An analysis of the optimal distribution scenario for large Hollywood movie studios. This was created for one of my marketing courses at the University of Washington.
2. Iron Man: How would you watch this movie? A. In the theater B. Rent it on DVD C. Watch it On-Demand (pay-per-view) D. Purchase the DVD E. Watch it on Premium Television (HBO, Showtime) F. Watch it on basic cable for free
3. Current Movie Distribution Model Theatrical Release DVD Rental DVDs for Purchase Video on Demand Premium Television Basic Cable
4. The Ice Cube is Melting! Movies are like “a melting ice cube. The longer it sits, the smaller it becomes” - Bob Chapek, President of Buena Vista Home Entertainment
5. Optimal Distribution Scenario Theatrical Release DVD Rental Video on Demand Optimal DVD Price in this Model is: $22 3 Months DVDs for Purchase Premium Television Basic Cable
6. Changes Are Being Made Downstream Warner Brothers studio will now release movies for video-on-demand systems on the same day they are released as DVDs. Lionsgate will now start bundling an iTunes digital download with DVD purchases
It has found that DVD rentals only fell by 3 percent to 5 percent and sales of DVDs actually increased, perhaps because of the increased promotion and fewer used rental discs available for sale.“Taking a customer and moving that person over from rental-physical over moving them to VOD day-and-date is like a 60 to 70 percent margin instead of a 20 to 30,” Mr. Bewkes said. “So it’s about a three-to-one trade.”