Movie delivery is ruled by a strategy called “release windows”. It means that a movie is not available at the same time for all distribution channel. The traditional sequence is “Theater – Hospitality (airplanes, hotels, …) – DVD/rental – VOD – Premium channel – Pay TV – Fre To Air.”
It is believed that one of the reason of the slow take off of VOD is the availability of illegal DVDs before VOD. People are willing to pay a few dollars (euros or whatever money in their country) to get an earlier access even if an illegal one. In theory, offering VOD before DVD should thwart this type of behaviour.
Thus, Warner Bros announced the release of VOD before DVDs in Korea. If successful, this strategy may be generalized to China. Why Korea? Because Korea is probably the country with the best broadband network and the higher penetration of broadband. Thus, download times should be negligible and potential customers larger. Will it work? I am not sure. According to me, two conditions have to be simultaneously present:
1- The VOD release occurs at the same time than “release” of illegal DVDs. Currently, illegal DVDs pop up soon after (if not before) the first worldwide theatrical release.
2- The price of VOD has to be near the price of an illegal DVD.
Another solution could be that VOD offers attractive goodies not available on illegal DVDs (this is less obvious)
I find the strategy used in China more interesting. Warner and Paramount offer legit DVDs at a price near the price of illegal DVDs. Customers may be ready to pay a little more to have a guaranteed quality product.
For sure, the traditional release windows will drastically change in the coming years. We already see a sever shrinking in the duration of the different phases. The delay between theatrical release and legit DVD constantly erodes.