Can second screen drive renewed growth in home entertainment?

Digital Video By The Numbers, Q4 and 2012 Infographic

It's getting harder and harder to pull apart "Second Screen as a Companion Experience" and "Second Screen as the First Screen Viewing Experience".  The living room and the tablet are converging so quickly.

• UltraViolet has 7m subscribers, but only carries 59% of the Top 100 titles and 50% of currently popular video titles
• Best Buy / CinemaNow launched a Disc-to-Digital beta last week
• Flixster's iPad experience now has download capability--giving UV consumers the opportunity to travel (without a laptop)
• While HBO Go, Hulu, and Amazon Prime are garnering press, the traffic shows that Netflix out streams them nearly 30 to 1
• Netflix has now tied HBO in total subscribers (albeit with some international ones)
• Xbox is the underestimated player in the digital living room with 30m subscribers and a recent commitment to launch 40 new content channels
• The Wii U deployed multi-screen services for its platform and promises to combine it with its second screen controller and then "TV will never be the same"

While everyone know Netflix, Hulu, HBO Go, and Amazon Instant Video (as an app), have you tried Matcha, NextGuide, Flixster, or Plizy?  Interested in case studies on great apps that help consumers discover and watch content on their tablet?    Click here

Join us at the www.2ndscreensummit.com today at the Wynn (1-6pm, cocktails to follow).

10 Predictions for the Second Screen Industry in 2013

1. To Control.  While perhaps the hardest to monetize, this is the most important feature for device makers and those hoping to win the digital video ecosystem war (see 9 and 10 below). Recurring app usage starts with utility.
2. To Discover.  Trying to find content to watch, with many in the ecosystem seeking to influence that decision through some form of advertising.
3. To Enhance.  This will come in the form of a) searching for or receiving additional (perhaps synchronized) related information to the program and b) second screen-based commerce (a subset of M-Commerce).  Just a few weeks ago, Nielsen reported that of consumers using a tablet while watching TV, roughly 40% are using them to check information related to the program and 29% of 25-34 year olds are shopping while watching TV.
4. To Share.  Already hyped in the press to the nth degree, expect to start to see attempts to measure how impression affect viewership across demographics and how they influence others decisions to view content.

Driving digital video ownership

• UltraViolet now has 6m user accounts
• an estimated 30% of U.S. households have tried an OTT streaming service
• 31% of consumer households view their video entertainment on both physical and digital formats
• a substantial number of subscription streaming households (Netflix, Hulu, Amazon Prime) also purchase and rent content on eiher Amazon or iTunes 

There has been substantial growth in digital subscription services (Netflix, Amazon Prime, Hulu, soon to be RedBox Instant by Verizon), physical rental kiosks (RedBox) and disc-by-mail subscription services (Netflix)--all of which earn about 1/3 of the profit per viewing of their "digital transaction" cousins (digital rental and sell-thru) and physical retail sell-thru.  To exacerbate the situation, there is no equivalent concept of "digital ownership" in the consumers' eyes, and as a result as consumers migrate to digital consumption models, they are rarely choosing to replace a physical purchase with a digital purchase, opting instead for digital rental (same margins, 25% the gross value) or digital subscription (1/3 the margin, 25% the gross value).  Keep in mind, we have discussed this several times before at conferences and in this blog.

1. Drive down "premium title" availability in digital subscription services, and 
2. Make UltraViolet ubiquitous.  

UltraViolet marches onward, but can it succeed?

While the last official news from the UltraViolet website is from August 15th of this year, there was an interesting panel last week and some interesting support statements from the BBC, Fox and Barnes and Noble the previous week.  The title count is supposed to be above 7,000 now, available to more than 5 million consumer accounts through Wal-mart/Vudu and Flixster (as well as the studios' own title websites), with promises to be available soon on the Nook and M-GO.

But is this enough for success?


As both a consumer and industry evangelist, no one would like to see this succeed more than I do, but when you look at the initiative in the cold light of day, it is a tough, uphill climb.  Why the pessimist you ask?  You say its barely been a year after launch and there are already 5 million accounts and 7,000 titles, right?

Well, let's back up and examine what ingredients are required for consumers to "cross the chasm" in market adoption of new products.  With roughly 110 million households in the U.S., UltraViolet (UV) is just approaching the 5% penetration point.  While that seems like a lot of consumers when comparing it to Netflix (22m+ subscribers) and Comcast (similar numbers), the right comparison here is the DVD player install base (near 100%) or the PC install base (also in the high 90 percentile in the US).  So, how do you convince consumers who are clearly buying and renting a lot of DVDs (despite the press to the contrary, see this blog) to start paying a little extra to have digital ownership?

First, consumers need to believe that there will be title ubiquity.  If this is only available on 50% or 75% of the titles that are available on DVD, then this is just another format that complicates their lives ("Hey, I want to get this on UV, but it isn't available...").  I know, I know.  Many of you are going to chastise me with emails and tell me that 5 of the 6 major studios are now supporting UV and that eventually Disney will have to come around.  Unfortunately, consumers don't shop for titles by studio (shocking as that is), nor do they care about the challenges our industry faces.  What they know is that more titles are available to purchase digitally on their favorite list (let's assume the "IMDB Top 100" list represents that) from iTunes, Vudu and Amazon than from UV and for a price that is cheaper than the UV enhanced physical SKU.  What can the studios do about this?  Start by standing up themselves and making a public commitment to start putting every new DVD / Blu-ray title on UV (even if there is a not a UV SKU sold physically at retail) and give a reasonable time table to make their top 90% of SKUs available in the format (only Warner to date has demonstrated this kind of commitment).

Second, it is difficult to crow about having retailers signed up when the largest DVD / Blu-ray sales retailer (Amazon), the largest digital video retailer (iTunes), and the largest digital "rentailer" (Xbox) have not signed up for the program.  No matter how you slice up the markets where the consumers you want to attract are currently buying or renting, each one of these companies represents represents the lion's share of them and I would venture to say you cannot create mass adoption without them.

Third, consumers' appetites are VERY strong for accessing their content through subscription packages.  They sign up in droves for cable, satellite, telco and even Netflix/Hulu packages.  If you want to create mass adoption, work with those subscription services to allow consumers to stream the UV titles they already own thru their services as well (yes, make it part of the deal in your next licensing negotiation).  Once consumers can access the content they "own" through the video services they use to watch the other 35 hours of content each and every week, they will see it as a valuable feature and may consider it during their decision process to rent or buy titles (physically or digitally).

If you are interested, here today's title count.  UV improved by 2% since our last review in September.

I am very curious to see what the marketing campaign leading up to Christmas looks like.

Ok, let the harassing emails ensue.

@ChuckParkerTech

The Second Screen Hype Cycle

Digital Video by the Numbers for Summer, 2012

With the summer now officially over, the digital video space continues to march forward.  I am sure much of this will be discussed at the UltraViolet workshop in London tomorrow (Wednesday, September 5th, 2012) at the PARK PLAZA WESTMINSTER BRIDGE.  Below is some empirical evidence of the progress:

• It is estimated that 111 million Americans watch time shifted TV content these days at least once monthly (DVR and VOD), but 143 million Americans watch TV or Film content delivered on-line delivered via some connected device (connected TV, PC, tablet) at least once monthly.
• UltraViolet, the content industry-backed initiative to enable consumers to purchase physical media (DVDs or Blu-rays) and get a cloud-based digital copy through several participating retailers has progressed their catalog and UV now penetrates more than 50% of the IMDB Top 100 movies list (and has nearly doubled their penetration at the SD version level).
• While Netflix surpassed 1 billion hours viewed in the month of June, their viewing traffic declined by 25% in the first week of the Olympics.
• 61% of internet users have watched an online movie or TV show
• Delivering another crushing blow to Adobe Flash, Android announced they will not support Flash as of August 15th

How available (really) are top TV shows in the digital video world?

As the UltraViolet academy in London approaches to wake us out of our summer slumber and send us on to IBC, I sat discussing the onward march of digital video in today's Top 20 ratings-driven world with some neighbors around the end of summer BBQs.  There was a general view that most TV shows were available (in the US) on either HuluPlus or Netflix.  While there was some discussion about network specific sites like ABC.com, HBO-GO and TV.com (CBS' site) and some general understanding that there was content missing from HuluPlus and Netflix, most people felt like anything they were missing was probably available to purchase as a catch-up one-off show from iTunes or Vudu.

