Magazine article Variety

Show Us the Vod Money!

Magazine article Variety

Show Us the Vod Money!

Article excerpt

New systems for delivery, from set-top boxes to game consoles, muddle rev pic By Gregg Goldstein

For sellers'at the American Film Market, the value of video on demand and other forms of digital content remains very much up in the air in overseas territories.

Even in the relatively robust U.K., it's difficult to predict what the marketplace will look like a year from now. Given the growing number of new services, questions about which ones consumers will adopt and the increase in piracy, the value of digital can be hard to determine in all-rights deals - and in a market based on presales, forget about valuing advances or guarantees for digital rights.

Despite uncertainty, overall on-demand content is expected to grow considerably. A recent study from U.K.-based Digital TV Research forecasts a 44% jump in on-demand TV revenue from films and TV (excluding sports and adult programming) from $4.2 billion last year to $6 billion in 2018 in 97 countries.

Though still dwarfed by the U.S.' projected $1.78 billion revenue, the biggest jumps by 2018 are expected to occur in Asia Pacific (up by 113% to $1.45 billion), Latin America (up by 129% to $380 million) and Eastern Europe (up by 89% to $362 million).

While the study Includes VOD that viewers can access via their cable and satellite operators, it doesn't include subscription VOD (SVOD) providers like Nettlix and other orthne TV and video (a.k.a. over-the-top content, or Ofl) services, or download services like iTunes. Digital TV Research principal analyst Simon Murray and other research outfits expect those will grow even bigger than on-demand TV revenue, buoyed in part by new delivery systems such as Xbox One and PlayStation 4.

"On demand still has a long way to go, even in Western Europe," Murray says. "The OTT market is really undeveloped, and there's more money to be made from Internet delivery than the traditional pay TV on-demand side."

All this growth is both promising and disconcerting to AFM attendees eager to replace lost DVD sales revenue.

"It's important that we producers and sellers protect our backend," says one seller, who spoke on condition of anonymity for fear of offending buyers. "We have to look at these rights carefully and what the value is, instead of just giving away big percentages."

Digital rights are almost always included as part of an exclusive all-rights sale to a territory, with buyers then selling them to local on-demand distribs. What used to commonly be a 70-30 seller-buyer split is now often 50-50, according to one industry expert, and on-demand sublicensing in each territory (which, depending on the ever-shifting popularity of different services, may ultimately affect the seller's take) makes things even more complicated.

"In some territories, there may be a fight between a DVD and TV distributor over who's going to take the digital rights, and you'll carve up those rights," says Independent Film & Television Alliance chairman and CineTel Films prexy Paul Hertzberg. "In a lot of the European countries, there are negotiations about who should get them, who's sharing and how to do it, because you're not going to keep digital by itself. And then if you sell to TV networks, they're taking a lot of the digital rights."

Though markets vary widely, IFTA offers an Inti. Multiple Rights Distribution Agreement template to help sellers and producers negotiate the different platforms and windows. …

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