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March 2008

On-demand media: Re-inventing the retail business model

56 Tables & Charts / 30 pages
Available formats: Print & PDF
Electronic: £1990.00, $4090.00, 2990.00 Print: £995.00, $2045.00, 1495.00

On-demand media: Re-inventing the retail business model

The DVD business is approaching saturation point in key markets, with the release of thousands of new titles every year resulting in intense pressure on shelf space for brick-and-mortar retailers. Even for online retailers, the sheer volume of titles available is putting the supply chain under strain.

For retailers, the issue of how to reconcile the ever-expanding DVD catalogue with intense pressure on shelf space is becoming increasingly urgent. Meanwhile, for rights holders, there is growing concern that only the most popular titles can secure shelf space. Proponents of on-demand media (ODM) argue that this technology has the potential to address these problems.

This report addresses the arrival of commercial ODM services that will enable retailers to offer content without the constraints associated with stocking extensive physical inventory. It assesses first phase DVD manufacturing on-demand solutions and looks ahead to next generation services that will support digital delivery to portable video devices and flash storage.

The report examines the ODM supply chain and compares in-store and online solutions, including detailed forecasts for both sectors in the US and Europe. It evaluates potential business models and technological hurdles, as well as profiling the service providers emerging in this sector. In addition, it offers a genre-by-genre analysis of ODM from a rights holder perspective and outlines opportunities and obstacles. The report also considers what impact this technology will have on specific retail channels, from specialist video retailers to non-traditional outlets.

Key findings:
The ODM market will initially be focused on 'long tail' content as rights holders move to exploit niche titles not considered commercially viable in the traditional DVD supply chain.
As the number of participating rights holders and retailers increases, the ODM market has the potential to expand to include more mainstream content.
Transactions through online ODM (e-tail solutions) will grow faster than in-store ODM (brick-and-mortar retail solutions) because the method of manufacturing is invisible to consumers so will not require them to adjust to new technology to the same extent as in-store solutions.
TV and other non-film content features heavily in ODM services and is often available on an episodic basis allowing consumers to create compilation DVDs.
Unlike the traditional DVD supply chain, ODM enables rights holders to monetise content with a short 'shelf life' such as sports fixtures.
Catalogue movies will dominate the ODM market as the sector develops with rights holders and retailers offering more library titles through these services.
At the outset, a large proportion much of the content accessible through ODM solutions will not be available through traditional distribution channels, meaning that ODM transactions will be largely incremental to the existing video business. However, as more mainstream content is made available the rate of cannibalisation will increase exponentially.

In the report:
Forecasts for in-store and online ODM transactions and spending in the US and Europe to 2012.
Breakdown of potential incremental and cannibalistic ODM transactions and spending to provide net DVD sales.
Assessment of current DVD landscape and potential impact of ODM solutions.
Analysis of the ODM supply chain, including examination of potential business models and insight into revenue splits and margins.
Identification of key players in the ODM space and their respective strategies.
Evaluation of rights holder opportunities and implications for the retail environment.

Table of contents

Executive Summary

The DVD landscape

On–demand media
What is on–demand media?
Back story
ODM solutions
Pros and cons of each model
Setting up an ODM solution
Business models
Supply chain
Technological issues
ODM service provider profiles

What does ODM offer the rights holder?
ODM as an opportunity
Potential obstacles for ODM
Which genres are suitable for ODM?
ODM and the long tail

Retailer perspective
Diversification of video retail
Potential impact of ODM
ODM solutions in the field
Geographical concentration of ODM
ODM deployment by retail channel

Tables and charts

Executive Summary
In–store ODM genre splits
Online ODM genre splits

Market forecast
US: In–store ODM volume
US: In–store ODM value
US: Online ODM volume
US: Online ODM value
Europe: In–store ODM volume
Europe: In–store ODM value
Europe: Online ODM volume
Europe: Online ODM value

The DVD landscape
US: DVD titles released

On–demand media
US: Physical vs. digital retail 2007
Europe: Physical vs. digital retail 2007
ODM pricing scenarios
ODM flow of funds
Average ODM revenue split
Average off –the–shelf DVD revenue split
ODM revenue model 1: Catalogue movie
ODM revenue model 2: Children's programming
Broadband penetration vs. DVD penetration 2007: US & Europe
Download times
Digital retail market shares

What does ODM offer the rights holder?
Evolution of the DVD business: US & Europe
Europe: DVD sales by genre
US: DVD sales by genre
How the long tail works in the UK DVD market

Retailer perspective
UK: DVD retail market by retail channel
US: DVD retail market by retail channel
Evolution of DVD pricing in US & Europe
Relationship between time spent in–store and spending

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