As you say, the key problem in all of this is discovery. And networked discovery works on powerlaws. So you really want to get some kind of takeoff and to get takeoff you need low friction to initial purchase. To brute force this you need buckets of money. Or you can be more clever. Something nobody likes to talk about out is that torrent sites (certainly historically) could actually help ticket sales through this exact mechanism. It’s all about discovery if you’re nobody. I mean this was an issue for arthouse movies back in the day for indie diatribes going up against the studios. It’s just much worse now. So you need to lower the cost barrier for purchase of the unknown item and hope you get word of mouth growth.
Mike Masnick has been going on about this since before 2008 on TechDirt. His formulation is: all advertising is content and all content is advertising. And in a zero marginal cost distribution environment that really comes into play. What you really pay for is not the content but the experience of that content. That’s always been true it’s just more obvious now because the scarcity has been taken away. Kpop is a good example. Theatrical was sold by VOD. People were buying the experience after getting the thing for “free” at home. In theatres the low cost VOD distribution has unbundled the experience for most people and laid bare just how awful going to a multiplex actually was. But that’s a separate issue really.
Anyway… Basically for takeoff with nothing to your name but a good movie, the discovery mechanism kind of has to be organic recommendation which you can then amplify with paid ads (or any other way you can pr your movie). You get this effect in kindle sales too. Put out your book at first for 99c or free to get the ball rolling and hope your organic growth is big enough that you can amplify it with paid, and pr. and then you start charging 9.99. So if movies are like books, VOD is indeed key - but I think it entirely depends on your business model.
For example is your business model about selling views then TVOD is the obvious go to as that’s the easiest large addressable market and your problem is finding eyeballs and converting sales. Your return on TVOD to SVOD is 50:1 or so. So SVOD is a waste of time.
However - and this is where it gets more interesting. As you point out. sVOD can be good for discovery. Amazon and Netflix have algorithmic clients on everyone’s tv. They can push whatever they want, whenever they want and they’ll get big numbers of views without advertising because most push from Netflix happens in the client. If you’re universal you have to buy all your push. Disney and Netflix not so much. Long gone are the days people turn up to a Universal movie theatre. So… the upshot is if your business model is about selling Merch or insurance - then man, that SVOD deal is gold. And throw it up on all the torrent sites too. Not because you get money from the movie but because you get Netflix to do all your discovery marketing for you. The svod is just free advertising. Your views convert to selling a boatload of insurance and T-shirts. The total addressable market for movies is largest on VOD, and with the lowest conversion friction. So if you want wide audience access you kind of have to go where the audience is.
This is kind of the topic of my post I’m just writing… funny this is in everyone’s minds at the same time.
Well said. The old studio claim that every torrent download = a lost sale never held up to scrutiny, and we can see this at work in SVOD and AVOD today. Every “view” isn’t someone who was going to go to the theeater otherwise. But then because you’re combining people watching it at home AND those who did go to the theater, you’re incresing total word of mouth, and then people who didn’t know the movie even existed are suddenly going to the theater or watching it at home as well. It’s all one giant snowball, not a siphoning of one away from the other.
No doubt there is some small fraction of people choosing one venue over the other, all other things being equal. But the game at its core is simple awareness and FOMO. And for that, you need easy discoverability and a way to scale that awareness with the least amount of friction, as you say.
Oh hey thanks for the shout-out! Those %s seem pretty accurate based on what I’ve seen so far, but will confirm as more data accumulates.
As you say, the key problem in all of this is discovery. And networked discovery works on powerlaws. So you really want to get some kind of takeoff and to get takeoff you need low friction to initial purchase. To brute force this you need buckets of money. Or you can be more clever. Something nobody likes to talk about out is that torrent sites (certainly historically) could actually help ticket sales through this exact mechanism. It’s all about discovery if you’re nobody. I mean this was an issue for arthouse movies back in the day for indie diatribes going up against the studios. It’s just much worse now. So you need to lower the cost barrier for purchase of the unknown item and hope you get word of mouth growth.
Mike Masnick has been going on about this since before 2008 on TechDirt. His formulation is: all advertising is content and all content is advertising. And in a zero marginal cost distribution environment that really comes into play. What you really pay for is not the content but the experience of that content. That’s always been true it’s just more obvious now because the scarcity has been taken away. Kpop is a good example. Theatrical was sold by VOD. People were buying the experience after getting the thing for “free” at home. In theatres the low cost VOD distribution has unbundled the experience for most people and laid bare just how awful going to a multiplex actually was. But that’s a separate issue really.
Anyway… Basically for takeoff with nothing to your name but a good movie, the discovery mechanism kind of has to be organic recommendation which you can then amplify with paid ads (or any other way you can pr your movie). You get this effect in kindle sales too. Put out your book at first for 99c or free to get the ball rolling and hope your organic growth is big enough that you can amplify it with paid, and pr. and then you start charging 9.99. So if movies are like books, VOD is indeed key - but I think it entirely depends on your business model.
For example is your business model about selling views then TVOD is the obvious go to as that’s the easiest large addressable market and your problem is finding eyeballs and converting sales. Your return on TVOD to SVOD is 50:1 or so. So SVOD is a waste of time.
However - and this is where it gets more interesting. As you point out. sVOD can be good for discovery. Amazon and Netflix have algorithmic clients on everyone’s tv. They can push whatever they want, whenever they want and they’ll get big numbers of views without advertising because most push from Netflix happens in the client. If you’re universal you have to buy all your push. Disney and Netflix not so much. Long gone are the days people turn up to a Universal movie theatre. So… the upshot is if your business model is about selling Merch or insurance - then man, that SVOD deal is gold. And throw it up on all the torrent sites too. Not because you get money from the movie but because you get Netflix to do all your discovery marketing for you. The svod is just free advertising. Your views convert to selling a boatload of insurance and T-shirts. The total addressable market for movies is largest on VOD, and with the lowest conversion friction. So if you want wide audience access you kind of have to go where the audience is.
This is kind of the topic of my post I’m just writing… funny this is in everyone’s minds at the same time.
Well said. The old studio claim that every torrent download = a lost sale never held up to scrutiny, and we can see this at work in SVOD and AVOD today. Every “view” isn’t someone who was going to go to the theeater otherwise. But then because you’re combining people watching it at home AND those who did go to the theater, you’re incresing total word of mouth, and then people who didn’t know the movie even existed are suddenly going to the theater or watching it at home as well. It’s all one giant snowball, not a siphoning of one away from the other.
No doubt there is some small fraction of people choosing one venue over the other, all other things being equal. But the game at its core is simple awareness and FOMO. And for that, you need easy discoverability and a way to scale that awareness with the least amount of friction, as you say.
WOW! The amount of behind the scenes research you must do for this is crazy. Great read sir
I am both proudly wine nerd AND film nerd (and comic nerd, and book nerd - it's all ultimately a love of deep diving into how a thing was created.)