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FEATURE: UltraViolet in Europe -
Quo vadis?

UltraViolet, the cloud-based content delivery platform, was officially launched in Germany, Austria and Switzerland on 3 December with the release of Sony's The Smurfs 2, the first Blu-ray disc to come in this region with a redemption code allowing customers to stream or download a digital version of the film on multiple devices. In France, it is Pacific Rim that is to jump-start UltraViolet, together with The Smurfs 2 and five other titles. Final Destination 5 spearheaded UV in the UK exactly two years ago (to date, some 230 titles are available and 750,000 UV accounts have been reportedly opened).

These, in a nutshell, are the only hard news bites to be gleaned from Googling 'UltraViolet' and 'Europe' (.com/ A remarkable state of affair given that UV is the shot of adrenalin Hollywood studios designed to inject a few more years of life in their revenue-producing packaged media.

The specialist press will be forgiven for the dearth of coverage on the progress (or lack of it) of UltraViolet in Europe, above and beyond press releases from UV progenitor Digital Entertainment Content Ecosystem (DECE). Journalists were barred from London's UltraViolet Academy 2012 and 2013 conferences, where 250+ video publishers and other professionals were getting updated on Euro-developments. Without the press, they could "candidly discuss what is happening on their side without fear of being called out in the papers," as the organisers put it to DVD and Beyond to whom they promised follow-up briefings that never materialised.

A well-attended second UV Academy conference took place in September and DVD and Beyond was determined to play the same constructive role in regard to UltraViolet that it played in regard to DVD when it was unleashed in Europe in the late 1990s. The press, then, was roaming freely amid professional gatherings, conveying consumers' frustration and expectations to authoring houses and video publishers as they were sorting out the inevitable early technical and marketing glitches. This mutually beneficial relationship bore fruit: kept involved, the press embraced the new disc format and made it the success it deserved - and still deserves!

It was not much of a challenge to obtain a comprehensive record of the London proceedings. The organisers ought not to have feared the hacks: no tough questioning, no panellist or delegate made foul of himself. Actually, they would have welcomed the dissemination of data showing an increase in sales of UV-enabled titles (in the US). But the 'outside world' will have missed Cinram CEO Steve Brown's powerful call to arm spelling out the conditions for a successful deployment of UltraViolet (see below).

IHS Screen Digest's PEVE 2013 conference in April will have been the last journalist-friendly event where a progress report on UV developments in the UK was presented. Data on other territories were scarce (read article).

Consumer education, marketing coordination and consistency were the key words at the Blu-ray Academy conference in September. DECE's unveiling of the 'Digital HD' branding in the US seems to have thrown a spanner in the marketing efforts on this side of the Pond. "Launched in October, 'Digital HD' has a lot of resonance in the US," says Rich Marty, VP Emerging Platform Development & Marketing, Sony Pictures Home Entertainment. Less so in Europe where it is perceived as adding confusion in a market already crowded with acronyms.

A delegate from the floor pointed out that a 'Digital HD' logo prominently displayed on a pack with a small UV underneath sends a confusing message. "What is it that we want consumers to understand? We want to promote the concept of UltraViolet and say it is digital HD or the other way around?" "We are looking for something which is more visible in the UK," confided Rob Salter, the straight-talking consummate professional put in charge of UV promotion in the British Isles. "Subtlety is not going to be our friend on this one at the start."

Figuring out how to incorporate the new Digital HD branding into a standardised UV message in Europe has delayed the start of the marketing exercise here by "at least two to three weeks," according to someone close to the brief.

This raises the question of how much influence the US-dominated DECE and the big Hollywood hitters have over the crafting of a global UV campaign that plays in the diverse European markets. Customising the message is key - a challenge for those Hollywood majors whose blockbuster titles will be used for the UV take-off.

