Premium VOD Pricing too High?

According to new research from The Diffusion Group, premium VOD services such as those soon to launch from DirecTV and Comcast are priced too high to support significant demand. TDG's report "Premium Video-on-Demand Windows -- The Consumer Speaks" examines consumer receptivity to two aggressive rental windows -- same-day and week-after theatrical release -- as well as price sensitivity to these rentals at various premiums.At the moment, Warner Bros., Sony, Universal, and 20th Century Fox have signed on to provide content for the new "Home Premiere" premium VOD service, the brand under which TV operators and Hollywood studios will collaborate to distribute rentals 60 days after their theatrical debut (compared to the current window of 90 days), assuming the title in question is no longer yielding significant theatrical revenue. The cost to the consumer will be around $30, approximately six times the cost of a $5 non-HD rental in existing release windows.TDG examined likely demand at four premium points including $5, $10, $15, and $20 above standard rental fees. When asked of their willingness to pay a $20 premium (meaning $25 in total cost) for a same-day rental, only 8% of consumers surveyed were highly likely to rent the title. On the other hand, 21% were highly likely to spend an extra $5 for a same-day rental, suggesting that consumers are unlikely to pay the more sizable premiums currently under consideration.