As I pondered this seemingly simple challenge, I though back to the end of May when I wrote a blog about the current state of digital title availability in the various service offerings (rental, sell-thru, subscription) and retailers (iTunes, Vudu, Netflix) and compared them to each other and to their physical counterparts.  So, with the help of some colleagues, I set out to get to the bottom of the details.



We started with the current TV Guide Top 20 (as of August, 2012).  I realize that the Top 20 would have been different in May and will be different in October once the season is underway, but this is a unique time of the year where even the most protected of shows has finally exited their Spring window and have been pushed out on DVD or at least a digital purchase service (if not a streaming one--rental by the episode is no longer supported by any site).

What were the results?  Surprising to say the least.  First, let me give you an idea of the list (since it is relatively short):


Now with this list, you would have thought there would be a high probability to have nearly all but the HBO and AMC series available already.  The results?

• iTunes carries 75% of the content (in SD) for purchase (most recent season)--Vudu and Amazon were just a step behind them.  The missing items were all some sort of reality show.  
• Netflix has a (not surprising) poor showing for current seasons (strong for past seasons) with only 15% available, but to my surprise, HuluPlus only came in at 40% (disappointing in a big way).  Combining the two options only yielded 45% availability.
• Physical still trumped all of the options with 80% of them available for purchase from Amazon and 75% for physical rental from Netflix.  
• Combining digital purchase and streaming (across all services) yielded a 90% availability (with only X Factor and So You Think You Can Dance absent)--yielding a problem discussed in my blog last week of finding content across multiple sources.

The "Seamless" sourcing of video content from multiple aggregation services

10 years ago, life was simple in your living room.  You really had 3 libraries of content to worry about:

1. the 500 channels of content you were receiving from your Cable, Telco, or Satellite provider, 
2. the collection of DVD's on your shelf, and
3. the available plethora of DVDs to rent at your local Blockbuster.  

But even simpler then was the fact that there were only a few rights windows, and as a consumer, you understood them pretty well:

• Movies came out at the theater first, and then a few months later were available to rent (eg Blockbuster) or purchase (many locations) on the same day.
• A few months after this, they started appearing in your premium TV networks (eg HBO, Showtime).
• A few months after this, they came out on the standard, non-premium broadcast networks.

Better than bonus material? What Second Screen could do for title sell-thru

When DVD's first arrived on the scene back in the late '90s, the majority of consumers thought they were a significant leap ahead of VHS tapes because of their size, ability to quickly access anywhere on the disc, better picture quality, etc.  But as the industry realized the opportunity to create a sell-thru model (vs. the rental model with VHS), they started trying to figure out what it would take to get consumers to collect or gift DVD's (the biggest reason for purchases).

Opinion: Where’s UV’s guy in the turtle neck (or hoodie)?

I just came off of a day-long UltraViolet download. Eight hours of data and details about the next big Hollywood format. There were 250 of some of the smartest folks in home entertainment, all counting that UV will once again make home entertainment the cash engine that drives the Hollywood machine. Read more

Building critical title mass for digital video services

In the on demand video world, title availability can either help or hinder consumer adoption.  Finally ready to try a new digital video service but can't find your favorite more or a new release?  This experience just pushes you back to the physical world (Amazon.com and Netflix disc rental).  As the content industry is a few years into an effort designed to increase digital sell-thru (vs. digital rental and subscription services) in an attempt to improve their overall margin structure as physical sell-thru continues to decline, they have developed UltraViolet as a way to encourage consumers to build a digital catalog at home, across multiple services, DRMs, and devices, to gain the freedom they experience with physical DVD or Blu-ray.  The most obvious way to do this today is thru Walmart's Disc to Digital program on their Vudu digital video service.



A few weeks ago, while reviewing the Walmart / Vudu disc to digital program, I was surprised at how few titles of my desired catalog were available on Netflix (I had assumed a large percentage of the DVD's in my closet would be available on Netflix).

Intrigued by this, I decided to explore further over the past few weeks and decided to check the availability of titles in a proverbial "Top 100" list for various digital video services. In addition to checking on the Disc to Digital service (still nascent), I thought I would check iTunes, Vudu and Amazon (digital rental and sell-thru) as well as Netflix and Amazon Prime streaming and compare them to what should be the "gold standard"--available for sale on DVD or Blu-ray from Amazon.com.

The first step in any good comparison is the source of the data. I combed thru the AFI (American Film Institute), AMC (theatre chain) and IMDB top 100 lists (IMDB does a top 250). I wanted to make sure the list was some what representative of the demographic for digital video consumers, and based on my view of the titles in the list (and the method of selection--IMDB takes consumer voting), I chose the IMDB list. Note of caution here--Amazon owns IMDB.

Not surprising at all, 99 of the Top 100 titles were available for sale on Amazon.com in the DVD format (our gold standard). The only title not yet for sales on DVD was the recently released Avengers movie, which won't release on DVD until this fall. 88% of the titles were available on Blu-ray for sale from Amazon.com--an indicator that not all Top 100 titles are viewed equally by their rights owners.


Also not surprising, Netflix offers 96% of those titles for physical rental thru their mail-based subscription service.

So, as a consumer, if I can wait 24-48 hours (Prime and Netflix shipping service levels), I can have access to all the titles that matter (pretty much).

But what if I want it NOW? Or if I don't want to deal with the physical good hassle? Your best bet is digital sell-thru (SD), with iTunes in the lead at 82%, followed by Amazon at 77% and Vudu at 73%. This is a factor of the complicated windowing of rental vs. subscription video on demand (SVOD), and in recent years, digital sell-thru has escaped this availability problem.

But what if I wanted it now but don't have $7-$20 of appetite for my entertainment? The best best is digital rental (SD), and here Amazon and iTunes are tied at 72%, with Vudu trailing at 62%.

Have to have it immediately on HD you say? Surprisingly, your better option of availability is digital rental across the board, lead by Vudu at 59%, Amazon at 57% and iTunes at 52%. Oddly enough, digital sell thru for the HD format was held back by security concerns and perceived canibalization of Blu-ray sales.

Really want to own the HD version digitally? Amazon takes the lead here, with 54% of title available, followed by Vudu at 42% and iTunes at 34%.

What if you are that value consumer who is willing to wait until the window opens up for a streaming option? You will be disappointed as a paltry 13% of titles are available on Netflix and another 10% are available on Amazon Prime.

And if you have those Top 100 titles in your closet and want to watch them on your iPad? Before you drive to Walmart for the disc to digital conversion, check your titles on their site as only 42% are available in the SD format and a mere 15% are available in HD (again, the UltraViolet capability is still nascent in the market place).

What conclusions can you draw from this?

- Streaming (SVOD) services are not for new release windows--we already knew that with delays being 45 days to 6 months depending on the title an HBO (or Sky in the UK) exclusivity. But even if you just want to watch some great older titles, they are just not there.

- You can have access to a large number of the Top 100 titles digitally one way or another (70-80% if you are willing to live with SD quality and purchase the title). You will find that most new releases are available for sale in both HD and SD the day of the DVD release while some digital rental is still pushed by 2-3 weeks from that day (encourages you to buy more vs. rent more).

- If you have a collection of the greatest titles in your closet, the industry isn't quite yet ready for you to try to convert it in any meaningful way via UltraViolet.

Returning to Wal-mart to try the Disc to Digital conversion to Vudu again

Since I visited Walmart previously on the day they first opened their service, I thought I would give them a few weeks to work out the kinks and try again.  I also thought I would test my own theory that I put forward in several blogs (What is holding back digital sell-thru?, Converting your physical disc library to a digital locker).  The short summary of that discussion was that if I had the supposed average 80+ titles in my library as the average consumer, I would find that only 75% would be available on Netflix (reducing the need to purchase) and of the remaining 25%, half would not be available for conversion on Walmart / Vudu.

So what happened?

Well, it turns out I have more than the 400+ titles I thought I had previously.  I have 525 titles in the house (not your average consumer).  Even at $1 a title, I am not willing to pay $525 to have access to this whole library digitally.  So I went thru a fast filtering process:  Would I watch this movie more than 1 more time (ie 1x per year)?  It meant the real "keepers" (for my household) were cult-ish fan movies (Matrix trilogy, Lord of the Rings, Batman, the Marvel Avenger series, Mission Impossible, etc), kids movies (mostly Disney and DreamWorks titles), holiday classics (Home Alone, Christmas Vacation, etc), and classic comedies (The Blues Brothers, Eurotrip, American Pie, Austin Powers, etc).

I came up with 170 titles (32% of my catalog) I thought were worth spending the money on converting to digital under the premise that I would watch them more than 1 more time (otherwise, I would rent since we know the average cost will be $3.50+ per title to convert and renting is not much more and is money spent later when I will watch it instead of now when I might watch it in the future).

