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UltraViolet brings consortium a step closer to digital utopia

Written by Chris Andrews

Digital distribution set to get interesting, provided consumers are actually on board

It would seem we’re a step closer to the digital video utopia promised by the Digital Entertainment Content Ecosystem (DECE), as the consortium has unveiled its new consumer brand dubbed UltraViolet, while announcing that LG Electronics, LOVEFiLM and Marvell Semiconductor have joined up with the group.

That consortium represents nearly 60 of the biggest players in film and television production and distribution, as well as consumer technology companies; these include Cisco, Best Buy, Comcast and Warner Brothers, among many others. It was formed back in 2008, with the intention of developing a set of standards for the digital distribution of video content, hoping to turn the tides on illegal file sharing and plummeting DVD sales.

The idea is good. While there are indeed many devices on the market capable of playing recorded films and TV, actually getting the video on those devices presents a range of problems. If a film is already owned on DVD, to get it onto a mobile device the DRM has to be broken – illegal in itself – and the film converted to a suitable format. This is not a process for the uninitiated. Alternatively, people can pay a second time to download a film for their mobile device – though the quality of these is often not up to scratch for viewing in the living room. The result is a lot of illegal file sharing, or not making use of the video capabilities of a device in the first place.

The idea behind UltraViolet is that people will be able to pay once, and then watch that purchase across multiple devices and platforms. This could be through the VOD option of a cable company, or through connected TVs, PCs, game consoles, smartphones or tablets.

The whole thing will be cloud-powered – purchased films or TV shows will be stored in a ‘Digital Rights Locker’ as part of a free UltraViolet Account. This Account, said the DECE, will allow consumers to easily access and manage all of their UltraViolet entertainment, regardless of where it was purchased.

“The introduction of the UltraViolet brand is another important step towards the consumer launch of UltraViolet products and services,” said 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.”

Technical specifications and licensing details for companies who wish to offer UltraViolet content, services and devices, are expected this year. Conspicuously absent from those companies are Apple, who likes to stay within its own iTunes bubble, and Disney which is developing its own ‘Key Chest’ technology, which is essentially doing the same thing.

There is much talk of companies ‘rolling with the times’ and ‘updating outdated business models’ when it comes to digital video. If people had an easy alternative, fairly priced to compete with the ease of illegal file sharing, then many of the current problems could be solved. This seems to be what is happening here, but the devil will, as always, be in the detail.

Pricing will have to be right, obviously, and it really will have to be a seamless experience for the average person to use it. But even if these are spot on, there could be another hitch, and that comes down to consumer psychology.

The NPD Group recently published its iTunes Usage Report, which asked users about various music subscription-models, and how willing they would be to adopt them. This is not identical to what UltraViolet is aiming to achieve, but it is similar enough to be of interest.

Here’s what the report asked. First, what would the reaction be to a music service offering free and unlimited streaming of content from a person’s own iTunes music library? This would effectively be using iTunes as that digital rights locker, streaming music you already own to connected devices.

It also asked about several paid options for music subscriptions, offering combinations of music streaming (Ala Spotify in Europe), music downloads, and universal Web access to a person’s own collection, as per the free model above.

NDP estimates that there are some 50 million iTunes users in the US. Of those, according to its research, 13 to 15 million of those would be interested in that free, universal access to their own music. So that’s somewhere around 28% of users expressing interest in a service that won’t cost them anything. That’s not great actually.

When it comes to paying for it, between seven and eight million would have ‘strong interest’ in one of those options. There was willingness among these people to pay a fee of $10 per month (again à la Spotify) either for streaming music or access to their personal music libraries on multiple devices. That’s only 15%, and not particularly encouraging.

“After the service’s launch, user numbers could conceivably rise substantially, as they upgrade to newer connected devices and actually experience the benefits of cloud-based music,” said Russ Crupnick, vice president and senior entertainment analyst for The NPD Group. “If the consumers who indicated strong interest in a paid subscription actually adopted one of those services at $10 per month, the market opportunity is close to $1 billion in the first year, which is roughly two-thirds the revenue garnered by the current pay-per-download model.”

How this translates to UltraViolet will be interesting, and whether people will be willing to turn over physical ownership of either DVDs or video files to the mysterious cloud remains to be seen. If consumers can be urged on board than this will surely be a very good thing for the industry. Hopefully this will not be another case of the industry simply telling consumers what they want, only to find a lot of empty digital rights lockers floating around in the cloud.

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