Why the World Doesn’t Need A Zune Marketplace

Microsoft (s MSFT) has announced ambitious plans for expanding its Zune music and movie marketplace overseas and giving users three-screen access to content that they buy on their PCs, Xbox 360 game consoles and Windows Phone 7 mobile devices. But the Zune marketplace, like a similar offering soon coming out from Sony (s SNE) later this year, is doomed to fail for one simple reason: users don’t want or need another siloed digital storefront.

Extending its Zune marketplace to another screen — the mobile phone — and to international markets will give Microsoft more eyeballs and more users to sell and rent videos. But the broader capability of letting users pay for a piece of content and to view it on multiple devices is one that Microsoft will have a hard time selling to consumers.

In that respect, Microsoft is not alone; Sony is also planning a digital marketplace that will extend videos available through its PlayStation Network to other devices, including broadband-connected Bravia HDTVs, Blu-ray players, Sony Ericsson mobile devices and Sony PCs. The new service, dubbed Qriocity, will be launched later this year.

The problem is that, for the most part, people don’t buy their consumer electronics based on brand, so the likelihood of someone having a Sony PlayStation, Bravia TV, Sony Ericsson phone and PC with Sony software pre-installed is extremely low. Same with the likelihood of someone owning a Microsoft Xbox and a Windows Phone 7 mobile handset. As a result, the number of users that will find value in such a service is bound to be limited to just a few.

Apple (s AAPL) is an outlier, in this respect. It’s the only consumer electronics manufacturer that has reached scale with a digital marketplace that reaches multiple devices. With iTunes, Apple can sell music, movies and TV shows to PCs, iOS mobile devices and Apple TV broadband set-top boxes. But Microsoft and Sony — both of which have tried to build proprietary music services in the past, let’s remember — will have a hard time replicating this success.

What’s needed is not a digital storefront that works on just Microsoft devices, or just Sony devices, or even just Apple devices — but a marketplace that allows you to purchase and use content that across multiple devices from multiple consumer electronics manufacturers. That way, I could buy a movie on my PC and access it on my TV, my mobile phone and through my gaming system without being tied to a certain vendor or a certain operating system.

Luckily, that sort of capability is already in the works. A group of consumer electronics manufacturers and content providers have formed the Digital Entertainment Content Ecosystem (DECE for short), which is focused on providing a framework for delivering content from multiple providers sold through a number of different digital storefronts to various devices that a consumer might own.

The DECE’s DRM System, which has the brand name UltraViolet, was announced earlier this summer and could be available in consumer electronics devices by the end of the year. Sony and Microsoft are both part of the DECE, and if they’re smart, in addition to their own branded CE devices, they’ll make content from the Zune and Qriocity marketplaces available through UltraViolet-supported devices as well.

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