There are many variables we've identified that have an impact -- positive or negative -- on the success of on-demand rentals. We can split these variables into two categories: events we know about and can plan for in advance, and ones that can't be planned for but have an effect on performance.
More than 20 of the variables we found are plannable, including holidays like Christmas or events like the Oscars. The talent featured in a film also has a measurable effect on rental performance.
But many fall into the other category. Think snow days, for example: these surprise days off are a perfect opportunity to reach a household whose members didn't plan on being home. Now, they have more time in the day, call them "on-demand viewing hours," at their disposal. (On the other hand, of course, some weather events lead to outages which could prevent families from watching anything at all.)
Recently, we noticed this phenomenon in the Los Angeles market, which over-indexed consistently against other markets in January.
In 2018, LA had a 159 index for transactions against other top markets like Detroit, Denver, Philadelphia and New York. Looking at January 2019, their index increased 27% to 201. While not all revenue spikes can be planned for, they can be explained: this increase lined up with the Los Angeles United School District teachers' strike. Schools were shut down from Jan. 14 to Jan 22, affecting around 600,000 students and their families. With their unexpected free hours, families turned to on-demand rentals.
When these unplanned events happen, it's also important to look at the MVPDs who benefit. Each MVPD has a natural geographical alignment to certain genres, depending on the markets each is zoned for and the demographics of those markets.
For example: TWC organically performs best with family titles and the markets they are zoned for skew suburban. Altice organically performs best on drama titles, with their subscriber concentration mainly in the New York market. Cox does well with action movies and is mainly in military zones. When those areas have more viewable hours (whether planned or unplanned), the movies that organically do well will pop.
In LA, a top market for TWC, a wide range of PG-rated, family-oriented titles saw the biggest bump from the strike. Goosebumps, Incredibles 2, Smallfoot and The House with a Clock in Its Walls each saw transactional boosts during the week of the strike. And, once the strike ended, each of these titles resumed their expected weekly decay.
Not all films saw viewing increases during the unplanned strike. Horror movies like Halloween, which typically have an average performance in the LA market, saw a higher-than-average decline from week 1 (before the strike) to week 2 (during the strike).
Studios want to know why a movie performed a certain way at a certain time, but the variables that contribute to on-demand rentals are often unpredictable. At Cadent, we have the experience and historical data to dig in and understand what is contributing to increases and decreases in rental revenue. We can look at performance from different angles to find explanatory connections and correlations, then make strategic suggestions.
While things like the LA teachers' strike may not have a next time, studios should be ready for similar unexpected moments when rich opportunities for on-demand titles hit. When they do, being able to move quickly and strategically is critical. For example, advertising a discounted bundle for movie rentals could make all the difference.
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