Universal Pictures and Focus Features broke with the long-standing industry practice of giving theaters an exclusive window of around 90 days to play new movies in the peak of the pandemic. Instead, they made their movies available for digital rental or purchase after just 17 days. This introduction of premium video on demand, or PVOD, generated more than $1 billion for Universal in less than three years while ticket sales remained steady and, in some cases, even increased. With PVOD advertising and word of mouth, box-office sales for movies like “Minions: The Rise of Gru,” which was made available for PVOD after 33 days in theaters, even exceeded those of its 2015 predecessor at the same point. Revenue from Universal’s studios increased 23% in 2022 alone.
Universal is charging as much as $25 to rent a film for 48 hours and $30 to buy it during its PVOD sales period, while traditional VOD lets viewers rent or purchase movies at lower prices after 90 days in theaters. Universal thinks it has found an entirely new customer with PVOD, according to Donna Langley, the chairwoman of the Universal Filmed Entertainment Group. For some art films, theatrical releases are becoming valuable mostly as marketing tools for PVOD rentals and purchases. Premium V.O.D. revenue is small compared to box-office sales, but it provides a financial safety net for box-office misses.
Universal is also benefiting from the flexibility allowed by its PVOD strategy. The studio has taken back control of the decision of when to make its content available in the home, based on the most optimal timing for individual films. Mr. Levinsohn, the Universal Filmed Entertainment Group’s chief distribution officer, says that PVOD has positively impacted the studios’ business and Universal has released more movies in theaters than any other Hollywood studio. Every studio is trying to find creative ways to maximize movie profits, and PVOD seems to be an effective and profitable strategy for Universal.