Then I started determining which titles I would convert to Vudu / UltraViolet.  While I know that titles move in and out of availability on Netflix, I don't think the average consumer understands that at all.  So my simple logic was that if it was available on Netflix, I would not convert it to digital at Walmart.  I was shocked (and even double checked my process) that only 18 of 170 titles were available on Netflix (11% of the 170 chosen titles).  Netflix losing the Starz catalog (which covered many Disney titles) is a bigger loss than I think was anticipated by all.  In an article in February (a few days before the change), Netflix said they would replace all but 15 of the Disney titles.  That certainly does not appear to be the case as just about every kids' DVD title I have (the stuff they watch over and over again) from Disney and from the other studios is NOT available on Netflix.

While the numbers for UltraViolet / Vudu were higher than Netflix (68 of the 170 keepers or 40% of the target), it is no where near large enough to encourage wholesale consumer adoption at any price point.  Clearly, the desire to have the kids titles, driven mostly by Disney titles, was the biggest contributor to the loss here (probably 20+ titles), but there were also numerous other non-studio titles missing (eg the BBC contributions like Blue Planet, Walking With Dinosaurs, etc).

So I chose 30 of those 68 title (some were available on Netflix, some I just re-filtered) and went to Walmart.  I had high expectations because Vudu made a new feature available online where you can check the title availability and then print the list and take it with you to Walmart which then in turn saves them the data entry process--in theory speeding the whole process up dramatically.  The experience was unfortunately worse than it was on April 16th.  The sweet lady who last time had so much patience was out of it entirely.  I still had to fill in a form--she could not explain why, but rather gruffly told me I had to do so.  I didn't have to re-enter all of the titles, luckily.  We then went thru the list title by title, checking that each of the discs was available and ran into our first major problem--one of my Austin Powers discs was missing.  I said no problem, just remove it.  She said quite adamantly it was not possible.  I asked what my options were and she said I could get management over here, but there was nothing she or any of them could do as the system would not let them remove anything--I was told to go home and find the disc or come back with a new list.  Refusing to be defeated, I let another customer go before me and thought about how they had designed this process.  The printout was itself not material--it was the saved catalog in my account they were accessing.  I pulled out my iPhone, logged into the Vudu site and removed that title from my list.  I didn't print it (I was in the store after all), but she was able to check that it was in fact out of her view of the title list.  Problem solved.

Then we hit the second major snag.  The system in their photo processing center had to print a label to be attached to the paper work before she could ask for my credit card and then stamp my discs.  But that same label maker was constantly being accessed by the photo center as orders from their on-line photo service came in and it printed labels for their pickup.  It kept failing to access the label maker (timing out each time) and took nearly an hour to get thru (after 20+ attempts from the attendant).  When it finally printed the label, her colleague was able to stamp all of the discs, take my credit card, and send me on my way.

Summary

After 30 minutes in the car and 90 minutes in the store, I only ended up with 26 DVDs converted (I had to pull 3 before I left because they were suddenly not available on the Walmart list and had the 1 missing disc).  I paid $121 or an average of $4.65 per title for the right to access those titles digitally (streamed to my PS3 or iPad) presumably anywhere in the US.





If the average consumer has 80 titles in their library and filters in a similar manner, they would be faced converting 25 titles and likely finding 10 of them available for a cost of $47.

The conclusions for the industry and the consumer:

• I just think getting the consumer to fork over $47 for 10 titles they already own for the pleasure of watching them streamed to the iPad is going to be a challenge.  Why not encourage them to spend the level, but for 50 titles (an offer for $1 per conversion at 50 or more DVDs)?  That builds a digital library.
• College-aged kids (with more time than money) are going to rip DVDs vs. spending 2 hours in Walmart and $47.  If the become a target demographic, something different needs to be done.
• The studios seem to have reduced the premium title availability at Netflix pretty effectively.  It looks like Netflix is negotiating for strong titles shortly after they are available, but then letting them leave their library 6-12 months later.  
• This is good for the studios because it creates a reason to purchase digitally, but will not work without signficant education efforts (ie marketing).  
• This also spells DOOM for Netflix if the education to the consumer works.  It truly means Netflix is a late window video service full of titles that may have once been "A" titles, but have little long term value.  Said differently, it is a service to use when watching something, almost anything, is better than trying to find that same poor content on your cable provider's channel listing.
• Walmart clearly needs to improve the actual service itself.  I should be able to drop off my DVDs in a box/bag with the list, shop in their store for 20 minutes, and return.  Having to wait at the counter for 90 minutes is a definite service failure that needs to be addressed.
• Walmart or Amazon should promote a DVD catalog service (iPhone app with bar code scanner) that allows me to track what I do have in my catalog (some independent ones exist for the iPhone, Amazon has the inklings of this service on their website).  It would provide the consumer with a service capability so that I am not renting a title I already own.  It would provide the merchant with an opportunity to tell me when it becomes available for conversion.  It could provide recommendation and discovery engines with valuable seed data to improve the recommendations for watching new content.
• Ultraviolet needs to drive a consistent consumer experience across all titles (HD availability, streamed or downloaded to a core set of devices including the iPad and several TV service options). 

Academy on UltraViolet to Explore Technology’s Opportunities and Challenges

By Lyndsey Schaefer

The upcoming Academy on UltraViolet, set for May 16 at the Luxe Hotel on Sunset in Los Angeles, is a unique chance for the home entertainment industry’s key stakeholders to come together to determine how to ensure the success of  UltraViolet technology.

MESA’s Executive Director, Guy Finley, serves as the Conference Chair for the event. “The Academy is all about how we as an industry can come together to work on ‘the machine’ that is UltraViolet,”  he explains. “Content holders and their service provider partners need to ensure that we are prepared to scale the format as demand from the consumer increases. We expect the day to be an interactive dialogue around the workflow required to efficiently get UltraViolet product to market, and will encourage all attendees to be active in the discussion, raising hands and providing thought leadership to our industry about their particular role in the machine.”

Seth Hallen, Chief Executive Officer, Testronic Labs, will present his company’s view of the role of quality assurance/quality control in the UltraViolet user experience.  “Continuing to understand how the consumer wants to interact with the interfaces through which they access digital content and delivering those solutions to them will continue to be a key focus for the UltraViolet initiative,” Hallen says. “Also, ensuring all devices and the content adhere to a set of compliance specs will ensure a consistent and reliable consumer experience. Similar to the confidence consumers have with physical discs and the hardware that plays them, the consumer needs to feel confident that all UltraViolet content will work on all of their devices.”

Dolby is also an important partner in the emerging UltraViolet workflow. The company is working closely with studios and vendor partners to ensure readiness for the success of UltraViolet. “In the near term, the biggest challenge is simply product readiness. The legwork required to prepare libraries of premium content in the UltraViolet Common File Format is quite significant and Dolby is engaged with studios and their vendors to attempt to address those pain points through a variety of encoding tools, UltraViolet players, and other value adds,” says Ron Geller, Vice President, Worldwide Content Relations, Dolby Laboratories. “In the long run, the commercial success of UltraViolet will require not only the basics that consumers are accustomed to in physical media such as interoperability, HD picture, and surround sound, but also leveraging the unique capabilities of IP connected devices that enable enhanced user experiences not found in physical formats.”

Timur Insepov, Vice President, Innovations, Sony DADC Media Solutions, echoed Geller’s thoughts on the Common File Format issue. “Lots of players coming from different perspectives are helping to create a vast ecosystem. We must address different compatibility, especially with regards to the Common File Format, across devices and make it possible to copy files from device to device. Speed is critical, but we can’t sacrifice cohesion of and within the ecosystem,” says Insepov. “However, when all the pieces start coming together, consumers will see value that will be hard to get elsewhere.”

The Academy will also explore the marketing challenges and opportunities of the technology, in addition to what it takes for UltraViolet to ultimately reach the end consumer.

PricewaterhouseCoopers (PwC) is helping guide the conversation on consumer behavior regarding UltraViolet. Ted Garcia, PwC’s Managing Director, U.S. Advisory Services, will share findings from the company’s Consumer Intelligence Series research — which found that consumers are interested in learning more about video content storage and delivery based on their desire for ubiquitous access to content on multiple devices. PwC also found that consumers are confused about the benefits of digital lockers and ownership rights. “The success of video content digital lockers will depend on whether companies can develop profitable offerings that match consumers’ preferences, and create focused marketing highlighting the value and benefits of services like UltraViolet,” Garcia says.

