What is Premium Video on Demand?

Premium Video on Demand (PVOD) is a business model in the eCommerce industry where users can watch early release movies before they become available on normal VOD platforms (e.g., Netflix, Amazon Prime Video) at a higher cost.

PVOD is a unique blend of the traditional cinema model and growing digital trends. Instead of waiting for films to leave the theaters before they hit the digital market, PVOD introduces them to the online platform earlier, compensating for the accelerated timeline with a higher price point.

Formula

There isn’t a specific ‘formula’ for PVOD, however, pricing structures usually consider downtime (period between cinema release and PVOD release), the film’s popularity or expected demand, and standard VOD pricing.

Example

Disney+ used the PVOD model for the release of “Mulan” in 2020. Subscribers had the option to pay an extra $29.99 on top of their usual subscription fee to watch the film before its standard VOD release.

Why is PVOD important?

• PVOD is a valuable aspect of the new digitization era in the entertainment industry. It helps production houses offset box office losses due to decreased theater attendance, while giving eager audiences earlier access to their anticipated films.
• PVOD also helps increase user purchases on ecommerce platforms, providing revenue opportunities both from the premium price and the potential uptick in overall platform subscriptions.

Which factors impact PVOD?

PVOD can be enhanced by creating appealing packages or bundles that combine early access to movies with other perks like exclusive content or merchandise. User experience can also be improved by ensuring high quality streaming, easy payment processes, and exceptional customer service.

How can PVOD be improved?

PVOD demand can be affected by several factors:

• Timing: The shorter the downtime between theater and online release, the higher the potential demand.
• Pricing: Customers should perceive the premium cost as worthy of the early access benefit.
• Movie Appeal: The more anticipated the film, the greater the consumer willingness to pay a premium.
• Market Environment: External factors like competition from other platforms or changing consumer behaviors can influence PVOD performance.

What is PVOD’s relationship with other metrics?

PVOD can be correlated with several e-commerce metrics. For instance, average transaction value could increase due to higher-priced PVOD purchases. Customer acquisition cost may lower if PVOD offerings attract new subscribers. Retention rates may also rise if PVOD increases perceived platform value.