99, reiterated Hollywood’s pandemic-enabled embrace of premium video on demand (PVOD). 

It’s a new distribution window dependent on online, and as such is substantially different from the business models that enriched the industry for the past century. But even as PVOD takes movies online, at least some flavors of the new window still keep a foot in the past, for now.  

As is typical for go-its-own-way Disney, the Mouse House approach to PVOD differs significantly from how other studios are handling it. It’s even different from how Disney handled July’s release of Hamilton, which was free for Disney Plus subscribers. And Disney has called the Mulan release a one-off that won’t likely be repeated.

Also read: Disney Plus to Premiere Live-action ‘Mulan’ Sept. 4 for $30

But somewhere between free and $30 (and somewhere between ongoing access versus a 48-hour rental window), the industry will find a workable model for PVOD to add value to their direct-to-consumer ventures. PVOD represents an important next step in Hollywood’s evolution, but it almost certainly won’t be the last one. 

Just look at the decisions Disney, WarnerMedia, NBCUniversal and ViacomCBS announced the past couple of weeks: they’re writing off cable operations, emphasizing streaming in huge reorganizations, and launching big international services designed to appeal to perhaps hundreds of millions of potential users. 

It’s fitting those moves came days before the death of Sumner Redstone, who pioneered the multiplex theater and then created the blueprint for the modern multi-platform media giant. His ViacomCBS was built on the lucrative bedrock of pay-TV networks. Now, the industry, including ViacomCBS, is turning that all upside down in a rush to embrace global streaming services. 

“The biggest change is how every content creator is realizing they need to build their own direct-to-consumer platform to reach consumers (in ViacomCBS’ case, the coming relaunch/expansion of CBS All-Access),” wrote LightShed Partners’ analyst Rich Greenfield in a research note about Redstone’s impact. “The resulting explosion of direct-to-consumer streaming services has led to a new race for control of the living room.”

WarnerMedia opted not to have its $200 million Chris Nolan blockbuster 'Tenet' debut directly on HBO Max. 

WarnerMedia opted not to have its $200 million Chris Nolan blockbuster 'Tenet' debut directly on HBO Max.  (Image credit: WarnerMedia)

One problem with all the new services is they’re starting to look alike. Redstone may have said “content is king,” but where do you find a specific show across a bunch of relatively undifferentiated services, especially when they pass around the same programs (the Harry Potter films, for instance, spent three months at HBO Max before skipping off to Peacock)?

Also read: Peacock Grabs Rights to Warner Bros. ‘Harry Potter’ Franchise

On top of that, the major connected TV platform operators, Roku, Amazon and Apple TV mix and match high-profile shows from various services on their front screens. Consumers navigating this new universe may appreciate the viewing suggestions, but they’ll be challenged to tell the difference between those proliferating services.

And that’s where PVOD and online feature debuts come in. Movies have always been big events, boosted by a carpet of marketing dollars, fan sites, social-media posts, journalist junkets, and phalanxes of critical reviews. 

Netflix has been releasing feature-length originals for years. But few broke through until the company started buying blockbusters such as Bird Box and Oscar favorites such as Roma and The Irishman. Netflix even gave those films short theatrical runs, grabbing some of the marketing and media attention of a traditional debut, though most exhibitors still refused to show them. 

No matter. Now, the streaming giant has become known as a haven for some great (or at least entertaining) films, like Chris Hemsworth’s Extraction, which the company said has been watched by a whopping 99 million households, or The Old Guard, which fans embraced as a new kind of superhero story. 

Also read: Netflix: ‘Extraction’ Its Most Popular Original Movie Ever with 99M Viewers

Even an in-your-face auteur such as Spike Lee is finding new audiences on Netflix. Last year’s Black Kkklansman won a screenplay Oscar, and this year’s equally worthy Da Five Bloods might grab awards gold, too. Even better, Netflix said Bloods was watched by 27 million households, possibly Lee’s biggest-ever audience (Malcolm X, for instance, only grossed $48.1 million worldwide). 

And unlike with Disney’s Mulan plan, Netflix runs its blockbusters and Oscar winners as part of the shared value of its subscription. These films don’t depend on theatrical success to provide value, but they may encourage audiences to stick around and subscribe for another few months. 

We’re seeing signs other streaming services may try this straight-to-SVOD with some of their big movies. Call it Beyond PVOD. 

There’s Hamilton, which was credited with a 72-percent rise (per App Annie) in Disney Plus downloads the weekend of its release. While a filmed version of a Broadway musical is far less expensive to produce than a live-action semi-historical epic like Mulan, what’s the value to Disney+ in attracting new customers beyond its core of kids and superhero fans?

Also read: Disney Plus ‘Hamilton’ Viewership Exceeds Those Who’ve Seen It Live, Research Company Says

Hamilton shows the power of putting a new feature film directly on SVOD, skipping theaters and all forms of transactional home entertainment,” Greenfield and his LightShed colleagues Brandon Ross and Mark Kelley wrote recently. “Not to mention, Disney spent a fraction of the marketing dollars and likely generated far more viewership for Hamilton than they ever would have had the film been released in theaters.”