The Economics of Video On Demand: A Simulation Analysis

Ronald Rizzuto and Michael Wirth

Journal of Media Economics, 2002, vol. 15, issue 3, 209-225

Abstract: Simulation analysis and sensitivity analysis are used to identify the factors most likely to determine whether video on demand (VOD; i.e., movies on demand) is economically viable. The impact of subscription video on demand (SVOD) and of time-shifted, on-demand services on VOD economics is also explored. VOD movie buy rates, Hollywood and cable operator revenue splits, and VOD peak utilization rates are identified as key economic viability factors. SVOD and/or time-shifted services could also contribute positively to VOD economics if significant buy rates can be achieved without major impacts on peak utilization rates.

Date: 2002
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DOI: 10.1207/S15327736ME1503_5

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