Weekly Update

UltraViolet finally gaining luster

When Barnes & Noble announced the upcoming Nook Video service this week, it gave prominent play in its press release to Nook Video’s compatibility with the UltraViolet digital rights locker system.

“Customers will soon be able to easily link their UltraViolet accounts to the NOOK Cloud allowing them to view their previously and newly purchased UltraViolet-enabled movies and TV shows across NOOK devices and NOOK Video apps, as well as through third-party applications,” the press release said. “In addition to purchasing a digital version via NOOK Video, customers can shop for DVDs and Blu-ray discs with the UltraViolet logo in Barnes & Noble and other retail stores, add them to their digital collection, and instantly watch compatible titles from the NOOK Cloud to enjoy wherever they go and however they choose.”

It was a big plug for service that is still viewed skeptically by many in the home video business and that most consumers still know little about.  But it was also a sign that UltraViolet — an studio-backed effort to enable movies purchased digitally or on disc to be accessible across hardware platforms, operating systems and DRM schemes — may finally be gaining some traction.

Until now, Wal-Mart was the only major retailer supporting UV. In March, Wal-Mart launched its in-store “disc-to-digital” program, allowing customers to register their previously purchased UV-compatible DVDs and Blu-rays in a digital rights locker by setting up a UV account through Wal-Mart-owned Vudu. That program helped boost the number of registered UV users from barely 1 million at the start of 2012 to over 4 million as of mid-year, according to the Digital Entertainment Group. But broader retail support has been slow to materialize.

Amazon announced plans to support UltraViolet at the Consumer Electronics Shows in January, but since then has not enabled UV on any of its devices, or in Amazon Prime Video or Amazon Cloud Drive. Best Buy was a founding member of the Digital Entertainment Content Ecosystem, the industry consortium behind UltraViolet, as was Best Buy-owned CinemaNow, but like Amazon, neither Best Buy nor CinemaNow has enabled support for the format. Apple is not a member of UV.

That lack of support has left an opening in the market for a retailer to try to leverage the capabilities of UltraViolet to gain a leg up on competitors, and B&N is clearly aiming to seize that opportunity. Thanks to Nook Video’s UV integration, users will be able to watch any UV-enabled movie they own on their Nook tablets, or on any iOS, Android or Windows device using the Nook Video app B&N is planning to release. In addition, anyone who creates a UV account through Nook Video can have instant cloud access to any UV-enabled DVD or Blu-ray Disc they buy on any device with the Nook Video app. The strategy is clearly aimed at positioning Nook Video as an open, platform-agnostic alternative to closed ecosystems like Apple’s and Amazon’s.

There are many other variables that will affect whether Barnes & Noble succeeds with Nook Video, of course. UltraViolet integration alone is unlikely to be decisive. But B&N’s effort represents the first time a major retailer has sought to deploy UltraViolet strategically, rather than as merely a nice-to-have add-on to DVD purchases.

Another important UV milestone came earlier this month when 20th Century-Fox began offering Prometheus for download for $15 three weeks ahead of its release on DVD and Blu-ray. Prometheus is the first title released as part of Fox’s “Digital HD” initiative — an effort by the studio to establish a new, electronic sell-through window for movies weeks before they’re released on disc or become available through any on-demand rental service. As part of the initiative, Fox for the first time is issuing the movies in the UV format so they can be viewed across multiple devices and platforms.

The effort marks the first time a studio has sought to associate UltraViolet with a genuinely new consumer proposition — early availability at a low price — which could help give the format greater definition in the minds of consumers.

Another, broader electronic sell-through initiative leveraging UltraViolet is set to launch in the fourth quarter from M-Go, a new service backed by Technicolor and DreamWorks Animation. Though details of the offer have not yet been announced, all five major UV-supporting studios (Fox, Paramount, Warner Bros., Universal and Sony Pictures) are on board.

Finally, there is evidence that UltraViolet is already having some impact on consumer behavior. According to the Digital Entertainment Group, consumer spending on home entertainment in the first half of 2012 rose just over 1 percent from the first half of 2011, reversing a long slide. Among the strongest performing sectors was electronics sell-through, which increased by 22 percent over 2011, a move the group attributes in part to the increased availability of UltraViolet services in the market and greater value proposition of purchasing movies that can be played across multiple platforms.

UltraViolet alone probably can’t save Hollywood from further shifts in consumer spending away from purchasing movies. But at least it’s finally being put to the uses for which it was designed.