Access, experience, ownership key to demand models

Posted on October 12, 2013

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Audience demandErnest Bevin, Foreign Secretary in the radical 1945 UK government famously described his foreign policy as being able “to buy a ticket at Victoria Station to anywhere I damn well please.”

The words spring to mind after a summer of analysis of acres of research,  exit polls and user surveys on consumer attitudes to watching films in today’s on-demand media environment.

Some of the data came from a series of BFI-backed experiments in day-and-date releases of films in cinema and VOD, and sometimes DVD and free-to-air television, which ranged from all-star ensemble piece A Late Quartet to Ben Wheatley’s trippy take on the English Civil War, A Field In England.

The first of thos reports will be released in shortly by the BFI, following an event at the London Film Festival this week.

They will act as valuable sources of knowledge to producers, distributors and exhibitors, alongside other research, include SampoMedia’s own focus group survey on the value, and price, that consumers put on different forms of release. (That survey will be released soon).

What all the research demonstrates is that, despite the industry’s often esoteric debates on the changing market, Mr and Mrs Consumer continue to follow the Bevin line: they want to be able to buy a film on any platform and watch it wherever and whenever they damn well please. So all aboard the VOD train to a brighter on-demand future then?

Certainly, everyone in film is along for that ride, like it or not.

And there are some reasons for optimism. Some of the subscription VOD services (such as Netflix, LoveFilm, Sky and even some indies, including Universcine) are now paying serious money (and occasionally silly money) for digital rights.

The battle for subscribers has even seen the commissioning of some new content, such as the Netflix web series of A House Of Cards. On the other hand, it is wise not to get too carried away given that VOD, in all its many guises, is still in its infancy.

The best policy is to begin with understanding demand. Surveys reveal more complexity to consumer demand than is suggested in the Martini culture (‘anytime anyplace anywhere’) cliché.

 

Two points in particular leap out from research. The first is that expecting the choice is not necessarily the same as exercising it. We may choose not to choose – and there is increasing evidence that too much choice is no choice at all. (A favourite piece of research in this area comes from Columbia University, based of all things on selling jam – click here for more.)

In the on-demand environment, time is one critical factor in media use but another area, that deserves greater study, is price.

We may know, or assume, that consumers put a value on choice or access but value is not the same as price. This is particularly important in day-and-date releasing of film, for example, where the premium price for instant access at home at the same time as theatrical release is at the heart of some emerging VOD business models. But there are big questions about what, or event whether, the consumer is prepared to pay for early viewing (look out again for that SampoMedia research).

An important point for business trying to understand how to navigate this new world is not to see demand as one-dimensional.

In the workshops and events that SampoMedia has been running, we have tried to look at three different dimensions to demand:

  • Experience
  • Ownership
  • And Access

The first of those has rightly been getting more attention of late.

One fact that consistently asserts itself in research (and which ought to be the exhibitor mantra) is that cinema is not seen as just another platform by most consumers. Words like ‘event’ and ‘experience’ are used in almost all polls to talk about the cinema, and it is seen as unique. Polls show audiences see going to the cinema as an activity with value above and beyond any individual film being shown.

There is no room for complacency here though. Our work comparing older and younger audiences, suggests that while the former generally see cinema as the place to see a film, with a sliding scale of value as screen sizes shrink, younger audiences are much less fixed in their views. The cinema might be the best experience, particularly for action and effects, but it may be losing its place as the only authentic place to see a film.

Focus on enhancing the cinema offer and extending the appeal more widely, particularly to younger audiences is not a simple matter of marketing but of really understanding the nature of demand in an ‘experience economy.’

The year so far has been a mixed bag, with some failed blockbusters on one side and the continuing growth of ‘event cinema’, such as opera and director Q&As on the other.

Experience is important to all platforms, of course. iPads, Smart TVs, faster broadband, etc have, and will, improve the on-demand offer. But the foundations of VOD business models, and to some extent for the future of film, come down to two trends – ownership and access, which, while not necessarily mutually exclusive, are distinct and different.

Four or five years ago, the industry assumed the future depended on digital downloads.

Rampant piracy took a big bite out of the notion that a download boom would replace lost DVD revenues. Consumers also found little to be loved in owning a file, particularly when it was generally played on a device that did not match the quality of television.

A second issue for the download market has been space on the hard drive. It has taken the world a long time to understand that disk space is not a free commodity. Notwithstanding the still reliable Moore’s Law about the ever-increasing processing power of a chip and better compression technology, films quickly eat up the bits and bytes. And lastly, the price of a download has been an obstacle.

The aggressive, and possibly in retrospect, ill-advised discounting of DVD has dramatically reduced what consumers see as a fair price for a film. A big change in consumer habits has now set in. Ownership has in many ways given way in the on-demand world to access. Music is now fully engaged with this new reality and film inevitably will follow suit.

Possession of an individual file is becoming less attractive than a subscription allowing permanent access to vast stores of content. And it is the subscription VOD (SVOD) giants, such as Netflix and the now Amazon-owned LoveFilm, that are dictating the pace. But the industry needs to address issues that this promising new source of finance and revenue throws up.

A unified voice would be helpful, although the challenges to different parts of the value chain make that difficult.

  • Transparency
  • Visibility
  • Market confusion
  • Interoperability
  • Consumer price points
  • The effect on download and television prices

The film industry needs a whole lot more knowledge and a lot less ideological posturing on issues such as windows when it comes to these new markets, perhaps more so because we are talking about a moving target. The on-demand world remains in its infancy and change is likely to be constant over the next few years.

At some point, however, the consumer confusion that comes with 700 services currently available in Europe, for example, will probably resolve itself through failure, acquisition and merger. The prospect of a monopolistic market, like that in music, cannot be ruled out.

The visibility of both indie films (particularly without theatrical success) and of indie VOD sites is not likely to find a quick fix, particularly with the vast amounts of available content and being seen may be a matter of improved marketing techniques and just more attractive content.

All these issues suggest that lack of transparent data ought to be more of an obsession for the film industry. You cannot base an industry strategy or a sustainable business model on the kind of partial or often non-existent data currently available.

Going back to poor old Ernie Bevin…Within a few short years, he found his Victoria station ticket didn’t even get him across Europe, never mind the world. And there’s a long way still to go until the tensions between consumer choice, industry business models and self-interested platforms and services resolve themselves into a free and open market.