The world of video on demand (VOD) is evolving steadily as VOD networks and their content suppliers continue to find synergies and profit strategies beyond everyone’s expectations. It seems like both sides are not necessarily in opposition at this point – both just want to figure this out.

One example is the speed at which first-run films are getting to VOD. The traditional 6-month exclusivity period has shrunk substantially to around 90 days. VOD networks and other providers are now working with studios about to take the 90 day period down to periods as short as just a couple of weeks, also known as Premium VOD. This would allow consumers to view, for a 48-hour period, a film that has been in the theatres for a few weeks for a $50 fee.

As expected, exhibitors may present a roadblock to this strategy in the short run as they attempt to keep their exclusivity. Sean Parker’s Screening Room, for example, is attempting to entice exhibitors by cutting them into the VOD profit pool upfront in exchange for much earlier VOD release dates. Additionally, Apple is taking an early lead by looking to work with major film production and distribution companies in order to show current movies on iTunes. They reportedly have been in talks with Warner Bros, 21st Century Fox, and Universal Pictures in hopes of showing movies in theatres and iTunes at the same time. Apple’s encryption technology may be a stumbling block due to concerns regarding how iTunes users could download and distribute pirated copies of current films.

Despite the technology, security challenges and the potential push back from exhibitors, consumer demand would ultimately decide the fate of this new emerging service. In my judgment, Premium VOD would provide more revenue stream opportunities for the studios, the exhibitors and the VOD service providers, as well as satisfy consumer demand to view the film at home.

No matter what emerges, it appears that changes may soon happen. Each player in the equation is working on solutions that may become the norm.

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Ilan Haimoff

Ilan Haimoff, CPA, CIA, CFE, CFF, is the Entertainment Practice Leader at GHJ. His specialty includes profit participation and forensic accounting on behalf of talent, investors and co-producers at both the major and mini studios. Ilan has over 30 years of accounting experience in public accounting…Learn More