“The Academy on UltraViolet is a great venue for industry leaders to come together to drive toward one common goal: ensuring that UltraViolet is a success with consumers and valuable to our industry. All facets of the ecosystem are represented, which is critical as we all attempt to rally around best practices starting early in the supply chain and extending all the way through to millions of happy consumers on the other end,” Geller says.

Sony DADC’s Insepov is positive about the promise of UltraViolet, stateside and abroad.

“We’ve witnessed significant studio and retailer adoption as well as global expansion plans. The more participants and members, the better the offering will be to consumers. But there’s a lot of information to digest, and behind the scenes, the ecosystem is complex. The quicker we get everyone up to speed and provide a good understanding of opportunities and challenges in each area, the healthier the ecosystem will be — yielding faster growth and an even greater consumer value proposition,” Insepov says.

To join the dialogue at the Academy on UltraViolet, visit www.ultravioletacademy.com.

Can Consumers Legally Sell Unused UltraViolet Movie Codes?

by Terence Keegan

Hollywood studios view the UltraViolet cloud service as a make-or-break marketing effort to rejuvenate packaged media sales in an access-everywhere era. However, the response from consumers who remain faithful to buying Blu-rays and DVDs — but who have no use for UV access to movies — is raising new legal questions of consumer “ownership.”

From the launch of UltraViolet value-adds with Blu-ray and DVD packages last October, industry analysts have warned that an online secondary market for access codes to digital copies of films could quickly develop, creating a new headache for Hollywood (see GigaOm). The issue resurfaced this week, when The Consumerist reported that eBay had taken down a consumer auction of an unused UltraViolet code from a copy of new Paramount release “Mission: Impossible – Ghost Protocol.”

According to the report, eBay cited copyright infringement as the reason for the takedown — obviously irksome to the bona fide Blu-ray purchaser, who believes the digital copy of the movie is “his.”

Unbundling

It’s long been accepted that consumers are not violating U.S. copyright law when they sell Blu-ray discs that they previously purchased. But is it legal for consumers to keep the discs they bought and sell the UltraViolet access codes that come with them?

Probably not, says Jim Burger, an attorney who specializes in intellectual property and entertainment content licensing. As a consumer, says Burger, “the UV access codes represent the purchase of a bundle of rights to download copies of movies for playback on authorized devices or to stream the movies.”

Essentially, he continues, “use of the UV code is governed by the UV license, [which] permit[s] the owner of the disc to access digital content in the cloud and does not allow resale of the service.” Unlike with used discs and other packaged media, the transfer of such a license is likely not protected under the “first sale doctrine” in U.S. copyright law, says Burger, who is a member of the Washington, DC law firm Dow Lohnes.

Sellers of UltraViolet codes also may be in violation of the “shrinkwrap license” that they agree to when they purchase the UltraViolet titles, Burger says. Meanwhile, the buyers of the codes on eBay could be theoretically liable for copyright infringement, as their downloading of movies using the codes would be unauthorized by the studio.

Given all this, says Burger, it’s not surprising that eBay is being “super-cautious” in removing UV code auctions from its site.

How Big A Problem?

One comment to the April 18 Consumerist story observed that there were only 39 listings for UV codes on eBay at the time. Yet other comments maintain that download code auctions are much more numerous, with most ending soon after they begin to elude takedown — and few mentioning “UltraViolet” by name.

A handful of auctions for UltraViolet digital copy codes — as well as for download codes from CD and video game packages —  were live on eBay Friday afternoon. No UV code auctions were fetching more than $6, and none had more than three bids.

For UltraViolet marketers, the legal questions surrounding “first sale” issues of digital copy codes may mount. But it seems likely that for now, simply introducing consumers to UltraViolet, and selling them on the benefits of the system, will remain studios’ biggest challenges.

Converting physical DVDs and Blu-ray discs at Walmart to my Vudu (and UltraViolet) account

A few weeks ago when the story first broke about Walmart planning to launch an Ultraviolet-compatible disc-to-digital conversion service thru their own Vudu video service, I raised some points about cost vs. hassle, availability of titles, and potentially what could be done to use this (and hopefully other similar services) to drive growth in digital sell-thru for the studios. I also raised some points later about what would help drive digital sell thru.

So yesterday morning, on the day Walmart launched their service, I called Walmart and asked to speak to the photo processing departing. A very kind woman answered and said she wasn't sure if the service had launched, but had heard about it and asked if I could call back in 15 minutes so she could ask. 15 minutes later, she told me the service was ready, but that no one in her department including herself had been trained in how to do this, but if I was patient, I was more than welcome to come down to be their first customer.



I went thru my collection to choose a representative sample for this test: 1 from each major studio plus 1 from Lionsgate, a few Blu-rays and even a few titles from a different region (I previously lived in London for 5 years and have a number of DVDs purchased from there).



15 minutes later, I was trying to find the photography department in Walmart. I did see the sign above at the counter and found the kind woman from the phone call. She handed me a form to fill out, listing each of the titles, how I owned the title (SD or HD) and what version I would like to purchase (SD or HD). The form also asked for my name, email address and phone number to create or sign into my Vudu account. When I showed her the 30 DVDs I brought, she became a little anxious. I asked if I could fill out the forms and come back later--she said I was not allowed to leave the DVDs with them. So I scaled back my expectations and instead settled on 8 titles (shown in the form below) which still represented every major studio plus LionsGate, some Blu-rays and DVDs, and my UK-based DVD.
After a few minutes of muttering to herself, the woman kindly asked me to tell her where the "@" was at on the keyboard (she was trying to type in my email address). I knew then we were in for a learning experience. She tried to look up my account but it said I did not exist. She then tried to create my account, but it said my account already existed. I asked to come around the counter to help (she accepted), and asked her to try my home phone number instead of the mobile I had put on the sheet (the sheet did not specify). It then found my account (it turns out you only need the email or the phone number that is listed in your Vudu account, not both).




We then started the process of looking for the titles. The search function on the web terminal she was using was actually very robust. For Cowboys and Aliens from Universal Studios, it offered 10 different source versions of physical product. We found the one I had in my hand (Extended Edition Blu-ray) and she selected it. I was pleasantly surprised to find that converting a Blu-ray disc to the HD format for Vudu was only $2 (it is $5 to upgrade from normal DVD to HD). While a limited test, the next 7 titles offer an interesting current view into the library (stated in HomeMedia magazine yesterday as 4000 titles).









My copy of Batman Begins, a Warner Brothers title, was an SD DVD (plain old DVD) but from the UK. I successfully upgraded to HD for $5.
My daughter's Justin Bieber, Never Say Never was a Blu-ray from Paramount and I converted to HD for $2.
I was surprised that Sony's 50 First Dates was only available in an SD version.
Not surprising, Disney's Pirates of Caribbean was not available.
I was surprised that the Fox title The A-Team was not available for conversion--especially since my Blu-ray came with a digital copy option with the disc.
National Lampoon's Van Wilder from Lionsgate sadly was not available.
And even sadder, Eurotrip from Dreamworks was not available (despite an announcement that day that all their titles would be available).

When I got home, Vudu forced me (in a good way) to finish the UltraViolet portion of the registration. Trying to play the movies before that did not work. Once I completed it, they all worked fine. A good surprise: I was given the HDX version of each title I requested in HD (the highest quality available in Vudu).

So, after 50 minutes in the store and 30 minutes total driving time, I had converted 4 titles successfully for a cost of $11. Had I successfully converted 8 titles (same time period), it would have been roughly 10 minutes per title vs. the 20 minutes it became.




How does this compare to the college kid's (non-legal) option?
- Pro. No tech savvy required. Just bring in your titles.
- Con. Costs $2-5 per title vs. the cost of free for the college kid ripping his DVD, though there is the cost of storage which is not required with Vudu.
- Con. Can't currently watch these titles while disconnected on your iPad (ie on a plane) where as you can do so on the illegal option.
- Con. Took 10-20 minutes per title at Walmart while the time touching the computer to rip an MP4 copy is only 3 minutes (including entering metadata), but you end up waiting an hour or 2 for the actual encoding to occur. Sort of a 1 day of pain vs. 3-5 minutes each day approach.
- Pro. The title is now UV enabled, meaning I will soon have access to it on Amazon, Flixster and other non-Apple video services and it can be streamed to me on the go (no storage required).
- Pro. Presumably, my library of owned titles will soon be "available" so that other services can catalog it and use the list for recommendations.


