Universal says that a shortened premium VoD (PVoD) has created a new revenue stream without significantly impacting cinema takings. Universal Pictures and Focus Features broke the tradition of giving theaters an exclusive 90-day window to play new movies in 2020. Instead, they introduced premium video on demand (VOD), making movies available for digital rental or purchase after as little as 17 days. This move caused concerns among filmmakers and theater owners who feared that audiences would prefer watching films at home rather than going to theaters. However, Universal’s willingness to experiment seems to have paid off. They have generated over $1 billion in premium VOD revenue in under three years, with little impact on ticket sales, and sometimes even increased box-office sales.

Universal found that releasing films on premium VOD did not significantly decrease revenue from traditional VOD, which offers rentals or purchases at lower prices after 90 days in theaters. Premium VOD was seen as an additional revenue source that didn’t exist before. Universal charges up to $25 for a 48-hour rental and $30 for a purchase during the premium VOD sales period. Approximately 80% of the revenue goes to Universal, with the remainder going to sales platforms and theaters.

Premium VOD revenue is smaller compared to box-office sales but provides a safety net for movies that underperform. It has become valuable for art films as a marketing tool for rentals and purchases. Premium VOD offers flexibility to Universal, allowing them to decide when to make content available in homes based on optimal timing for individual films. NBCUniversal reported a 23% increase in revenue from its studios in 2022.

While premium VOD has had some impact on streaming, it hasn’t been as significant as anticipated. Universal is cautious about the impact of selling or renting movies before they arrive on streaming services, as it might reduce their value as a tool to encourage sign-ups. Overall, Universal’s experiment with premium VOD has proven successful, providing a new revenue stream and allowing greater control over release strategies.