Mill Creek Entertainment, which built a retail niche for itself selling “value-priced” DVDs at Walmart, Amazon and Target, has engaged Zype, a cloud-based video distribution service, to help it launch a new over-the-top transactional video on demand (TVOD) service to launch in late summer of this year.
The company hopes to transition eventually to a combined TVOD/SVOD model, though it hasn’t yet set a timetable for this to take place.
In addition to streaming support, Zype would handle monetization, audience management and analytics, similar to the way other third-party streaming providers like JW Player and Kaltura do.
The news comes on the heels of Zype’s announcement that it raised $2 million in another seed round of funding, led by Revel Partners. That brings its total seed funding to $3.6 million according to TechCrunch. Additionally, Zype’s founder and CEO Ed Laczynski said the provider has seen revenues grow more than 40 percent each quarter over the past 12 months.
How well consumers will take to buying (or renting) from Mill Creek’s catalog online remains to be seen. The distributor’s DVD products are probably most attractive to last-minute Christmas shoppers trying to find cheap stocking stuffers for visiting relatives and so-so acquaintances (come on, you know you’ve been there).
But Mill Creek could be taking a leap into the TVOD market at a good time. Transactional has never really taken off to the extent that SVOD did (Amazon excepted, but then it has a huge retail presence to piggyback its Instant Video service on). The very same retailers with whom it partners to sell its physical products took a stab at TVOD with mixed results. Target Ticket shuttered in early 2015. Walmart’s VUDU service is still quietly operating, offering recently released digital titles (and more recently, the option to have both a physical DVD or Blu-ray copy and a digital version in an UltraViolet locker).
However, evidence of rekindling interest in transactional is growing, and it’s happening alongside growing consumer demand for more video content. According to a June Nielsen report, viewers now watch video for an hour more per day on average than they did last year. Research firm Statista says that the U.S. TVOD rental market is worth about $2.08 billion this year, while online video streaming and downloads combined are about $9.8 billion -- up from $7.5 billion in 2014. Average revenue per user is $24.08 for transactional video – down a few cents from $24.63 in 2014 -- and $95.13 for video downloads and streaming, up from$81.45 in 2014, the firm found.
Meantime, at least one failed streaming effort is being rekindled: Redbox is trialing a TVOD service with a select number of its rental customers. And online players are showing some interest in transactional’s potential; for example, FilmOn recently acquired the pretty-much-defunct CinemaNow, once Best Buy’s TVOD option.
Walmart wouldn’t necessarily be a direct competitor to Mill Creek, either. For one, VUDU’s titles tend to be recently released movies and television shows; Mill Creek licenses and distributes older fare directly from studio divisions like Sony Pictures Home Entertainment and Warner Home Video.
Plus, Mill Creek is looking for that same value-conscious retail customer online. “Zype has given us the flexibility to create a monetization model that gets us beyond revenue sharing and enables us to maintain profitability with bundled content that can be offered at a value price point,” said Barrett Evans, VP of marketing and product development.
To promote the upcoming TVOD offering, Mill Creek will insert coupons inside its DVD and Blu-ray titles “that will enable consumers to stream content directly from Mill Creek’s website or branded apps on Amazon Fire TV, Apple TV, and Roku.”
Viewers can also get an early look at the streaming service on the distributor’s website, where curated classic movie collections and nature documentaries are available to watch on desktop only.