How can this be improved to drive adoption?
- Create an incentive to do it. Give me a discount for doing 50 or 100 titles or more at once (after all, they are trying to encourage me to build a digital library for ownership, right)? The mathematical issue is simple: I am being asked to pay an average of $3.50 per title (perhaps higher since the majority of my titles are SD DVDs) to convert something I MIGHT watch in the future. If I don't do the conversion, the cost to me to just rent the title on demandis only $3.99 or $4.99. I just doesn't make sense for me to pay this amount to own a title I might realistically only watch once in a long while that has a high probability of being available on Netflix for free.
- Allow me to check title availability before I go to the store--saves all of us time.
- Get a bar code scanner in the store to speed up the process.
- Let me drop off my average of 85 owned titles and pick them up the next day.
- Give me access to the titles in a download fashion (at least to my tablet) so I can watch them on the go.

I think this is a great concept and I do think we need to find a way to stimulate digital ownership. We just have a long ways to go to get it right--and very little time. Apple already has all of this in their ecosystem--and once you buy an iPad, buying the Apple TV is short decision process when you realize the ecosystem that is made available to you for $99.

My recommendation: give the service 2 weeks to get the teams trained up and perhaps the process improved, then try the conversion yourself.

@ChuckParkerTech
http://www.chuckparker.tv

The Evolution of the Digital Living Room

Apple with its iPad, Apple TV and iCloud for movies and TV shows has delivered a seamless ecosystem to the consumer's digital living room for owning and watching content from multiple devices in the home.  The rest of the industry (SmartTVs, connected devices, Android tablets) struggles to create a similar experience when they are a single-brand ecosystem and fail miserably when there are devices from multiple manufacturers in the household.
How can the industry work to solve this problem?  Part of that solution is UltraViolet.  As discussed in previous blogs, the concept is that someday I will have the same experience as the Apple ecosystem (buy a movie with the UltraViolet feature and have access to it from every device I own).  The reality today is that none of my SmartTVs or connected devices (except my iPads and PCs/Macs) can stream content from Flixster, some have access to Vudu, but if I purchase on Blu-ray I can use "sneaker net" to carry the disc from room to room.

But perhaps more important than UV is a better connectivity approach to the digital living room itself.  The challenge here is that DLNA is not enough.  Assuming I have a pre-sorted directory on my PC where I can access that I am looking for is a bad assumption.  The majority of SmartTV companies have been busy building their own proprietary approaches to solving this problem (with and without partners).  Boxee is trying to solve this problem, but I think its focus on a 10-foot remote experience limits its capability to do so.

I think the best way for the consumer and for the device manufacturers to move forward is for the device manufacturers to focus (similar to LG) on exposing their devices via APIs to applications on tablets (second screens) and local (home movies) and over-the-top video services (Netflix, Hulu, Vudu, Amazon, VDIO, M-GO, etc).  This allows Second Screen apps (think BuddyTV, Dijit) to deliver the "Simple" capability to control the large TV (1st screen) and deliver the selected TV show or movie to that 1st screen (or tune the channel), but also provides a more natural interface (2-foot remote, touch screen, virtual keyboard) for "Social" interaction, review of "Stimulating" content and "Discovery" of new content, and providing the "Seamless" delivery of the source of that content across services so that it can be delivered directly to the viewing screen.  This then gives the consumer the capability to buy devices (Boxee, PS3, Xbox, Blu-ray players) and Smart TVs from different manufacturers and still have a robust alternative ecosystem that is similar in capability to Apple's.

And this approach is an urgent requirement for the industry because the consumer will not wait much longer to improve their own digital living rooms.

Let's face the facts.  If the iPad tablet market share holds in the 90%+ range, consumers are going to start buying Apple TVs (Tim Cook described them as iPad accessories), which will obviate the need for SmartTVs and other devices almost entirely:

• removes the need for Blu-ray players since the Ultraviolet experience is built-in to iCloud for the Apple ecosystem
• removes the need for SmartTVs as Apple TV connects to HDMI
• removes the need for other devices for streaming services with Netflix, MLB.tv, etc, on the AppleTV product
• leaving only the home movie challenge which Apple then solves with their iMovie and iPhoto products.

If you don't believe this is urgent, check out my recent experience at home below:

I have had a frustrating last few weeks with my Apple Ecosystem at home (AppleTV, iTunes on a Windows PC as my main library, 4 iPads & 4 iPhones for a family of 4--by no means ordinary in penetration).  Apple's latest 10.5x change to the iTunes software has a bug in it that requires you to turn off IPv6 in your network adapter of your Windows 64-bit PC (guess how long it took me to figure that out?).

So for those few weeks, I was forced to deal with the "average" digital living room in my attempts to share and watch content in my home.  I am sure most Americans have 3-4 TVs in the house (so say the statistics)  of different brands plus a gaming console or two and various connected Blu-ray players.  In my house, we have a Boxee Box, an Xbox 360, a PS3, 3 "SmartTVs" (a Samsung TV, an LG TV, and Panasonic) and another connected LG Blu-ray player.  We typically use Vudu to rent movies (better experience than Apple in Discovery and delivery in real-time) on the PS3 or Boxee, we watch "high end" TV on the Apple TV (series not yet available on Netflix or Hulu), and watch all other content either live or DVR'd from our AT&T U-verse or from iPads/other connected TVs/devices via Netflix or Hulu+.

What a mess.

Our digital living room experience at home a few weeks ago (and going forward since I fixed the IPv6 problem) was that for special movies and TV series, we would buy them, and they would download automatically into the main library where everyone in the family had access to them forever more from iPads or the Apple TV (using local delivery or the iCloud).  Home movies that were already in .mp4 were also available to those devices.

During the "time of digital failure", I tried using the DLNA capabilities of the various devices including Boxee, PS3, and my TV-connected PC to watch home videos or non-DRM'd content (outside of Netflix and Hulu+).  I think all of you probably already know how painful this was.  Boxee is probably the best at being able to decode multiple formats of personal home video (Canon camcorder, Canon DSLR, iPhones, etc), but is difficult to use to browse and find content (as we shoot and store video).  The PC which houses everything is just not built for a 10-foot remote experience (yes I have tried to font changes, I have a Logitech mini-keyboard, and even occasionally us LogMeIn from a laptop instead to control it).

The experience was so painful, that we actually purchased a few movies on Vudu as an experiment (can't download to the iPad, but you can stream) and had another push on Boxee for home movies.  Ultimately, it was the "stick" that drove me to fix the Home Sharing bug Apple created.

What is holding back sell-thru in digital?

A friend and industry expert made a great point about my last blog entry relative to the choices consumers have beyond ownership in terms of managing their digital collection of movies and TV shows.

It used to be that we all had the "Discovery" experience in Blockbuster (going to rent a video, expecting a 15-minute trip and spending an hour combing the walls of the store looking for something to watch). Then, DVD sell-thru became VERY affordable. So affordable that not only were the big releases being sold by Wal-mart, Target and Bestbuy below their wholesale pricing (losing money to drive traffic to their stores), but as the DVD industry matured, cheaper back-catalog titles became available in the check-out aisles of grocery stores. Spending $5, $7 or even $10 for a title to have forever seemed like a bargain compared to the time suck of the trip to Blockbuster combined with its late fees. More importantly, buying a cheap title to watch when it was a slow night in the near future was a perhaps a better alternative then cable TV. For years HBO filled this need--a subscription movie service that allowed you to essentially turn on the TV and watch something "good" when you had time on your hands for entertainment.

Next physical Netflix started to make a serious dent in all of this--but it only worked for those people who had patience and essentially replaced the new release for those willing to wait and the back catalog for those who planned ahead and always had a title around to watch. I think this is the first time consumers had an alternative to the timesuck/late fee experience to watch new movies and to the "what's on HBO?" experience (despite all of us having DVR's, but not having the foresight to use them to solve this problem).

Then we had a step change improvement -- rental went digital thru iTunes, Vudu, Amazon, and Xbox. Now, the "Discovery" process happened in your living room. There was some initial disappointment with titles only available on certain services and sometimes later than the physical DVD rental and sell-thru date. The fact that the studios made more money per rental (improving their share from 25-65% on average) hastened the demise of Blockbuster nearly overnight and brought digital rental day and date with physical rental and often sell-thru.

Then Netflix dropped the boom and started a digital subscription (SVOD) service. In theory, this was no different than HBO--you had a bouquet of content that you didn't really understand and had no guarantees on what would be in there tomorrow, but instead of setting your DVR or waiting until the next movie started, you could now actually search/discover and watch "something" instantly. And cheaply. Cheaper in fact than HBO.

