So says a new note by Pali Research analysts Rich Greenfield and Mark Smaldon ..they say that even though Comcast and Time Warner Cable are currently trialling the release of movies on their VOD systems at the same time that those same movies are released on DVD, it would be a grave mistake for the movie industry in the long run, as it would dramatically increase the volatility of the business (in what is already an inherently poor ROI business). The typical window used to be 30-45 days between a DVD’s release and VOD availability.

Even though it would appear financially prudent for movie studios to trade a $4.00 DVD rental at a rental chain (of which 30% goes to the studio) for a $4.00 VOD transaction (of which 70%-plus goes to the studio), the analysts believe that when consumers are all actively talking to their friends and family about the tremendous depth and breadth of VOD and the lack of need to go to a video store we believe there will be a negative impact on sell-thru. “We believe the creation of a new premium HD VOD release window between theatrical and DVD release at a $30-$40 price point that includes the DVD when released (first proposed by FOX last year) would be far more intriguing than day and date VOD at rental pricing.”

Also, the note says that “VOD is the purchase of one movie at a time, whereas, walking into a Blockbuster store, the average consumer rents between 1.5-2.0 movies per visit (i.e. you rent a new release, while your child picks up some other movie).  So even if you believe that enhancing VOD will not have an impact on retail sales (contrary to our view), VOD buy rates still have to nearly double to compensate for the multiple rentals a consumer makes at a rental chain (or by using a video rental subscription).”