VOD (Video on Demand) has quickly risen in the last decade to become the preferred method of home viewing for consumers and is only continuing to expand in popularity. VOD is a technology that allows viewers to watch films and television digitally, by streaming or downloading onto either a computer or any other device capable of providing VOD, including top-boxes, mobile phones, tablets, video game consoles, etc. VOD has become popular over physical media due to its convenience for the viewer. The viewer can choose to watch what they want, whenever they want, all without ever leaving the comfort of home to go to a video rental store and later having to return it.
There are a number of different providers of VOD as well as different business models. The subscription model gives the consumer a vast library of films and television programs to choose from for either a monthly or yearly fee. The most prominent providers are Netflix, Amazon Prime and in the US only, Hulu Plus. While reasonably cheap and featuring an extensive library the selection available can be fairly random and irregular. Viewing is dictated by what just happens to be available, if you are looking for a specific film, the chances are likely that it is not available on that service. As content is licensed by distributors, contracts expire all the time, if the provider decides not renew the contract then the film or series is removed. This happens all the time and just as much content is removed as is added.
Transactional VOD allows the consumer to buy media piecemeal. Services such as iTunes and Google Play allow the consumer to purchase films digitally to download and watch at their leisure. This is commonly used to buy newly available films that have just come onto the home video market. This allows the viewer to purchase the film that they want much like purchasing a DVD only with the convenience of accessing it without leaving home. There are also the rental services offered by subscription television providers such as Sky and Virgin Media. Brand new films are available (often before the home video release) to purchase and watch within a limited timeframe. This rental service, along with pay TV services in general are losing customer to businesses that are offering the subscription model.
Catch-up TV services such as BBC iPlayer and 4-on-Demand are provided for free by television stations and allow the viewer to watch content previously shown on network TV for a limited amount of time after broadcast.
Due to the competition between each other, VOD providers have turned to producing their own original content and making it exclusive to their service in order to draw in new customers. Netflix has arguably been the most successful in this regard; most notably partnering with Disney and producing shows based on Marvel Comics properties (Daredevil, Jessica Jones) and Star Wars (the final season of Star Wars: The Clone Wars). Netflix has also produced its own original content (Orange Is the New Black, House of Cards) as well as films such as Beasts of No Nation and a four-film deal with actor Adam Sandler.
VOD as we know it today was first commercially utilised to minor success in the UK in the late 1990s by Kingston Communications. At this early stage VOD never achieved mainstream success due to the majority of households using dial-up rather than the much more effective broadband internet access. At this stage Netflix and its then competitor, Redbox, were functioning by offering a mail order DVD rental service, going up against the giants of the home video rental service, Blockbuster, Hollywood Video and Movie Gallery. The service was successful and kept both companies afloat into the mid-2000s at which point broadband was more widely adopted, allowing Netflix to offer digital streaming to their subscribers, which is a much more cost-effective and faster method of providing its service to customers. By 2010 Netflix offered an unlimited streaming service for a much cheaper price than the mail order DVD service that also had limits on how many DVDs could be rented at one time. Due to its cheaper price and ease of use the subscription service soon caught on, doubling Netflix’s profits and the arrival of competitors offering their own subscription VOD service. As of 2016, 80 million subscribers worldwide have now adopted Netflix.
From the late 1980s to the mid 2000s Blockbuster dominated the home video market with its rental service. Customers could come into their local Blockbuster, browse through a physical library of videos, rent the videos of their choice for a few days, returning it at a later date. With the arrival of VOD this service quickly became seen as archaic by the majority of consumers with more and more jumping ship to VOD every year. By 2010 Blockbuster filed for bankruptcy and had to reduce the amount of stores from its peak of 9,000 stores down to 3,000. In 2013 all 300 remaining Blockbuster stores were closed down in the US with only 51 franchisees remaining, in that same year all stores closed down in the UK.
The effect of VOD is so strong on the entertainment industry that it has even had a knock-on impact to seemingly unrelated forms of media. The sports casting giant ESPN has suffered a decline in stock value for parent company Disney, despite its stranglehold on sports media. This is due to the amount of customers moving away from the Pay TV model in favour of VOD despite the lack of sports media on VOD services. The effect has been so strong that Disney is even considering offering a sports VOD subscription service to regain its customers.
Movie theaters seem to be the only market unaffected due to its position in the distribution chain. Cinemas screens still have the theatrical window, getting the newest films first and remain to have first access ninety days before the ancillary markets. There have been some isolated incidents which have threatened theaters however. Paramount’s ‘Paranormal Activity: Ghost Dimension’ was announced to have a VOD release only seventeen days after its theatrical release. Many theater chains boycotted this move by not screening the film as a form of protest. It is unclear what ramifications this could possibly have on the film industry if this strategy is implemented again.
VOD has risen to popularity at an alarmingly fast rate and continues to do so. Looking into the future it seems as though we will soon be entering an age of entirely digital media as a result.