Consumers voted with their feet/pocket books and Netflix grew their subscribers at an alarming rate, threatening even the mighty HBO.
Not surprisingly, the physical sell-thru rate started dropping quickly. Consumers now had a better rental experience either in Netflix or digitally and had a digital subscription video service that replaced the "what do I watch when I am bored" scenario.

Studios wanted and needed sell-thru, digital or physical, to regain its previous levels (while their share is similar with digital rental, the gross sales on sell-thru 3-5x higher). But how? Digital purchasing meant you acquired a title on a single device (your Vudu box, your PC) and at the time the concept of cloud ownership was non-existant (even with the mighty Apple).

What consumers needed was confidence that they could buy something digitally and have it on any of their devices when and where they wanted it.
The industry launched the concept of an industry-supported digital locker service in 2008 (then called DECE), but like all industry initiatives, it languished under the weight of its own support. The 75 initial members pulled it in many directions and then suddenly with Microsoft and Sony clearly at the helm, Apple refused to join. The battle lines had been drawn and the law abiding consumer suffered (and digital pirates continued to flourish).

Now as scant 4 years later, Ultra Violet has launched (the industry's answer to a consumer digital locker). But there are serious challenges to drive consumer adoption:
1. The experience isn't consumer-centric. You don't have the same experience movie to movie (same offer) or retailer to retailer (different sign-up processes, different viewing process).
2. In four years, Apple has launched and owns the tablet segment, probably where most digital movies and TV that are owned are viewed BY FAR.
3. Netflix has used the 4 years to cement a 20m strong subscriber base, offering unlimited movies for less than the purchase of a single new release.
4. The "connected TV" promise has become a confusing wasteland of technical solutions that make Apple all that more appealing.

And now, Wal-mart / Vudu wants to help you convert your physical library to digital with a hefty fee--and most of the physical titles you own you probably also have access to on Netflix. What to do?

While in my previous blog, I described the time vs. money trade-off of the legal conversion option, the other challenge is the easy access to a large library in which content is likely but not guaranteed to be there tomorrow vs. the cost (and hassle) of converting those titles to UltraViolet and Vudu.

My guess is that of the 400+ titles I have at home, probably 3/4 of them are available on Netflix. The other 25% are going to have issues with availability (Disney, other smaller studios) or won't pass the rental option test (ie if I am truly only going to watch that title once in a long while, is a $4 rental a better option at the point of viewing vs. a $2-5 investment for a title I may not watch for some time).

If consumers think all this thru while thinking about what the Wal-mart experience may be like (and that they likely can't view these titles on their iPad while traveling), my guess is that this will not take off very quickly.

I will try it myself on April 16th and let you know how it goes.

As for the other burning question, "How can the studios improve digital sell-thru"? That's an easy list to create but hard for them to accomplish:
1. Make the UltraViolet offer consistent on every title (streaming, download, HD for the right price, viewable on an iPad).
2. Make it easier to register the UltraViolet copy (should be as seamless as my Blu-ray player detecting it and marking my digital locker appropriately).
3. Make the iTunes digital copy work with Ultraviolet (for a small fee).
4. Like iTunes, let me purchase UltraViolet digital only titles (Paramount started this late last year).
5. Provide an incentive for me to convert my physical library that counters that hassle and the Netflix inertia.

If the studios can't do these things in the near term, I predict that a "Seamless" 2nd screen app (Fanhattan, M-GO, BuddyTV) will come along shortly that will "catalog" my digital collection and combine that with the sources of subscription and rental services, and further combine that with my Cable/Telco/Satellite provider program line-up and a slick recommendation / Discovery engine (DigitalSmiths) that includes my social network "likes', and consumers will have the tools to reduce their "purchase" of physical and digital content to only what they need, when they need it...this is a race that Discovery, Social networks, and 2nd Screen might just win.

Chuck

www.chuckparker.tv

Testronic Joins UltraViolet Consortium

Quality assurance services provider Testronic Labs announced on Monday its membership in the Digital Entertainment Content Ecosystem (DECE), the cross-industry consortium responsible for developing the UltraViolet system for digital home entertainment.

Seth Hallen, Testronic Labs chief executive, noted that with the company’s expertise and experience in more than a dozen certification programs, “we feel we are uniquely positioned to fill a vital information need for the organization.”

Hallen said in a statement that Testronic looks forward to contributing to the UltraViolet specification, as well as to the definition of the system’s testing and certification protocol.

Added Mark Teitell, general manager and executive director of DECE, “The continued expansion of DECE membership underscores the widespread support of industry leaders for UltraViolet, with more and more companies working together to fully realize its potential and bring those benefits to consumers.”

More than 70 companies belong to the DECE, including studios, technology developers, and consumer/professional service providers.

Converting your physical disc library to a digital locker

There has been a significant amount of press this week around the Wal*Mart announcement to provide consumers the ability to get UltraViolet digital copies of their existing Blu-rays and DVDs starting on April 16th.  The concept for the consumer is that your bring your collection (minus Disney movies) into the store and they do some magic and create digital copies in your digital locker to be accessed through your Vudu account online.  They perform this service for you for a mere $2 per DVD (presumably then generating a non-HD digital copy) and $5 per Blu-ray disc (presumably for the HD digital copy).

Does this sound like a deal to anyone or does it sound like the consumers are getting the short end of the stick?

A few things to think about first:

• Apple does not support Ultraviolet, so you will not be able to view your converted library on your iPad or AppleTV.
• There will be content gaps.  Disney does not currently support Ultraviolet, and there will be many other smaller studios that don't yet support them either (the other 5 majors do).  I am curious to see how this will be handled on April 16th at your local Wal*Mart store.
• If my memory is correct, the average consumer in the US currently has a library of about 70 DVD and Blu-rays (I will try to dig up this data to confirm).  That mix in 2012 is probably 80% DVD and 20% Blu-ray (I am making an educated guess about penetration over time).  So the cost to convert the average person's library (assuming all titles were supported by Ultraviolet) would be roughly $182.  Ouch!  I have over 400 DVDs and about 40 Blu-rays, so I need to get a 2nd mortgage to convert my library.
• $2 vs. $5 presumably for better quality video.  Let's think through this.  Your typical DVD puts out an average bit-rate of about 10 mbps in video rate (this is a measure of how much data is transferring from the disc/player to your tv screen).  I say average because intense scenes (big explosion, etc) push more data and slow moving scenes push less.  The average bit-rate of a Blu-ray is roughly twice that (about 20 mbps).  The typical "SD" or standard definition download or stream from iTunes, Amazon, Netflix, Vudu, Hulu, etc, is around 2 mbps.  What is typically called "HD" for high definition is pushing 4-6 mbps (720p vs 1080p matters here because there is more data to push).  Vudu's "HDX" is supposedly in the 10 mbps range.  Now I am sure all of the videophiles out there (and the experts behind download services compression algorithms) will jump in here to say that they are compressing the data "in a smater way" than is typically done for DVD and Blu-ray and therefore get a better picture as a result.  I would dispute that for a wide range of fact-based reasons, but even if we gave them a 20% improvement based on this urban legend, what do we have:  We are paying $2 for a video to be transferred to my digital locker that is only 20-30% as good as my physical SD version and $5 for a video that is 25-30% the quality of my Blu-ray HD version.  Seems like a pretty poor deal.
• What are my options?  Well, legally, none.  Despite the urban legend that I can rip DVDs and Blu-rays for "personal use", it is still illegal according to the digital millennium act.  But what if I were a 19 college student who perhaps cared less about these kinds of laws?  I could use a number of paid-for and free software programs available on the internet to "rip" a copy of the DVD or Blu-ray into an .mp4 file.  Let's pretend I pay $30 for "good software" (making this up).  Let's pretend that I have to spend 12-15 minutes each time I want to make a copy for my personal consumption (typing in the title, the destination, importing into my program for viewing, etc, though the actual transcoding might take an hour while I am doing something else).  Let's pretend that I get paid $10 an hour as a college student.  My 70 title library would now "cost" me $170-205 (12-15 minutes) to put together.  The cost for this library moves and and down based on the consumer's perception of the value of their own time.
• What about quality trades?  The great thing about getting an officially sanctioned copy of the title in your digital locker is that it has all of the searchable metadata (title, summary, cast, etc) already done for you.  The pro for using locally available software is that you can have a high-quality encode (depending on the source and your tool) every time (ie better than the $5 version).

