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With DVD sales declining, movie studios unite with cable operators in support of VOD

For years, the motion picture studios treated video-on-demand (VOD) services with little fanfare. They feared that too much promotion might anger powerful retailers like Wal-Mart and Best Buy, who virtually controlled the nation’s DVD sales.

That fear is now history. Growing DVD sales are over, and DVD rental companies are on life support. Last week, Blockbuster — once the rental giant — warned in its annual report that competition and declining sales “raise substantial doubt about our ability to continue as a going concern.”

Last week a $30 million advertising campaign called The Video Store Just Moved In, was unveiled on television, in print and online. Eight motion picture companies and eight cable providers back it. It marks the first joint effort to push viewers to rent more movies through VOD on their cable services.

On-demand VOD usage soared 20 percent last year, the “New York Times” reported. On-demand rentals are also more profitable for studios than traditional rental options. While Blockbuster gave the movie studios about 25 cents of every dollar spent on movie rentals, VOD services deliver as much as 65 cents of every dollar to the studios.

Also gone is worry over “day and date” release s— the practice of offering new titles on demand at the same time the DVD hits the stores. It was found that simultaneous VOD does not cannibalize DVD sales. Now, Warner Brothers, for example, will release nearly all of its movies simultaneously. The studios largely still maintain a delay of days or weeks before traditional rental companies like Blockbuster and Netflix get access to new titles.

“Improvements in technology, the instant availability of the most recent box-office hits and thousands of library titles have fundamentally changed viewing patterns,” Derek Harrar, Comcast’s senior vice president for video and entertainment services, told the “New York Times.”

Comcast, he said, now processes about 350 million on-demand views a month, which includes television shows. The average on-demand view averages about 20 per home per month.

Studios participating in the VOD promotion include Warner, 20th Century Fox, Focus Features, Lionsgate, Rogue, Sony Pictures, Summit Entertainment and Universal. Absent are Paramount and Walt Disney. Cable partners include Armstrong, BendBroadband, Brighthouse, the iO digital unit of Cablevision, Comcast, Cox, Insight and Time Warner.