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On-Demand Media to revolutionise video retail

On-demand media (ODM) services, sometimes referred to as manufacturing-on-demand, will generate $33m in incremental spending this year in the US and the major European markets, and be worth $1.1bn in consumer spending by 2012, according to Screen Digest’s latest report.

Crucially, two thirds or $665m of this amount will be new revenue, whilst the remainder will replace traditional DVD spending, say the UK-based analysts in their report On-demand media: Re-inventing the retail business model.

The video business is approaching saturation point in many markets. High street and even online retailers are struggling to accommodate an ever-expanding DVD catalogue while rights owners find that only the most popular titles can secure shelf space.

ODM provides a way of tackling these problems by enabling retailers to offer a huge range of titles without the constraints associated with the traditional video supply chain. Rights holders will have the opportunity to exploit ‘long tail’ content – including video titles currently not considered viable for commercial DVD release - as well as the chance to explore alternative retail channels.

Consumers will not only enjoy the benefits of a wider range of content and a greater choice of distribution outlets, but will also be able to pick and mix from a library of episodic content to create their own compilation DVDs.

“ODM, if executed effectively, has the potential not only to revolutionise how consumers buy DVDs but also to generate incremental revenue at a time when overall growth in DVD spending has slowed,” says Screen Digest.
As the chart shows, ODM distribution will initially grow more rapidly in the online environment as consumers will not need to adjust to new technology to the same extent as they will with shop-floor solutions. One major DVD retailer, Amazon, already offers an online ODM service in the US.

However, Screen Digest believes that store-based ODM solutions will catch up quickly, and by 2012 spending will be more evenly split between in-store and online.

Whilst initially the ODM business will be focused on ‘long tail’ titles, including those not previously made available for sale, the market will also offer an avenue for content with a short shelf life such as highlights of sporting fixtures.

As the market expands, ODM will be harnessed for ‘catch-up’ TV and, to a greater extent, catalogue feature film. Much of the content available through ODM services will be offered to viewers for the first time and therefore a significant proportion of the value generated by the market will be incremental.

Story filed 20.03.08

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