• What are my options moving forward for new titles?  A little research on Amazon tells me that I can buy an "Ultraviolet enabled" version of the title when I buy new movies.  The price difference varies.  It seems that Warner Brothers is including it with the DVD and Blu-ray for nearly the same price as the discs used to be alone, where as Paramount, Sony and others are charge $2-7 more for a bundled product that is the DVD + Blu-ray + Ultraviolet Digital Copy.  My other alternative is of course to buy it from iTunes (typically at the same price as the DVD or Blu-ray), and while I do not get the physical disc nor do I get an UltraViolet compliant digital copy, I get the movie in my "iCloud" service, and can download/stream to any of my apple devices (AppleTV, iPads, etc).  If you have tried registering a purchase in Ultraviolet, you know that the experience is complicated and confusing--unlike a purchase from Apple.  There has been some activity (from Paramount) offering the digital-only UltraViolet copies to consumers, but this is typically not the case (ie buy something in Vudu, it is stuck in Vudu).

Walmart To Market Two-Dollar ‘Disc-to-Digital’ Conversions As Part of UltraViolet Push

by Terence Keegan

Walmart customers will be able to buy digital access to their DVD and Blu-ray collections beginning April 16, in a new partnership between the retailer and five major movie studios that back the UltraViolet digital rights system.

Under Walmart’s “disc-to-digital” initiative, a streaming “conversion” for standard DVDs and Blu-ray discs will cost $2, while high-definition digital access to standard DVDs will cost $5. Access will be through Vudu, Walmart’s Internet video-on-demand service.

Walmart will market “disc-to-digital” in partnership with Paramount Home Media Distribution, Sony Pictures Home Entertainment, Twentieth Century Fox Home Entertainment, Universal Studios Home Entertainment, and Warner Bros. Home Entertainment. The new service stands a complement to the UltraViolet titles that Vudu will sell direct to consumers, according to a news release.

More details on Walmart’s “disc-to-digital” campaign in Wednesday’s edition of M&E Daily.

Will 2012 Be UltraViolet’s Year?

Sell-Through Video Markets Stand at $9.9 Billion in 2011: IHS

And so we end 2011 how we began it: posing the question of whether UltraViolet will reboot studios’ sell-through business for today’s multi-screen marketplace.

Research firm IHS Screen Digest has confidence that the new digital rights system can gain traction with consumers in 2012, as five major studios release a wave of UltraViolet-enabled Blu-ray titles.

Studios are still fighting to stem market declines from the peak days of DVD retail in 2004. IHS reports that in 2011, combined U.S. consumer purchasing of video content — both physical and electronic — will stand at $9.9 billion, representing a down 29 percent contraction of the business from its 2004 high of $14.1 billion.

Unless there’s a change in the consumer proposition, IHS says, revenue could fall further in the years to come — to as low as $8.1 billion by 2015.

“Although the rate of decrease moderated during the last two years from the double-digit drop in the recessionary year of 2009, we don’t see those declines turning into renewed growth without a fundamental change in the ownership proposition for consumers,” says Tom Adams, IHS’s principal analyst and director, U.S. media. “UltraViolet delivers that kind of change.”

Adams notes that consumers have cut back on buying discs “in the absence of easy access to all their purchased content across all their proliferating number of screens.” The benefits of UltraViolet — streaming or download access to content from up to 12 devices, by up to six members of a household — could make disc purchases a more compelling consumer option than renting titles via subscription services or video-on-demand.

The sell-through model, Adams points out, produces far more revenue for content owners per view than do rentals.

“We think it’s important that UltraViolet is being launched not so much as a feature of EST files, but as a value-added feature of the digital disc, on which consumers have spent $113 billion since they were introduced in 1997,” Adams adds. “Even if our projections are correct that annual disc sales in the United States will have declined to some $9.3 billion in 2011, that’s still about 14 times the size of the EST business.”

Adams notes two advantages to studios’ continued pursuit of a disc-focused strategy in 2012. “First,” he says, “tens of millions of the studios’ best customers will be quickly exposed to the UltraViolet pitch in the box. Second, if UltraViolet it sparks just a 7 percent increase in consumer disc buying in the years ahead, it would pay off for studios as much as a doubling of [electronic sell-through revenues].”

At Blu-Tech Summit: Apps Provide New Marketing Momentum for Blu-ray

by Marcy Magiera

UNIVERSAL CITY, Calif.— Apps are poised to increase the interactivity of Blu-ray and provide new marketing momentum for the format, said a panel at Blu-Tech: The Blu-ray Innovation Summit held here today.

“Second screen” apps to access features on Blu-ray discs—such as Sony Pictures Home Entertainment’s “Smurf-o-Vision” feature for “The Smurfs”—were much discussed for their ability to increase consumer interaction with BD movies through the tablets and other mobile devices that are currently growing like wildfire.  “Smurf-o-Vision” is a free app exclusively Apple’s iPhone, iPad, and iPod Touch.

“Second screen is the hot topic, the way to get BD going again,” said Sven Davison, VP of production for 1K Studios/Cinram, who added that traditional features are not the potent selling points for discs that they once were.

With BD Live and apps together, “Consumers will see more Internet-connected features with BD,” said Charles Potter, VP of product development  and creative services for Sony DADC.

“Tablets are delivering on the promise of BD Live,” said Andrew Carlson, executive director of interactive media at New Wave Entertainment.

The term “second screen” is one consumers are becoming familiar with, panelists said, though they emphasized that engaging entertainment experiences are more important to consumers than the technology with which they are delivered.

“Consumers are actually getting it,” said Tracey Garvin, senior VP of worldwide marketing for Sony Pictures Home Entertainment, of the term “second screen.” Sony touted its second screen features in marketing and press materials for “The Smurfs”; other studios, including Disney, have also done so.

That said, panelists stressed that consumers don’t care about features such as second screen capability or UltraViolet, per se. “The creative experience is what matters to consumers,” said Cory Watson, executive director of interactive media at New Wave Entertainment.

Speaking separately, Jim Bottoms, director of Futuresource Consulting, predicted that “apps will be a very, very important distribution medium for movies,” as he presented research on “The Consumer BD Experience.” In addition to adding new excitement to BD, “social networking and apps will help drive online video revenues,” he said. Read more

Warner Offers iTunes Movie Downloads in UltraViolet Make-Good

Boosters of UltraViolet have already faced negative reviews of the cloud-based movie platform from the tech press. But consumers are also panning studios’ first implementations of the technology as well.

Poor consumer reviews have led Warner Bros. to offer codes for complimentary iTunes downloads of “Harry Potter and the Deathly Hallows – Part 2″ to those who have purchased the UltraViolet-enabled Blu-ray of the movie (via GigaOm). Warner has included UltraViolet on several of its releases to date. Consumers must register with the studio’s Flixster website to gain access to the UltraViolet streams; many of the complaints stem from compatibility issues.

The iTunes make-good is ironic given that Apple has been conspicuously absent from Hollywood’s UltraViolet push; indeed, studios’ direct-to-consumer UltraViolet services compete, in a sense, with the iTunes video store.

Analyst Richard Greenfield delves further into the poor ratings for UltraViolet on among Amazon.com customers (via BTIG, registration required). Greenfield does point out that Warner continues to improve the functionality of Flixster, most recently enabling users to download copies of movies onto their mobile devices.

First Takes on UltraViolet’s Early Days

Hollywood’s first UltraViolet-enabled movies are receiving positive marks from early reviewers in the business press, even as they note the battles that studios, technology companies, and service providers will have to wage to establish the platform.

Geoffrey Fowler, a contributor to the The Wall Street Journal’s Personal Technology column, emphasizes the simplicity of watching an UltraViolet movie on the go. Reviewing his experience with Warner Bros.’ UltraViolet-enabled “Green Lantern,” Fowler reports that the process of accessing a digital copy of the movie “went smoothly, though it could be streamlined. Entering redemption codes,” Fowler writes, “reminded me of collecting cereal-box tops to win a prize.”

Fowler suggests that for UltraViolet to “really catch on,” the format’s backers “may have to develop a way to add previous DVD purchases to a digital locker, like people do with music by ‘ripping’ old audio CDs.” Setting aside the legal implications of DVD ripping — could content owners now sanction the circumvention of past copy protection measures? — Fowler’s suggestion is analogous to what Apple is promising for cloud-based music storage with its upcoming iTunes Match.

No doubt an iTunes Match-type service for video is technologically feasible. But it will likely involve some compromise between Apple and studios supporting UltraViolet, which can be viewed as a competing platform to Apple’s iCloud.

