AOL continues to expands its online video initiative and this time steps into the long-form content arena with Miramax at its vanguard. The two have partnered up to get the latter's movies on the AOL On network with its own channel so they can be offered to users in an ad-supported model.
This is a big step for the industry as a whole. If AOL and Miramax make this work and make it profitable they may use it as a case study to get other major movie libraries into their own ad-supported channels as well. It could create a movement that begins an erosion of Netflix's audience over time. After all, Netflix recently announced there would be some fee increases for new subscribers, but why do there and pay when you could just watch free movies with ads in them? Granted, many who subscribe to Netflix are ad-averse and may not see the value in the Miramax/AOL On channel.
Miramax, who has over 700 movies in its library, is betting that enough will see the value in it and that they can better monetize that list of old movies with an ad-supported model.
The difference between an SVOD service like Netflix and what Miramax is doing at AOL is the refresh rate of content. Whereas Netflix sees value in a long-term library build out, Miramax will refresh its library of free movies monthly. This will work to retain a bit of scarcity and, I imagine, Miramax hopes will continue to bring users back each month as they search for something to watch.
If It Works...
If the move works and Miramax starts earning some serious dough from its ad-supported movie channel on AOL, it could trigger a move by other studios and content owners to try their hand at making money from that business model. Warner Bros has a pretty big distribution rights library as well including a lot of old MGM stuff which they might try to monetize in this same fashion. Same goes for NBCU.
This may also dry up the well of older movies for SVOD services like Netflix and Amazon in an effort to generate more revenue. Then again, maybe not as studios might try to 'double dip' and get those non-Netflix users to generate some revenue for them while they still rake in millions on giving the SVOD service rights to stream without ads. After all, they already have deals with Netflix, Amazon, Hulu, etc. So this is probably just another revenue stream on that same content.
The Miramax movie channel is scheduled to launch April 30 along with a full-blown Movies area on AOL On and will feature a couple dozen movies a month. The Movies area has featured short-form content and this will be the first major push into full-length films.