There are different privacy rules in Germany and France, the first two non-English-speaking territories visited by UV. There are a variety of UV-related contractual issues for independents studios to be brought in as well. "While UV interface will be localised, as will be the code redemption procedure via Flixster, how to you pronounce 'UltraViolet' in German, will there be a translation?" mulled Kai Marner, Marketing Director, Warner Home Video Germany. "There are questions to be cleared beforehand. Blu-ray Disc is a well understood concept, there is a gap with UV."

Europe's largest home video market, Germany, will be a tough one to crack, according to the German panellists. DVD and Blu-ray are very strong there. It will be difficult for high-street retailers to accommodate multiple product lines. Also, Germans are "very conservative customers," they take time to embrace new technology. "They only jump into it when it's developed enough and works," says Hans Henseleit, Managing Director of Videociety. "Extensive testing is the priority. Germans have little time for technical problems."

"Also, I would not release disc-to-digital right away in Germany. I experienced difficulty when I tried the system at Walmart in the US. You discover at the store that your title is not available in UV, that's a disappointment. I would rather wait. It is not a convincing proposition if only 10-20% of all titles are available as UV files. It needs to reach, say, 80% to go ahead," Henseleit argues.

In a market where 45,000 DVD/BD discs are already available, Sony's lonely UV-enabled Blu-ray titles, The Smurfs 2, is hardly likely to catch German consumers' imagination for UltraViolet!

Getting Germans to become familiar with the concept of Cloud, transforming the title they bought from a disc into a digital file available in the cloud to mobile devices, "will take a few years." There are no specific UV-branded BD players yet, and manufacturers cannot be counted on to spell out the UV advantage. It must be done by content owners and retailers.

"UV has a lot to offer, but it's a complicated proposition to sell," Henseleit continues. "In an advert you only have a few seconds to get the message across. Strip it down to a few points. Redemption code will need to be the first key message for at least two years [in Germany]. Later on, advertise the possibilities of multi-device usage."

Unlike now where the redemption code is attached to the purchase of a disc, it has been suggested that the UV digital files could be made available prior to the disc release. "There could be a window to sell UV files on the Internet. Maybe the UV file could be available a week before the BD UV disc," suggests Andreas Bork, Head of Digital & Online GSA, Sony Pictures Home Entertainment.

This idea does not convince everyone. How to maximise the movie ownership proposition is a concern of Marty. "Let's be careful not to leap-frog the Blu-ray Disc. BD is now spreading in combo packs. Let's work with both formats, intertwined, complementing each other, working for each other."

What will it take to jump-start UV in terms of number of titles? In France, Tristan du Laz, Deputy CEO of TF1 Video, shares Henseleit's concern: "I am afraid to hear that some want to launch UV with very few titles. It will be tough to explain to the consumers why only 2-3 UV-enabled titles will be on offer out of 5,000 movies available. What is going to be the offer on the medium-to-long term? We won't switch to UV if there are so few titles at launch."

In France, with a prolific domestic film production, panellists point out that local content will be key to the successful deployment of UltraViolet. The top two record-breaking box office titles in 2012 were French movies. It is thus all the more surprising that the handful of initial UV titles on offer are Pacific Rim and The Smurfs 2 to be joined by R.I.P.D , Elysium, Kick-Ass 2, Conjuring: les dossiers Warren and One Direction: le film. No Gallic fare! That does not dent the confidence of Yves Caillaud, formerly Senior VP EMEA, Warner Home Video & Digital Distribution and now DECE's Regional Manager Europe for UltraViolet: "France will be the fastest territory on Earth to adopt UV."

The French seems to have done their homework. Global supermarket chain Carrefour set up a 4-person team to investigate all facets of UV. "We wanted to understand first before making a move. We talked to a lot of people who were not saying the same thing. That's complicated," explains Emmanuel Rochedix, Culture/Entertainment Director, Carrefour. "Consultants were hired. We met colleagues in Spain, Italy, Belgium to get to know national idiosyncrasies. After three months of research, we draw a cahier des charges spelling out the advantage for UltraViolet to have Carrefour's backing and vice versa. And what resources we need."

