The Impact of “Same-Day/Soon-After” Movie Rentals

1Executive Summary

With DVD sales plummeting and Blu-ray and digital sell-thru unable to make up the gap, Hollywood continues to struggle with the digital revolution. Among the countless strategies under consideration to reverse this trend is making titles available for rent on or near the day they premiere in theaters. In other words, consumers interested in viewing premiere movies would have a choice: Take the family to the theater or rent a disc or use an on-demand service to view the movie at home — at an additional premium, of course.

While this may be heresy to many insiders — especially theater owners — for consumers, the economics make sense. Imagine taking a family of four to the theater to see a first-run movie, with ticket prices of $10 per adult and $7 per child (if under 12). Add snacks and beverages, and your out-of-pocket cost is around $50, not to mention the time and hassle of traveling to and from the theater.

When put in that perspective, would you be willing to spend $25 to rent the same movie to view at home, even if it meant popping your own popcorn?

This research brief discusses a slice of TDG’s latest research on precisely this subject: consumer proclivity to pay additional rental fees in exchange for access to new titles earlier in the release window (in the present case, one week after the movie first premiers).

Methodology

In early October 2010, TDG queried a random sample of 1,000 U.S. adult Internet users (age 18 or older) regarding their use of specific digital video services (both online and off) and their receptivity towards movies of interest being released — with a premium — on or near the same day they are first released in theaters. Demographics matched 2008 U.S. Census data, meaning the sample is representative of all U.S. households without the use of quotas or weights. Top-line full-sample findings have a 95 percent confidence and a margin of error of +/- three percentage points.

In some cases, data is also drawn from TDG’s landmark 2010 study, Benchmarking the Connected Consumer, a survey of 2,000 U.S. broadband heads-of-household, primary household decision makers above the age of 18. As with the October study, participants were randomly selected from an online consumer panel of several million opt-in respondents. Survey quotas reflect Pew Internet’s latest adult broadband user demographics. Top-line full-sample findings have a 95 percent confidence interval and a margin of error of 2.5 percentage points.

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