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Parks’ latest OTT Market Tracker digs into Disney’s decision to skip theatrical premieres

October 21, 2020 | By Michelle Manafy, Editorial Director – DCN @michellemanafy

New research from Parks Associates’ OTT Video Market Tracker shows that through Q3 2020, the number of OTT video services in the U.S. has more than doubled since 2014. The market now includes nearly 300 different services. The rate of closure has also declined. It reached a peak in 2018 when 19 services left the market. However, only six have ceased operations in 2020 so far.

Notably, Parks’ latest report examines the impact of Covid-19 on the longstanding practice of theatrical windowing. Many studios have put off premieres until 2021. However, Disney opted to debut two films on VOD, except in markets where its Disney+ service had not yet launched.

Impact on theaters and OTT competitors

As the report points out, Disney+’s Premier Access program initially bypasses all of the major services in the OTT space. It provides a single direct access point to viewing a piece of premium and exclusive content. As such, it not only directly competes with theaters but leading OTT services as well. It looks like Disney’s Premier Access concept is impacting the transactional VOD system and customers alike.

Disney’s strategy with Premier Access is two-pronged:

  • Drive incremental revenue among existing Disney+ subscribers. They are much more likely than non-subscribers to pay a premium on top of their monthly subscription fee to get exclusive access to a Disney-produced first-run movie;
  • Drive incremental Disney+ subscriptions among households with younger children who are interested in seeing a blockbuster title from Disney but do not yet subscribe to the service.

Long-term industry impact

Other subscription-based OTT services that produce and distribute original movies, such as Netflix and Amazon, have circumvented the traditional content windowing process with movie theaters, physical media, and other VOD platforms for years. Whichever path Disney takes for its upcoming blockbuster titles, the precedent has been set with the development of its Premier Access program.

The full financial picture has not yet emerged, despite the early success of Disney+. It will be interesting to see whether other studios follow suit and test major OTT premieres. And, of course, the entire industry is watching to see whether this was a short-term strategy to address the impact of Covid-19 or becomes a transformative trend in the film and video industry in the long term.

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