MW: What are the challenges to operating a profitable VOD business in Australia?
Paul Uniacke: Many challenges here! Australia is such a small market that it's hard for the studios to make it worthwhile for an operator who just walks in off the street and says "we want to set up VOD and distribute your movies".
The application process varies per studio but it is very involved. Legals and DRM alone will amount to $50k for some and up to $100k for others, just to approve the many and varied VOD applications that are put forward. This process can take years to get through before content is made available.
Once you are approved (and this is a big ONCE), you are launching basically a new product very much untested and in most circumstances, a virtual startup. There are also minimum guarantees to studios that need to be paid up front. The rev share varies between 50 to 70% - more closely aligned to the 70% mark (to the studio).
The operator has to bear all the costs up front, including digitisation, business development, DRM development, billing development, etc, etc. Then you require an ISP to distribute the movies through to your customer's ISP. This is also very expensive. APRA rights also have to be managed by you, not the studio.
Noting all of the above, Australia, with such a small market place, is a very tough space to be in. VOD has been around for some 20 years now, but still today there are not too many profitable operators on a global basis.
Australian producers will be challenged for some time yet. The big players in the VOD market today are not that interested in our product, they only want content as a means to an end to sell their core products.
For example, Play Station, X Box and Apple are a bad thing for this market. They are happy to set very high % splits to keep genuine operators out. What happens when they don’t need the studio content anymore, how far behind will that put the people who love the content and the industry?

MW: What sort of split do you consider equitable?
Paul Uniacke: As per above. Some 80/20 splits also exists for very new big movies released same day as DVD. Newer movies need larger % splits but older ones need to be more equitable. 50/50 or 40/60 for older catalogue would make more sense.

Could you tells us about your partnership with Hybrid TV services?
Paul Uniacke : Let this one slide l think for now, Tivo Aust (HTS ) wanted certain things and changed the model many times. We agreed to go our separate ways. They are now picking up all of the costs for the items noted above. It’s still a tough model.

MW: What plans do you have for VOD services under the Blockbuster brand?
Paul Uniacke: Blockbuster belongs to the FEG group which comprises Video Ezy and Ezy Dvd as well. We have been working on a few scenarios for some years now. Tivo was just one of these models. Download-to-USB stick is one scenario that takes away a lot of the DSL costs for both end user and us. This makes a lot of commercial sense, but time will tell.

ME : What is the place for Australian content in VOD services?
Paul Uniacke: With the right model, VOD opens up a lot of opportunity for Australian content, but then again big players will not chase it in this market.
Apple, Playstation and Xbox will not in my opinion support the local content, that’s where the USB model could also work very well with local conditions.
Holding many 1000’s of movies on a server waiting for download is not a great model today. A large in-store kiosk for USB downloads makes sense and costs are minimal once digitised. The offer can also be tailored for the local demographic.

MW: What advice do you have for Australian content creators getting their content online?
Paul Uniacke: The international guys will not really want the local content unless it's big box office. Look for the local VOD guys, although this is hard as today they do not really exist. Right now it's a tough space for content people and VOD operators.

MW : Do you see any solution to Australian content competing for shelf space on DVD stores offered by VOD or other ways of providing content?
Paul Uniacke: With the right search functions, Australian content can be big in the digital future. Localised content has had a huge impact in Asian, Bollywood and similar markets, where they have taken market leadership from the Hollywood product as they have become more sophisticated.
Not saying Aust product can do this, but it has happened in many local global markets. It's harder to make it happen in English-speaking markets but not impossible. How much government and local industry is prepared to offer support to Australian content creators will ultimately affect this.

What is your perception of the impact of the NBN on VOD?
Paul Uniacke: I am skeptical about the way Rudd rolled out NBN, skeptical about his ability to deliver it. By the time NBN is ready, file size will mean it’s not big enough or fast enough. 3D files at 40 gigs anyone??