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FEATURE: 'Signs are bright for UltraViolet' says IHS Screen Digest

By Christmas 2012, most major theatrical releases will be UltraViolet enabled, giving consumers 'any time, anywhere' access to their favourite films. IHS Screen Digest Senior Analysts HELEN DAVIS JAYALATH and TOM ADAMS examine the technology’s potential.

Late last year, Warner Home Video became the first studio to release UltraViolet-enabled movies on both sides of the Atlantic. The launch of Horrible Bosses and Green Lantern in the US in October and Final Destination 5 on 26 December in the UK are expected to kick-start a rapid expansion in the release slate.

Within a few weeks of Warner's first release both Sony (Friends with Benefits, The Smurfs) and Universal (Cowboys & Aliens) had joined the UV line-up in the US. The pace of releases is expected to quicken over the course of 2012 and by the end of the year studios expect most major theatrical releases to be released on UV-compliant discs.

Build on your core business

As a first step, it makes perfect sense that the studios should focus on delivering UV rights via physical discs - on which consumers in the US and Western Europe combined will spend $17.1bn in 2012 anyway, according to IHS Screen Digest forecasts - rather than via downloads, on which they will spend $1.1bn. This strategy allows studios to continue to focus on the near-term priority of boosting sales of physical product, which still account for the lions' share of studio revenues both overall and on a per-transaction basis, while not losing sight of the long-term objective: convincing consumers that ownership of a digital file "in perpetuity" is worth paying for.

The launch of UV in the US last October generated significant on-line comment from disgruntled Apple fans, unhappy to discover that, unlike the 'traditional' Digital Copy studios began offering all of four years ago, UV files cannot be imported into iTunes. Warner's decision to redeem UV redemption codes against iTunes versions of its UV titles placated most of the grumblers, but does not resolve the underlying issue: at present UV files are restricted to a single client app on the PC and must be pulled from the internet again to be viewed on a different device.

This is, however, only a 'soft launch', and UV has more tricks up its sleeve. Key to the future of the initiative will be the release, scheduled for "first half 2012"? according to Mark Teitell, General Manager and Executive Director of UV, of a common file format for UV downloads. This will make it possible for consumers to download a single file for viewing across multiple platforms, and to link one family UV account to up to a dozen UV-capable apps and devices.

Where are the retailers?

The launch of the common file format should also help address another fact currently undermining the UV concept: so far UV content can only be accessed through a handful of studio-backed websites. If the initiative is to capture the interest and - crucially - the confidence of consumers it is essential that UV becomes ubiquitous. For this to happen, retailer-driven services such as Wal-mart's Vudu in the US and Tesco's Blinkbox in the UK, must get seriously involved. These retailers, and others as closely linked in consumers' minds as providers of home entertainment product, are perfectly positioned to provide the ideal combination of a familiar - and trusted - brand that will provide a constant and reassuring presence from shopping trolley to digital locker.

Furthermore, if retailers can use UV to strengthen their relationships with individual customers and reinforce brand loyalty, they will have a vested interest in continuing to stock and promote the DVDs and BDs that propagate the format. This in turn will help convince consumers that physical discs are not on the verge of obsolescence and will thus boost the spending on physical home entertainment purchases that remains so crucial to the industry's bottom line.

However, like the proverbial buses, after years of waiting more than one digital locker service has shown up at once. Both Tesco and Wal-mart pre-empted the launch of UV in their respective markets by rolling out own-brand programmes linking purchased discs to the Digital Copies of those films. In early December, Tesco used Blinkbox, the online TV and movie service which the supermarket giant acquired in April 2011, to launch the UK's first digital locker scheme just three weeks ahead of UV's UK launch. Meanwhile Wal-mart has been offering a similar service on Vudu (which it acquired in early 2010) since July 2011.

