Digital Entertainment Marketplace Set to Launch as New Force in OTT

August 18, 2010 – Hollywood studios and other major players in digital entertainment are close to launching UltraViolet, their new name for a long-planned electronic media marketplace that could make over-the-top access to premium content a far more ubiquitous phenomenon than it is today.

The consortium of nearly 60 companies known as the Digital Entertainment Content Ecosystem LLC (DECE) plans sometime this fall to begin beta testing the new open market for digital distribution of movies, TV shows and other content over multiple platforms, including connected TVs, PCs, game consoles, smartphones and tablets. As previously reported (February, p. 1), DECE earlier this year established some of the technical components required to support the shared billing environment, where a consumer from a single account can purchase any UltraViolet-compliant content offering with "buy-once, play-anywhere" convenience.

Additional technical specifications and licensing details will be soon be issued for companies who want to offer UltraViolet content, services and devices, says Mitch Singer, DECE president and CTO of Sony Pictures Entertainment. "Our goal is to firmly establish UltraViolet as the symbol for digital entertainment – one that gives consumers the freedom of access wherever they are, the confidence of knowing how it will work and the broadest choice of content, stores and devices," Singer says. 

Once the UltraViolet ecosystem is operational, consumers will be able to create a cloud-based account with digital rights locker via one of many UltraViolet service providers or through the UltraViolet website, he explains. They will then be able to access and manage all of their UltraViolet entertainment, regardless of where it was purchased.

To facilitate bringing UltraViolet to market DECE has named Mark Teitell, an expert in consumer electronics startup operations, as general manager. "My role is to be the launch czar," Teitell says. "I'll be helping to coordinate functional things like product development, financial planning and marketing."

Along with Sony Pictures, the list of studio participants in DECE includes Fox, Lionsgate, NBC Universal, Paramount, and Warner Bros. Disney, the notable exception, has its own digital sell-through platform in the making – KeyChest, which it has had little to say about since January. Many of the powerhouses in media distribution, retailing and technology are also involved with DECE, including Adobe, Best Buy, BT, CableLabs, Cisco, Comcast, Cox Communications, HP, Huawei, IBM, Intel, LG Electronics, Liberty Global, Microsoft, Motorola, Netflix, Neustar, Nokia, Panasonic, Philips,  Samsung Electronics, Thomson and Toshiba.

"I think UltraViolet is getting commercialized this year at a critical point of time," Teitell says. "Consumers know that digital technology should be increasing the value and enjoyment they get out of entertainment, but it hasn't happened so far."

Instead, he notes, content is obtained from myriad sources through myriad accounts specific to delivery and reception devices. This discourages consumers from buying into the convenience of electronic purchases and leaves studios short of the mark in attempting to make up for the drop-off in DVD sales.

At the beginning of the year DECE said it had chosen Neustar, Inc. as the supplier of the "Digital Rights Locker," a cloud-based authentication service and account management hub that allows consumers to access content from multiple registered devices over multiple services. The group also defined an UltraViolet Common File Format, which can be licensed by any participating company to create a consumer offering that will play on any service or device built to DECE specifications. DECE will provide licensees an open application programming interface (API) that allows any Web-enabled storefront, service or device to integrate access to the Digital Rights Locker into its own consumer offering.

Teitell says there's still some work to be done to refine some technology specifications and the terms of the legal agreements that will define how offerings are made to consumers. Then DECE will begin the beta test of its "UltraViolet coordinator," the central hub at the heart of the account management system. "The specifications that define how companies interact with the coordinator technically as well as the legal terms that tell a customer, 'This is what I'm agreeing to,' are in advanced stages of finalization," Teitell says.

Teitell doesn't volunteer any information about who will be offering content through the platform but suggests the rapid expansion in DECE's membership, including new members based outside the U.S. such as LG Electronics, BT, NDS and Huawei, signals the participation could become widespread fairly quickly. "The agreement on the part of our membership to assume a brand identification and to put the weight of branding behind the platform to make it meaningful to consumers is indicative of escalating commitment," he says.

The Canadian theater chain Cineplex Entertainment, a new DECE member, offers one interesting example of how this branded approach to a universal market for electronic sell-through could expand the range of entities offering content digitally.  "Cineplex is dedicated to expanding and enhancing entertainment choices for our guests both in our theaters and at home through our Cineplex Store," says Pat Marshall, the firm's vice president of communications and investor relations. "Leveraging the benefits of the DECE ecosystem is part of our plan for online innovation as we prepare to launch our digital download product later this year."

In another move signaling the emergence of ubiquitous digital purchasing options, DECE member MOD Systems, a developer of self-service digital download kiosks, says it has entered into a strategic partnership with Sonic Systems to provide retailers a complete, multi-platform system for digitally delivering premium entertainment. The DECE-compatible system integrates Sonic's RoxioNow software solution for over-the-top Internet delivery of entertainment with MOD Systems'  kiosks.

 Participating retailers will be able to provide consumers in-store options for purchasing digital film and television titles via a wide range of devices, including PCs, laptops, Blu-ray disc players, HDTVs and smartphones. Sonic and MOD Systems say they will announce additional details of their initiative later this year, pending the securing of licenses from content owners.

"Today consumers have a variety of physical and digital entertainment purchase options, both in-store and online, but without a bridge that connects them," notes MOD chairman and CEO Anthony Bay. "With Sonic we're taking a major step toward giving consumers easy access to digital entertainment whether in-store, online, at home or on the go, all sold and supported by the retailer brands consumers trust."

Content accessed from MOD kiosks is delivered in the GreenPlay format for storage on Secure Digital (SD) memory cards and playback on any Windows PC as well as a growing number of GreenPlay-compatible consumer electronics devices, Bay notes. He says MOD's new GreenPlay software development kit enables software developers and device manufacturers to easily add GreenPlay support to software programs, portable media players, set-top-boxes, Blu-ray Disc players and televisions. At the same time, entertainment from online storefronts of participating retailers will be streamed or downloaded to portable and connected devices to consumers wherever they happen to be through the RoxioNow entertainment platform.

"While we've seen a significant increase in the number of consumers embracing over-the-top video services, many still turn to physical storefronts as their destination for entertainment," observes Sonic president and CEO Dave Habiger. "Leveraging kiosks to provide an in-store way for consumers to purchase entertainment in a digital form will help educate more consumers to the convenience and flexibility digital entertainment can afford them."

Notwithstanding the membership in DECE of service providers like BT, Comcast and Cox, the proliferation of digital storefronts offering content through a universal consumer account platform suggests OTT could become far more integral to the entertainment experience of average consumers than it is today. Indeed, with digital rights management policies enabling the setting of usage terms for rentals of movies and time-shifted TV as well as straight retail purchases, the UltraViolet impact on consumer behavior could have major implications for existing subscription service models.

"The core guiding plan for UltraViolet over time is to provide the flexibility for companies to support multiple ways for consumers to enjoy content," Teitell says. "Having an open, interoperable source of digital proofs of purchase, rights and entitlement that can be controlled by the consumer and can be utilized across service providers, retailers and content providers will, in my own view, make UltraViolet valuable for any number of things where consumers can have one predictable way to access and enjoy content."