UltraViolet might be too little, too late

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 (s NFLX) 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).