Hollywood stumbles on next big step in home video
When Jason Mockford bought a DVD of “Harry Potter and the Deathly Hallows: Part 2” with the words “digital copy” on the box, he assumed that he would be able to watch it on his iPad.
But the digital version of the film was accessible only through a new technology called UltraViolet. It required him to register on two different websites and download new software. It wasn’t compatible with the iTunes application he uses for all his other music and video.
Finding the process too difficult, the 30-year-old San Luis Obispo resident said, “I just stopped at some point because it asked me to do too much.”
If UltraViolet were just a new tech demo for geeks, a rocky start might not matter. But the new format is Hollywood’s next big thing, an ambitious attempt to drive consumers to keep buying movies as they abandon discs in favor of tablets, smartphones and Internet-connected TVs.
“Getting UltraViolet right is the single most important strategic issue for studios in 2012,” said Spencer Wang, head of Internet and media research at Credit Suisse. “All CEOs for the major entertainment consortiums need to be focused on getting it right.”
The stakes are enormous. Film studios derive about half of their total revenues from home entertainment sales. Yet overall consumer spending on home entertainment dropped 2% in 2011, the seventh consecutive annual decline, according to Digital Entertainment Group, which collates digital media sales. More notably for UltraViolet, revenue from consumer movie sales, as opposed to rentals, dropped 12%.
At a standing-room-only press event at the Consumer Electronics Show in Las Vegas on Tuesday, backers admitted that things hadn’t gone quite as smoothly as hoped. “The best way to describe the launch is we built this great house, it had an incredible foundation, and in our excitement to move in there was some finished carpentry that still needed to be done,” said Sony Pictures Chief Technology Officer Mitch Singer.
UltraViolet has been in the works for more than five years, as more than 70 movie studios, electronics makers and retailers have tried to build a unified ecosystem for selling and storing movies online. This consortium of members whose interests are not always aligned has experienced difficulty developing and launching its new product.
The first UltraViolet movies became available last year, their access codes sold with the discs for films including “Green Lantern,” “The Smurfs” and “Cowboys and Aliens.”
To watch a movie via UltraViolet, consumers have to use a code that comes with compatible discs to register on two different websites. They then need to install two new pieces of software on a PC and a new application on a mobile phone or tablet to download the film.
About 750,000 people have bought compatible DVDs and registered for UltraViolet. But chatter on message boards, tech blogs and Twitter has been largely negative as consumers found it confusing and buggy.
Even within Hollywood, there have been fissures among the studios backing the technology.
Some home entertainment executives who were not authorized to discuss the matter publicly said the launch, which was led by Warner Bros., happened prematurely. It would have been better to wait, these insiders said, until the technology worked smoothly and more retailers were selling UltraViolet-compatible digital copies online.
“We felt it was important to take a leadership position and show our firm commitment to this new industry standard by beginning to make these new rights and benefits available and to help drive momentum around this initiative,” said a Warner spokesman.
Warner includes UltraViolet copies on all of its DVDs and Blu-ray discs. Sony, Universal and Paramount are including it only with selected movies. But the latter two also include iTunes copies of their movies for those who prefer Apple’s technology.
Executives at 20th Century Fox, meanwhile, are waiting to get aboard UltraViolet until there are more places to buy and store UltraViolet movies online, more devices on which to watch them, and a common file format in which titles can be downloaded and utilized.
“We think that mass consumer adoption starts to have a tipping point when all of these pillars are built,” said 20th Century Fox Home Entertainment President Mike Dunn, whose studio is officially behind UltraViolet but doesn’t expect to launch its first title until late 2012.
At the Consumer Electronics Show event, UltraViolet supporters cited the large number of people who have signed up in less than three months and the debut at the show of new Blu-ray players from manufacturers Panasonic and Samsung that connect directly to UltraViolet.
“Studios are going to be making hundreds of titles available, at a minimum, throughout 2012,” said Mark Teitell, general manager of the UltraViolet industry consortium known as the Digital Entertainment Content Ecosystem. “By the time we’re having a conversation like this [next year], we’ll have grown exponentially.”
Amazon.com also announced that it would be the first independent retailer to sell UltraViolet movies directly online, without a disc. Executive Vice President of Digital Content Bill Carr said the Web retail giant just signed a partnership with one studio, which it declined to identify.
Previously, the only digital service that works with UltraViolet was Flixster, a movie rating website that Warner Bros. acquired last year as part of its plans to stimulate digital movie sales. Flixster makes an UltraViolet-compatible application for Apple and Android phones, tablets and PCs.
Best Buy and Wal-Mart, which also sell movies online, have yet to take the leap into UltraViolet. Representatives for both companies declined to comment.
Later this year, the companies behind UltraViolet plan to develop a marketing campaign to explain the format’s benefit and exactly how it works. Despite missteps out of the gate, backers say history proves that UltraViolet can overcome a troubled start.
“During the launch of the DVD there was a wave of negative comments, and people said it was a failed format,” Sony Pictures Home Entertainment President David Bishop recalled. “In the end, DVD did extremely well.”
