Window pains: How the subscription window affects title performance

It is often assumed that the uptake and use of subscription video-on-demand services is a key contributing factor to the ongoing declines witnessed across the home entertainment market. Part of the argument suggests that there is ‘too much content’ – that through subscription on-demand services, users are typically presented with more content than they could possibly consume, and as a consequence develop an unwillingness to spend on purchasing or renting content on DVD, Blu-ray or via digital stores.

To some extent, the film industry is afforded some level of protection from this in the form of windowing strategies. The unavailability of key titles via subscription on-demand for an extended period post-theatrical means that fans must purchase or rent new releases from digital or physical stores – if they want to obtain legal access to them during this period. And this can be seen in the profiles of those who are highly engaged with content – subscription on-demand users, for instance. Ampere’s consumer studies suggest that subscription video-on-demand users are actually among some of the heaviest buyers and renters of film and TV. In the UK and USA, subscription on-demand customers purchase or rent films at nearly double the rate of the average consumer.

Yet the two issues above are not mutually exclusive. Subscription VoD customers can be amongst some of the strongest media purchasers, yet still also be influenced by the widespread availability of content into purchasing less than they might otherwise.

This effect can be seen more clearly at the point at which titles do finally make the transition out of the exclusive retail/rental window and onto subscription on-demand services, in the form of chart-position deterioration. Ampere’s analysis of a basket of over a dozen major Action & Adventure releases spanning the past 18 months suggests that titles undergo a substantial drop-off in their chart positions on digital retail and rental stores following their debut on subscription on-demand. 

In the UK for instance, chart positions for this basket of titles averaged at between 30 and 50 over the three months prior to their debut on subscription on-demand. Following release on subscription platforms, the titles dropped to an average of between 169 and 253 in the charts over the subsequent months. There are a few drivers for this change. Firstly, it should be noted that a slow and steady decline in chart positions is normal for titles as their addressable market shrinks and they become less prominent on stores – supplanted by new alternatives. Secondly, and more importantly – given the accelerated drop-off in chart position – availability on subscription VoD will mean that subscribers can view a film without purchasing or renting it for a separate fee, reducing purchase incentives. And thirdly, holdbacks on rental availability are often applied at the point at which titles become available on subscription – leaving only the higher-priced retail option for consumers, and further reducing the addressable market.

Ultimately, the equation as to whether this is a net positive for studios and distributors will be dictated by the value obtained from the subscription window and whether this more than compensates for any downside – but it does strongly suggest that subscription on-demand movie services have a direct and observable impact on performance of home entertainment titles – beyond the less tangible effect of ‘too much content’.