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Summary:

Hollywood is finally starting to make good on its promise to allow consumers to buy a movie once and watch it anywhere. But in my latest piece on GigaOM Pro, I argue that UltraViolet does little to combat a visible shift in consumer behavior.

ultraviolet

Hollywood is finally starting to make good on its promise to allow consumers to buy a movie once and watch it anywhere. But the first rollout of movies that are part of its UltraViolet initiative didn’t go so well, with negative consumer reviews far outpacing any accolades the studios might be receiving for finally making cross-platform access possible. But beyond technical issues associated with the initial rollout, there are indications that the DECE’s UltraViolet plans might already be too little, too late.

In my latest piece on GigaOM Pro (subscription required), I discuss the issues surrounding the launch of UltraViolet and a shift in consumer behavior that might hinder adoption of the initiative before it really gets going.

For those watching the home entertainment space, the marked decline in DVD sales is nothing new. At the same time, any growth in Blu-ray and digital sales has yet to make up the difference in lost DVD revenues. In part, Hollywood would argue that one reason digital sales have been slow is that the industry hasn’t had a good solution for digital ownership.

UltraViolet might solve some of the technical hurdles in making ownership of a piece of digital content easier. But it doesn’t solve the bigger issue, which is that increasingly consumers have shown that they’re not interested in owning content and would rather rent it or subscribe to a service like Netflix that gives access to lots of different content instead.

While DVD, Blu-ray and electronic sell-through dollars — all of which are associated with owning a movie — lag, there’s been a huge uptick in consumer spending around renting movies and subscription VOD services. According to the DEG, revenues at subscription rental services (both streaming and DVD) grew 46 percent in the first half of the year, to $1.56 billion.

In a sense, Hollywood is facing a paradigm shift in the way users want to consume and access content. It’s no longer about owning a specific movie and being able to watch it whenever. It’s about paying a small amount of money and having access to a wide range of content all at once. But UltraViolet is ill-prepared to solve this shift in consumer behavior, and as a result, probably won’t do much to change the downward trend in movie purchasing.

To read more about UltraViolet and this trend, check out my report on GigaOM Pro (subscription required).

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  1. Patrick Thornton Monday, October 24, 2011

    I disagree. The issue is that Hollywood studios have not allowed for there to be great ways to own digital movies. Downloading a movie to my computer’s hard drive is not ideal. Downloading it to a set top box isn’t ideal either.

    What is ideal is the ability to purchase a movie and have it stored in the cloud. Then users would be able to stream it to any device they would like. I would purchase a lot more movies on iTunes if I could store them on Apple’s servers and stream whenever I like. The movie studios haven’t agreed to this idea yet, but it works well for songs and TV shows.

    The problem with digital downloads added onto physical discs is that the digital is always an afterthought. These downloads are SD. They require codes to activate. They expire. It’s really a terrible experience that only an old, out-of-touch executive could possibly think is a good idea (I no longer download digital versions of movies that come with Blu-rays).

    Instead, imagine you could purchase and store movies in the cloud. You would have a great UI for managing and finding movies in your collection and you could share and watch movies with friends. The movies would work on your TV, computers, tablets and phones. And it would just work. No need to manage codes or anything like that.

    It should be much, much easier to buy and store digital movies than it is with physical discs. Right now, it’s the opposite. Storing digital movies is a huge pain. The buying process isn’t that good either, especially with all the restrictions on the movies and how movies come and go in online store do to various licensing deals.

    Studios should be selling more movies than ever. I would buy a lot more movies if buying digital movies were easy. Instead, I have to store the movies on my hard drive and then I have to stream that to my TV. I also have to worry about backups.

    And how honestly wants to watch movies through UltraViolet? Codes? Streaming on only certain devices? Using a terrible UI made by a non-technology company? This is embarrassing.

    Streaming and movie rentals are catching on because they are so easy. The studios have made it harder to buy their content than they have to rent it. How stupid is that?

    ~Patrick Thornton
    http://www.interchangeproject.org

    1. Patrick – Thanks for your input. I do think Hollywood needs to work harder to enable people to get high-quality versions of their movies in whatever format they find most compelling — and that’s a big part of digital not catching on.

      However, I think the access/ownership shift in behavior goes beyond just Netflix, and I don’t think it’s only an ease of use thing. I think consumers see tremendous value in paying a small fee for access to a large amount of content, rather than paying more to own a specific piece of content.

      It’s also happening in music — check out what Spotify is doing to the old iTunes model. Why buy an album on iTunes when you can access it anytime — and most anything else, for that matter — for a low monthly fee?

      1. Ryan,

        I don’t disagree with your sentiments, but I don’t think the studios have put themselves in a good position to be successful with selling movies. Honestly, they have spent far too much time trying to protect physical disc sales, instead of trying to give consumers what they want.

        Netflix streaming is a pleasure to use. So is Huu+. The Apple TV is also a real pleasure. I believe part of the reason that people like these is because they are fundamentally the easiest way to watch video content and easy of use is a great way to make money.

        All of Hollywood’s digital download strategies have been terrible and hard to use. They need to realize that they aren’t companies that are good at digital distribution. I would personally buy more movies if buying and storing HD digital movies was really easy.

        But it’s not. I do not buy digital movies and abhor those stupid digital throw-ins with blu-rays. Now I only buy blu-rays of movies that I really like and that are visually striking — think Lord of the Rings. I don’t like storing physical media, so I am judicious about what I purchase, but I would purchase a lot more movies if a great digital download solution were available.

        As long as its easier to rent digital movies than buy them and as long as solutions like Netflix and Hulu+ make viewing video content easy and fairly cheap, digital downloads have no chance.

        But digital downloads should have a much bigger place than they do now. Certain movies you want to watch again and again. There is no good digital download solution that addresses that market.

        ~Patrick Thornton
        http://www.interchangeproject.org

      2. And yet multi billions are still being spent on purchases every year. You mention spotify but that is a small market currently not bringing much $. There are and will continue to be a rental and sell thru market. They will both co exist.

      3. Problem with all you can eat is that the series they have on these services are timed and many of them expire. Hardly available all the time to the consumer. No thanks I will continue to purchase my content and watch whenever I choose.

  2. Lindsworth Horatio Deer Monday, October 24, 2011

    Amazon Cloud Services, Apple iCloud and every other Web TV and IPTV Streaming service beating this one!!!!

    http://mythoughtsontechnologyandjamaica.blogspot.com/2011/04/amazon-cloud-drive-and-music-industry.html

    Even Google is reportedly coming with Cloud storage upgrade to Google Docs!!!!

    http://mythoughtsontechnologyandjamaica.blogspot.com/2011/10/google-docs-rebranded-as-cloud-storage.html

  3. I agree with you. Two points to make:
    1) When it comes down to it, this it still DRM. I haven’t forgotten the disaster that was Plays For Sure, and that was a much smaller investment.
    2) Music is highly repeatable.. and repeated. With access to so much content in the form of streaming services, owning feels archaic when you’ll end up watching the movie 2-3 times in it’s lifetime. I think people will still own music because they play a song dozens, maybe 100s of times.

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