Such a compromise is necessary if Hollywood has any chance at reestablishing an ownership-oriented consumer base, argues The Economist. In covering UltraViolet’s launch, the British magazine outlines the marketing hurdles that studios face in convincing consumers to build libraries of digital rights, ultimately instead of discs. “The benefits [of UltraViolet] for the consumer — flexibility, a common user interface and experience, and freedom from hassles over digital rights — are difficult to convey in simple terms,” The Economist observes. Consumer marketing and consensus building among industry players are only two challenges to establishing cloud-based entertainment: privacy protection also looms, The Economist notes.

At ESCA Europe: Studios Draw Digital Supply Chain Lessons from Physical Business

As major film studios venture further into digital distribution, they are bringing with them best practices from the packaged media business. Yet those best practices continue to evolve, as supply chain management becomes more critical than ever to profitability in the packaged home entertainment industry.

Speaking to attendees of the ESCA Europe conference in London on Wednesday, Jim Wuthrich, president of international at Warner Home Video, shared his own experience from when he added oversight of Warner Bros. Digital Distribution to his responsibilities.

“One of the banes of my existence in [the physical] supply chain was making sure that I had the right product on the right shelf, in the right quantity at the right time,” Wuthrich said. “When I went over to digital, I was so excited because I didn’t have to deal with supply chain issues anymore—or so I thought. Then I found out that if you don’t have the bits in the right place at the right time, you can’t sell it either. So the same supply chain problems exist on both sides of the business, be it physical or digital.”

Aodan Coburn, executive vice president of worldwide operations and licensing at Sony Pictures Home Entertainment, concurred with Wuthrich’s holistic view in an on-stage interview at the ESCA conference. But Coburn stressed that the physical side of the business is ripe for greater collaboration among studios, vendors, and retailers.

“Sometimes we’re thinking [as an industry] that digital is competing with physical,” the Sony executive said. “Whereas if you sit with our sales people—if you talk to the territories and say, what are your real challenges?—the real challenges are not around digital at this point in time. The real challenges are around competing with other products that come into retail, which give better margin and which are easier to manage.” Read more

Flixster Service Will Be Key to Warner’s UltraViolet Plans

Warner Bros. plans to offer UltraViolet digital access to its movies in the fourth quarter of this year, beginning with its packaged home entertainment releases for “Green Lantern” and “Horrible Bosses,” Time Warner chief executive Jeffrey Bewkes told analysts yesterday.

Bewkes, speaking during the company’s quarterly earnings call, said that Time Warner’s Flixster property would be “the key part of our plan” to drive UltraViolet adoption (via PC Mag). At present, Flixster is largely a showcase for theatrical trailers, although the site also offer free streams of select movies and TV series. Warner, which acquired Flixster in May, intends to transform the site into an UltraViolet-powered cloud movie service that will offer consumers digital access to both new purchases and their existing DVD collections.

“If you go and buy a physical DVD, you will have it in the cloud as you walk out of the store,” Bewkes explained. “If you buy an electronic copy of a movie from either a cable operator or any electronic retailer, you’ll also own a copy that’s up in the cloud that you can move from device to device. If you want to take your old DVDs into retailers and have them put them into the cloud and therefore be available for you to move from device to device, you’d be able to do that also.”

More on the studio’s plans at All Things Digital.

Studios Ready Digital Pitch for Holidays

With UltraViolet and Disney Studio All Access Keychest, studios are preparing to pitch digital access as a benefit of ownership.

Holiday-season Blu-ray discs will include registration info for one of the two cloud-based services (via The Hollywood Reporter), while UltraViolet and Keychest digital files by themselves will fetch in the $15 range, as the next generation of “electronic sell-through.”

UltraViolet, Warner Bros.’ Jim Noonan tells The Hollywood Reporter, “changes the whole proposition of the value of ownership:” purchasers will be able to watch a film like Warner’s “The Blind Side” wherever they find a fast enough Internet connection.

But technology may only be part of what it takes to establish UltraViolet and Keychest. Studios also may look for title exclusivity to play a crucial role. After all, one could conceivably stream a movie at a Wi-Fi hotspot today via iTunes, Amazon Instant Video, or Netflix. But “The Blind Side”  is just one major-studio title that remains unavailable on any of the three streaming services — even though it saw DVD release months ago.

More on studios’ holiday strategy at the Financial Times.

‘UltraViolet’ Licensing Now Available

The Digital Entertainment Content Ecosystem (DECE) trade group has begun to license its UltraViolet specifications to content owners, technology companies and service providers, with an aim to begin hosting consumer “digital rights lockers” this fall.

Specifications include a universal Common File Format for content downloads, allowing consumers to copy playable files directly among multiple brands of registered apps and devices — even devices running different UltraViolet-compliant digital rights management (DRM) systems.

Information on the licensing program is available at www.uvvu.com; more on UltraViolet’s market prospects at GigaOm and Multichannel News.

Studios: ‘UltraViolet’ Digital Content Set For Midyear Release

Major studios plan to begin marketing movies and TV shows under the “UltraViolet” digital entertainment brand in mid-2011, the consortium backing the new standard announced at the International Consumer Electronics Show (CES) in Las Vegas today.

The Digital Entertainment Content Ecosystem – the group of studios, electronics manufacturers, and other companies developing the UltraViolet specifications — plans to first introduce UltraViolet products to the U.S. market, followed by expansion to the UK and Canada later this year. Studios will market UltraViolet titles for retail purchase, either electronically or as digital copies included with Blu-ray Discs or DVDs. Purchasers will be able to watch UltraViolet content “on many devices they already own”, according to the consortium.

Additionally, streaming services will enable consumers to access UltraViolet collections via websites or devices such as set-top boxes, Internet-connected Blu-ray players, smartphones and tablets. UltraViolet-optimized media player apps for PCs, game consoles, and mobile devices are slated for a late 2011 introduction, followed by a wave of designed-for-UltraViolet devices in early 2012.

“[The] announcement that UltraViolet is ready shows that the entertainment and technology communities have made good on their promise to give the world a new, user-friendly digital standard for collecting movies and TV shows in the digital age,” said Mark Teitell, the consortium’s general manager (release via Engadget).

Enthusiasm for tablets and Internet TVs notwithstanding, studios will have their work cut out for them in convincing consumers to begin “collecting” yet again. Other emerging digital entertainment offers, such as Comcast’s “Xfinity” app for the iPad, emphasize on-demand access over consumers amassing their own digital libraries. As studios see it, the two models are complementary: video-on-demand will succeed the disc rental business, while UltraViolet will establish a digital analogue to DVD and Blu-ray sell-through.

More discussion of UltraViolet’s prospects this year at CNET and The Wrap.

Neustar, Sonic Team To Push ‘UltraViolet’

Rights management company Neustar says it is working with Sonic Solutions to help accelerate the launch of “UltraViolet,” the digital distribution platform now in development by the Digital Entertainment Content Ecosystem (DECE) consortium.

The two companies, both DECE members, are working on “rapid and cost-effective integration” of the Neustar-developed UltraViolet Digital Rights Locker with retailer storefront and locker access service functions to provide a turn-key launch solution for UltraViolet participants. Sonic’s RoxioNow digital supply chain platform (employed by retailers such as Best Buy) also will be compatible with the UltraViolet system.

Press release here (via PR Newswire).

‘UltraViolet’ Will Enable DVD Purchasers To Access Movies On Multiple Devices

The consortium of studios, technology companies, and service providers known as the Digital Entertainment Content Ecosystem (DECE) will pitch its concept of cloud-based entertainment access to consumers later this year under the “UltraViolet” brand name.

For the 58 companies participating in DECE, UltraViolet promises to be an interoperability standard built into everything from DVDs and video streams to TV sets, tablet PCs and smartphones, as well as cable and Internet video-on-demand services.

For consumers, UltraViolet will function as a passkey to view paid-for content on a multitude of devices. The service will work with physical as well as digital transactions, with consumers registering disc purchases on free UltraViolet accounts. (Release here in .pdf.)

The DECE’s member list includes top names in digital delivery services (Netflix, Comcast, Sonic, Best Buy) as well as content (Fox, NBC Universal, Sony Pictures, Warner Bros., Paramount). New members include LG Electronics, British DVD renter Lovefilm, and Marvell Semiconductor.

Conspicuously absent from the group are Apple, whose online store and devices constitute an ecosystem all their own, and Disney, which continues to develop its KeyChest technology for digital access.

On the branding and marketing side, the DECE has its work cut out for itself. Analysis from Wired, which likens the UltraViolet effort to banks’ development of the ATM infrastructure, but reminds readers how the music industry’s similarly-minded initiatives have sunk.

• Latest Edition

• Featured Blogs

• 2nd Screen Blog

---