UltraViolet’s Defenders Outline Path to Mass Adoption in 2012

Mitch Singer, president, Digital Entertainment Content Ecosystem & CTO, Sony  Pictures Entertainment.

Mitch Singer, president, Digital Entertainment Content Ecosystem & CTO, Sony Pictures Entertainment.

January 26, 2012 – Call it a beta launch and look for big things to happen when UltraViolet really gets going.
That was the message from the backers of the electronic sell-through platform as they made their case for mass consumer adoption by year’s end before a skeptical press audience at the Consumer Electronics Show this month.

With 19 UV-branded movies released on DVD so far, over 750,000 consumers have signed up for digital locker accounts, executives reported. But it may turn out that the biggest thing that has happened so far to jump start a strategy that’s supposed to supplement the losses suffered from a multi-year decline in DVD movie revenues has nothing to do with new disc sales.

At CES Rovi announced that consumers will soon be able to use its Digital Copy Solution to turn their existing DVD collections into cloud-stored libraries accessible on any UV-supported device. The first CE manufacturer to enable the Rovi solution is Samsung, which said its Disc to Digital feature will be available later this year on its Smart Blu-ray players.

These and the players of any other manufacturers who take advantage of the Rovi platform will be able to recognize movies on consumers’ discs, authenticate whether their origins are legal and then trigger access to the movies from the cloud. “We’ll have a dedicated button on the remote control that allows you to upload content from your personal inventory to the UV cloud,” said Tae-Jin Kang, senior vice president of Samsung’s Media Solutions Center. “We’ll have a price option for you to upgrade the content to full HD quality in the cloud.”

Given the limited availability of new release titles for UV activation, the possibility that consumers will be able to convert legacy movie libraries to a format they can access on their PCs, laptops, tablets and smartphones potentially changes the value proposition for engagement in the platform during the year ahead. “Disc to Digital is a revolutionary way for consumers to future proof their DVD library,” said Steve Polsky, president of Warner Bros.’ Flixster, which will support the Samsung application.“ They can take their movie and TV collection with them and watch it when and where they want.”

One of the significant gating factors to consumer adoption of UV will be the duration of barriers that currently prevent access to content on many types of devices. While, in some instances, as with PCs and some brands of tablets and smartphones, devices can be enabled to work with the UV file format with a client software upgrade, others, including the most popular brands, namely iPhone and iPads, will not be compatible until further steps are taken.

For devices like Blu-ray players not already equipped to support UV the upgrades will have to occur at the factory owing to the limited processing power most players have to accommodate a software client upgrade. But in other cases, like that of Apple, the problem has to do with the fact that the supplier isn’t a member of DECE (Digital Entertainment Content Ecosystem), the organization behind UV.

This is just a partial barrier, however, insofar as a distributor like Flixster that is both a UV licensee and is equipped with its own device distribution platform can stream the UV stored content over formats native to the targeted devices rather than requiring that they be compatible with the UV file format. Such distributors, so far few in number, will be vital to making UV a practical cloud solution on a mass scale.

Flixster, along with supporting the Samsung Disc to Digital application, announced it would be a distributor for UV content to Panasonic’s VIERA line of connected TVs and Blu-ray players. Consumers will be able to access their UV content by simply launching the new Flixster app on these devices, the companies said.

Another bright spot on the distributor front is Amazon, which at CES became the first retailer to announce agreement to support UV content sales and distribution, albeit in conjunction with just one, unnamed studio’s content. But there were setbacks as well.

Most notably, Netflix let it be known it was dropping its membership in DECE. Moreover, Best Buy, a founding member of DECE, has yet to make its plans known. Walmart, through its subsidiary Vudu, is also a member but has not made a move either.

Nor have potential UV allies like the cable companies, telcos and DBS providers, even though it would appear to be in their interests to offer subscribers a buy-to-own option with all the bells and whistles associated with UV. Such players’ involvement would help solve the scaling problem, since they would be able to support streaming access to the UV cloud over their emerging connected-device distribution systems without requiring format compatibility with UV.

Making matters worse, when it comes to acquiring new releases, consumers can’t leverage the cloud access component of UV without buying a physical disc, which cuts out all those who don’t want to own physical copies, including the legions of people who don’t own disc players. While the universal file format developed for UV supports streaming from the cloud, a version for downloading purchased content is still under development for release later this year.

Moreover, only four of the six studios backing UV, namely, Sony, Warner, Paramount and NBC Universal, have released titles to the platform, leaving Lionsgate and Fox still to be heard from. At CES Fox let it be known it would hold off on UV releases until there are more retail outlets and more devices in the UV fold.

Not to worry, said Mitch Singer, president of DECE and CTO at Sony Pictures Entertainment. By yearend consumers will have access to 900 newly released movies through UV, he predicted.

“We’ll start having marketing messages; you’ll start seeing TV spots,” Singer said. “The [UltraViolet label] will be on every single disc.”

“The ecosystem is ready,” said Mike Dunn, president of Fox Home Entertainment. “By the fourth quarter we’ll see mass consumer adoption. We’re on the verge of a monumental event.”

In response to complaints that UV requires two signups for each account, one to register with UV, the other to register the account with a distributor, Singer said to critics, “Is that the best you can do?” He made clear early signup difficulties were being addressed, but stressed that the signup process, covering an entire household with options for setting use limitations such as what children can access, is well worth consumers’ time.

“We are talking about true DRM interoperability for the first time,” he said. “Consumers don’t have to worry about or make technology decisions before buying content. You’ll buy a device, you’ll download an app, it’ll be associated and branded UltraViolet, and you know your content will play.”

For those who are optimistic about UV prospects, the real potential for mass adoption lies in the fact that the studios have made the benefits surrounding purchase of digital content a branded, potentially ubiquitous complement to virtually any retail environment. Executives were grilled on their failure to include a rental option with UV, given the fact that people typically like to see a movie before they buy it.

But adherence to the buy-only option allows UV to be included as a non-competitive threat within any on-demand service out there, from cable VOD to Netflix, they noted. “If I’m in Amazon I can stay in that ecosystem and go to UV to stream what I own,” Singer said.

Singer also stressed the long-term potential of the digital locker as a storage house for other types of content from third parties who work through the platform. “We’ve invited third parties to innovate on the platform,” he said, citing the potential availability of ebooks and TV shows as important sell points in the future. Cable operators’ ability to offer the digital locker with purchases of content users have viewed on VOD is an obvious advantage for those entities, he suggested.

Addressing the slow uptake on the part of big box distributors and online retailers, Singer said the lack of participation now is not a worrisome sign. “There are a lot of complex deal points to be worked out with retailers,” he said.

Another major sore point for UV skeptics, along with the lack of participation from Apple, has been Disney’s pursuit of its own digital locker strategy with no signs of getting on board with UV. Singer was non-committal on where things stood in ongoing talks with Disney, but as to holdouts in general, he said, “There’s no company you can mention that we haven’t talked to.”