So, could proprietary services such as these stymie the launch of UV? We don't believe so. Wal-mart is notoriously tight-lipped about its business strategy, but Tesco is more open and has made it clear that, like UV itself, the launch of its digital locker is about adding value to physical video discs by giving consumers the means to access movie content across multiple devices. The aim is to prolong consumer purchasing of physical home entertainment, which is a proven driver of footfall for Tesco and other major grocery chains, not replace it with digital alternatives.

Tesco is a member of the DECE consortium behind UV (see box) and the retailer has re-stated its commitment to launching a UV-compatible service. It sees the launch of its own digital locker service as entirely compatible with this commitment, pointing out that the Tesco service is exclusively available to Clubcard holders, while UV is by definition not limited to any one retailer. In other words, by going it alone Tesco argues that far from snubbing UV, it is simply positioning the Tesco brand as an independent digital video provider to its own customers.

We therefore expect that once UV - and, more specifically, its common download file format - is fully operational, Tesco will move to integrate its Blinkbox service with the broader initiative, enabling the 16m active Clubcard members in the UK to add UV-titles to their existing Blinkbox movie libraries. Tesco knows that half of those 16m people already buy DVDs or BDs in its stores; if the chain can convince just a small proportion of these consumers that cloud-based movie storage is the future of home entertainment, that can only be good news for UV.

But what if Wal-mart (or any other retailer for that matter) decides not to play ball, opting instead to create a closed digital offering of its own? In the short term locking consumers into a proprietary digital service may look like a good way to retain their loyalty, but we believe this would be misguided. Ultimately, adding UV capability to virtually any retailer website alongside existing proprietary offers and services is likely to be more beneficial in terms of both driving traffic and retaining customers than trying to go it alone. What's more, by working together the rest of the industry just might manage to grow the total market enough to break Apple's dominance in EST - exactly why UV was developed in the first place.

How UltraViolet works?

In order to enjoy the UV content on their new disc, a consumer must sign up for an account with their chosen portal (eg, They will then be prompted to either link this to an existing UltraViolet account or create one ( and enter the UV voucher code number from the disc they have bought. At the time of writing Warner's Flixster was the only UV portal site unveiled in the UK, but in the US both Sony and Universal timed the launch of their own UV sites to coincide with their first UV-enabled discs. Over time the number websites and apps offering UV capabilities will increase; each of these will need to be linked initially with the user's UV account, but once this is done any UV-linked account will give access to the user's entire UV library, irrespective of which studio or retailer the titles were purchased from.

Key features of a UV account:
1. Account holder can add up to five additional users
2. Parental control facilities available
3. Once UV's common file format is available (see main feature) account may be linked to up to 12 different apps or devices for streaming/downloading
4. Up to three steams permitted at any one time
5. Free streaming will be available for at least one year on all titles, plus up to three downloads. (These are minimum requirements: Warner has already committed to three years' streaming and five downloads for its titles)
6. Once these limits are reached some studios or portals may choose to charge for streaming or downloading, although this is by no means certain
7. In accordance with industry agreements on territory-based rights, geoblocking will be implemented so consumers travelling outside their home country will not be able to stream content although they can download it in advance

The Digital Entertainment Content Ecosystem (DECE) consortium, under which UV was developed, comprises more than 75 companies, including five major studios (all but Disney), leading consumer electronics companies and major bricks-and-mortar, e-commerce and digital retailers (all but Apple's iTunes Store). Its role will be limited to licensing the technology and operating the digital-rights electronic clearing house that will authorise users' devices and authenticate their requests for streams, downloads and inter-device copying. Consortium members and other interested parties will provide the internet portals and apps through which consumers will access their own libraries of digital content. At the time of writing 21 companies from across the entertainment industry had signed up as UV licensees for the UK; between them they cover 55 key roles in the UV ecosystem, including provision of content, streaming and downloading services, apps and devices as well as retailing.

UltraViolet is one of a range of topics that will be discussed at this year's PEVE Entertainment conference, to be held at the British Museum in London on 27-28 March 2012. For more information see

Story filed 19.01.12

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