Tip of the Week: The Devil’s in the Definitions
Do you really know what "VOD" means?
There is no universal standard yet for definitions of digital rights. While IFTA (the organization that runs the American Film Market) has rights definitions for its signatories, it doesn’t cover all contracts out there. Many distributors and digital platforms use their own contracts with a range of definitions that don’t match up with those of others. So, let's take a look at the term "VOD." If a contract notes "VOD Rights" but does not define them or defines them broadly, it opens up a world of interpretations and questions. Recently, I even dealt with a contract that had one definition for "VOD" and another for "Video-on-Demand." Go figure.
The term "Video-on-Demand" sometimes is used only to refer to "Cable Video on Demand," but other times its used much more generally. IFTA categorizes "VOD" as a "PayPerView Right (Demand View Right)," defined as "transmission by means of encoded signal for television reception in homes and similar living spaces where a charge is made to the viewer for the rights to use a decoding device to view the Motion Picture at a time selected by the viewer for each viewing." In other contracts, "VOD" could include things like "SVOD" (Subscription Video on Demand), which refers to subscription services such as Netflix and Hulu Plus. And the fees to the distributor and/or you could differ vastly.
In a TV Everywhere (and hence Film Everywhere) multi-platform, all-device playable universe, you need to know exactly what you’re licensing to whom. Why? For starters, you do not want to inadvertently be in breach of contract. But also, you don’t want to lose opportunities for the best distribution — you should not give rights away for disadvantageous terms, especially if there are different fees for the myriad categories of rights and types of distribution.
One can split rights based on mode of delivery: Download-to-own (e.g. iTunes) versus ad-supported streaming (e.g. SnagFilms). Or based on payment method, like Subscription Video on Demand vs. Free Video-on-Demand, which can refer to ad-supported content that generates some revenue or be just plain old free. A Netflix SVOD license, for example, has a fee that can vary over time. The fee is determined by the demand in the system. Whereas Cable VOD is a rev share based on transactions. Cable VOD also involves numerous operators, with just a couple of middle companies servicing the primaries. And some of those aggregators and distributors charge different fees for different classes of digital distribution and that can be for very good reason. The work is different, and so is the revenue.
So, how does one classify an iPhone app that offers in-app purchase downloads? Are they mobile rights? Digital-download-to-own rights? Does the term "VOD Rights" encompass them? Ask three people and you might get three different answers. So the devil is in the definition. Read definitions carefully before you sign on the dotted line. And don’t rely on a distributor/aggregator/platform's pre-set definitions, but know what you want and what is possible for your film. Then carve it up and spell it out. For example, you may be doing a broadcast deal that prohibits “mobile wireless” distribution (perhaps for a set amount a time) but you want to make sure you’ll be allowed to do a Netflix SVOD deal that will entail making the film available on mobile devices. The broadcaster may allow this, if you argue for it (as long as the film is not streaming for free to non-subscribers). And perhaps your film has an iPhone app and is available for in-app purchase. That too should be allowed and not be prohibited by a holdback against "mobile wireless" because this form of distribution is no different than DVD or digital-download-to-own in terms of the revenue model.
But remember, not all films have the same revenue potentials or work the same way on all platforms. Know your film, know its audience and their film-consumption habits. And, above all, be sure to know how any and all rights are defined, classified and accounted for and analyze that in relation to the realistic potential for your film. Not all films perform well on Comcast, for example. These days Netflix revenue is bigger for many films than various other platforms, and yet that may change. Since the launch of the iPad, download-to-rent (DTR) is growing and is anticipated to grow further. This is the kind of stuff we’ll explore in this ongoing Tip of the Week blog.