Consumers' lack of awareness and price sensitivity limit the VOD market, say analysts

Aug. 26, 2004
August 26, 2004 San Francisco, CA -- Only 11.1% of respondents to a recent survey claimed to have used or had access to video on demand (VOD), suggesting a ripe target for service providers, contends market research firm RHK Inc.

August 26, 2004 San Francisco, CA -- When asked if they would be willing to pay $3, $5, or $7 to download a newly-released movie at home instead of renting a DVD/video from a video store or through the mail, more than 60% of consumers in a recent RHK survey said that they would be willing to pay $3. However, only 11.1% of the survey respondents claimed to have used/had access to video on demand (VOD), suggesting a ripe target for service providers, according to market research and advisory services company, RHK Inc.

With so much interest, why aren't consumers using VOD? Most consumers are either unaware of the service or its availability and logistics, reveals the survey. In addition, most providers require a subscription to digital cable in order to have access to on-demand movies. Thus, limitations on access and a lack of consumer knowledge are large roadblocks in this market.

"Beyond unfamiliarity with current VOD offerings and restrictions based on digital cable requirements, a significant purchase barrier for customers is the potential price point of VOD," says Meredith Jameson, analyst with RHK. Higher prices are associated with a
15% reduction in share of households willing to pay for VOD, according to the RHK survey.

RHK's "Broadband Content & Services" program examines the market opportunities, revenue growth drivers, and financial and operational risks associated with the distribution of high-value content on broadband networks. For more information, visit the company's Web site at www.rhk.com.

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