Premium Video on Demand (PVOD)
What is PVOD?
Premium Video on Demand (PVOD) is an Over the Top (OTT) media distribution model where Subscription Video on Demand (SVOD) subscribers pay a one-time fee (in addition to their monthly subscription dues) for early access to stream new premium content, especially highly-anticipated or high-budget films.
Why is PVOD Important?
International box office revenues reached record highs in 2019, thanks to massive releases like Avengers: Endgame, The Lion King, and Toy Story 4.
But that momentum shifted in March 2020. With the arrival of the COVID-19 pandemic, a combination of mandated venue closures and widespread caution about congregating in indoor spaces have led global audiences away from the cinema and towards alternate sources of entertainment, costing theaters billions of dollars in revenue.
With audiences less inclined to visit the cinema during COVID-19, SVOD platforms attracted record numbers of new subscribers. At the same time, content owners and production companies like Disney, MGM, and Warner Bros. were investing billions in big budget franchise films, the kind that would traditionally have relied on theatrical distribution to drive their profitability.
This situation created a new business challenge: How could these content owners and producers effectively monetize their new releases at a time where audiences were unlikely to visit the cinema?
The answer? PVOD: A new OTT distribution model that offers early access to premium content for a one-time fee, circumventing the theater and bringing new movie releases directly to consumers as a premium viewing experience.
With movie theater attendance seeing record lows, content owners are leveraging the PVOD distribution model to profitably monetize new releases by delivering direct streaming access that better suits the needs of audiences in 2022.
How Does PVOD Work?
PVOD Content Goes Over The Top
PVOD is an OTT media distribution model. When consumers purchase access to premium content in the PVOD model, the content is streamed over the Internet on an on-demand basis.
Audiences usually access PVOD releases through their existing SVOD subscriptions (e.g. Disney Plus, Netflix, or Amazon Prime Video), or preferred Transactional Video on Demand (TVOD) platform (e.g. iTunes, Google Play, or Vudu).
PVOD Content Comes at a Premium Price
The release of a new blockbuster film in a well-known franchise is more than just a commercial endeavor – it’s a cultural event that audiences want to be a part of, even if they aren’t going to theaters right now.
That’s why SVOD and TVOD platforms can charge a premium price to stream Premium VOD content. Unlimited access to stream a new premium film usually costs around $19.99, but can go as high as $29.99, with some platforms offering a cheaper 48-hour rental option for between $3.99 and $6.99.
PVOD Competes with Theatrical Releases
Before COVID-19, a standard theatrical release typically lasted for 90 days. Only after this 3-month period of exclusivity in theaters could a hot new movie be released to home video (e.g. Blu-Ray, DVD, or VHS) and VOD platforms.
In the PVOD distribution model, OTT distribution sometimes competes directly with the theatrical release of a premium movie. Some premium titles have been released simultaneously in theaters and on OTT streaming services, while other films were afforded limited exclusivity periods of 2-4 weeks in theaters before being released on PVOD.
As audiences return to theaters in 2022, the industry is trending towards shortened theatrical release windows with limited exclusivity. Warner Bros. and AMC Theaters agreed to a shortened 45-day theatrical release window, while Cinemark’s deal with Universal guarantees just 17 days of theatrical exclusivity before a film can be released on VOD.
PVOD Distribution Drives Content ROI
PVOD releases give audiences early access to stream premium large-budget content, including titles that might normally feature exclusively in theaters for weeks or months before appearing on streaming services.
During COVID-19, PVOD distribution has allowed content owners to effectively capitalize on premium new movie releases by reducing their dependence on box office revenue and delivering content directly to audiences on SVOD and TVOD platforms.
3 PVOD Examples You Should Know
Disney’s Mulan (September 4th, 2020)
Disney released Mulan in 2020, a year that saw theater ticket sales plummet by 80% from their highs in 2019.
With most theaters closed in North America, Disney planned a bold experiment for its release of Mulan: the film would be released exclusively on PVOD in every country where Disney+ is available to subscribers – otherwise, countries without Disney+ would have a normal theatrical release.
Reports indicate that by September 12th, 2020, selling Premier Access to Mulan had already earned Disney $270 million in direct to consumer revenue. Mulan also grossed nearly $70 million at the International box office, and $24 million in domestic video sales.
The Mulan experiment was a huge success story for PVOD distribution. Despite the film’s huge price tag of $200 million, Disney was able to earn substantial profits while collecting a total of $0 from domestic box office sales in the US.
Mortal Kombat (April 23rd, 2021)
Mortal Kombat was released simultaneously in theaters and on HBO Max – but with a special condition. The film would only be available to stream for 30 days, after which it would be removed until the normal home release schedule period.
This created a huge sense of urgency for fans of the franchise, with reports indicating that 5.5 million subscribers had watched Mortal Kombat within the first 17 days of its release, a new record for fresh releases on HBO Max.
Disney’s Black Widow (July 9th, 2021)
After the success of Mulan, Disney experimented with a new kind of PVOD distribution for its release of Black Widow. The film, produced with a budget of $200 million, was released simultaneously in theaters and on Disney+, where subscribers could purchase Premier Access for $29.99.
Black Widow earned more than $225 million on its opening weekend, including $80 million in domestic box office receipts, $78 million international box office, and $67 million in Premier Access revenue from Disney Plus. The film would go on to earn roughly $380 million in box office revenue and $125 million in streaming revenue.
Manage PVOD Media Distribution with Revedia
PVOD distribution gives content rights owners added flexibility to monetize premium assets by responding to changes in audience viewing habits and leveraging profitable direct-to-consumer distribution channels.
SymphonyAI Media helps content owners maximize PVOD revenue by leveraging data analytics and machine learning to assess the commercial value of content assets, automate complex royalty calculations, manage content licensing agreements, and accurately forecast revenue.
With our Revedia platform, you can project revenue and validate existing models to find the optimal multi-channel distribution strategy for your next PVOD release.