M3GAN, (aka MEGAN), from left: Amie Donald as M3gan (voice: Jenna Davis), Violet McGraw, 2023. © Universal Pictures / Courtesy Everett Collection

Universal finally answers the PVOD revenue question

Finally, some real numbers to evaluate the value of the PVOD game for studios. And it’s a revelation.

Universal’s top executives have been speaking at length recently the New York Times, stating that the studio has grossed $1 billion in less than three years (as of July 2020). That’s when he started putting most of his films on PVOD after their third weekend (after 31 days if one opens to over $50 million).

Theatrical box office is reported daily; judging VOD’s actual revenue, to put it charitably, is a piece of cake. Premium Video on Demand (usually $19.99 for a 48-hour rental) and VOD (ranging from $3.99 to $6.99, though normally $5.99) can only be judged by their relative position in the charts of platforms such as iTunes, Vudu and Google Play.

At IndieWire, we broadcast PVOD performance from the charts these three platforms provide on a weekly basis (here’s last week’s report, for example), but they only provide rankings with inconsistent metrics (Vudu charts by revenue, others by transactions).

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Beyond the interesting details in the Times story (such as earnings of over $50 million for “Jurassic World: Dominion,” “The Croods: A New Age,” and “Sing 2,” and an astonishing $25 million for “News of the World” and “M3GAN”), the figures allow you to better perceive the benefits for Universal. (Note: While unverified, a publicly traded company must be truthful in its financial reporting.)

World news
“World News”Bruce Talamon/Universal Pictures

For studios, the main appeal of VOD is a nearly 80% revenue share; with theaters, it’s close to 50/50. (Also: When Universal launched its three-week VOD policy in July 2020, theaters reportedly received slightly better terms.)

Since the start of the pandemic, domestic box office revenue for Universal (including its Focus division) has been approximately $3.5 billion. This is in front of no. 2 Disney (including Searchlight) with $3.2 billion.

Add in Universal’s PVOD revenue and the total is $4.5 billion. (PVOD includes some from the UK, where windows are longer and VOD platforms are less advanced. Universal sources tell IndieWire that represents a small amount over the reported $1 billion.)

In terms of revenue, POV adds about 30 percent. But wait: it gets better for Universal.

Its estimated theatrical film rental — best guess — is about $1.8 billion. PVOD comes in at around $800 million. That’s 44 percent more.

With the most aggressive PVOD schedule in the industry and the most films (53 releases since January 2022), Universal has taken the lead at the box office. This also creates a virtuous circle: the aggressive PVOD schedule makes it easier for them to produce more films.

Three years ago, then-NBC/Universal president Jeff Shell announced his PVOD policy, and Cineworld, owner of AMC and Regal, suggested a boycott of the studio. Universal appeased them with a deal, and today, while theaters may not love PVOD, more movies benefit theaters.

Beyond cinematic exclusivity, the move to PVOD often buoys LINK at the box office as domestic marketing can also benefit theaters that continue to show the film. This reinforces the idea that much of the PVOD audience rarely goes to theaters, and theater audiences would rather pay $20 for two tickets than the same amount for home viewing.

The PVOD boost seems especially important for the Focus versions. The production and marketing costs for the Focus releases are far lower than for other Universal titles. With $5 million in PVOD revenue, about $4 million goes back to the studio. That’s the equivalent of an estimated $8 million in theatrical gross, far more than most specialty titles pull in. This makes it easier to greenlight these titles.

Puss in Boots: The Last Wish
“Puss in Boots: The Last Wish”Courtesy of DreamWorks Animation

Family films, a huge part of Universal’s recent success, seem utterly unscathed in their theatrical totals. After grossing $75 million, “Puss in Boots: The Last Wish” added $110 million at the box office after its PVOD release. While that’s an extreme case (“Puss in Boots” benefited from many weeks of being the only kid-friendly film in theaters), it also represents millions of people who could have more easily spent that money by staying at home.

One outcome that could come from the Universal revelations is to elevate PVOD in platform media coverage. Streaming is usually the fourth stage of release after cinema, PVOD and VOD. But it’s not just Universal that is prioritizing PVOD, increasingly delaying streaming until all VOD revenues are maximized.

Reporting numbers, whether it’s box office receipts or subscribers for streaming sites, focuses attention on these elements. But in terms of directly impacting a film’s financial revenue, PVOD results have become critical. Getting specific data like this is important to understanding why the initial stream became less frequent after the initial elevation. It also highlights how essential PVOD is in our ever-changing film financial ecosystem.