Designing a consistent marketing message is the sine qua non of a successful deployment. "We need to answer consumer needs, bring the features they will appreciate, be very clear with them," says Eric Legay, Marketing Director France & Benelux, Universal Pictures Video. "We need to help consumers not only to open an UV account, but to use it. That's the condition for attracting other players into that market." Ease-of-use of a redemption site, consistent messages and packaging are key.

David Morgo, Sales Director, Sony Pictures Home Entertainment France, sees it as the responsibility of studios to convince retailers that UV is important. The challenge for retailers is to see UV in a long-term strategy. Legay agrees: "We need a strong support from the studios, not just a strong title offer. We need a big push on promotion and marketing." "Hopefully UV will stop the decline of the [packaged media] market. If we have the first retail moves in early 2014, I am confident this will happen," adds Morgo.

At the end of the day, economics will dictate the pace of UV's ramp-up. Rochedix concludes: "In a year's time, I want to see a profitable market, at the moment it's not very profitable for the retailers. UV may be the way to bring more profitability to our business by bringing new consumers, we need to shape a global vision of what could be the film industry."

In the UK, which spearheaded UV in Europe - in a deafening promotional silence - the oft-announced marketing effort is to get underway in the first quarter of 2014. Up to 750,000 UV accounts are reported to have been opened to date and some 230 UV titles are available. Little else is known. "We have yet to have key retailers' footprint to help spread the message," sighed Richard Benson, Marketing Director, Sony Pictures Home Entertainment UK.

Indeed, the kickstart has been delayed by the dearth of retailers coming on board. But things may change now that the industry has got together to formulate a comprehensive marketing strategy. A pitch was put out to a consortium of agencies in London, led by Leagas Delaney. Sarah Craig, VP & Marketing Director, Warner Bros. Home Entertainment Group (UK & Eire), explains: "In the next few months, we will see packaging that is consistent across suppliers, publicity material and infomercial."

"We are working on a February 2014 timeline for many practical reasons," says Salter. "Retailers will come out of Christmas with January sales. If they have to make space adjustment, it will be in February. That's where the cycle is. It's also when retailers setting up digital lockers will be ready. Lastly, it's also when the studios will be able to fill up shelves with UV titles."

The UK video industry can count on Slater to inject a heavy dose of realism into the deployment of UltraViolet. With an extensive frontline experience as Category Director, Entertainment, at supermarket giant Tesco, Slater has been on record as the most articulate sceptic of the UV enterprise - somewhat ironic given his new role of presiding over the destiny of UV in the UK.

"Retailers are a good barometer of the state of the industry. They are listening to their customers. If customers are not asking for something, retailers will generally not give it to them," says Salter. "UltraViolet is in a difference space because we are asking retailers to lead the consumers in a territory they are not familiar with." He notes that the retailers' nervousness about UV is borne out by the fact that there has not been consistency of packaging and messages.

"Each retailer like consumers to buy all their DVDs and BDs in their stores and they have customised messages to differentiate themselves from competitors," Salter continues. "With UV, the challenge for retailers is to accept that you buy the BD titles at one place and redeem the code somewhere else. Retailers are scratching their head because someone else is getting all the money. When it comes to digital they want to lock customers into their particular service and they hope that a UV title buyer elsewhere will come to them for redemption. It makes them think quite hard about what happened to the value of a customer acquisition."

The supermarket home entertainment sector had experienced unrivalled growth in general merchandise terms. "The fact that video is not a particularly high margin product, is a fiddly category for retailers, that does not fit in the supply chain, and is a high shrink risk, are problems which were hidden by the fact that the sector was in high growth. Today, it's not in growth," Slate points out. "So, the pressure to find retail space is merciless particularly in supermarket. If you don't use it someone will take it from you. If UV can reverse the decline and start to generate some growth and create a consumer interest in physical products, then shelves will be available, but it cannot happen just because it's UV."

On logistics, Salter shares the views of his German and French counterparts: "A collection of UV movies need to be available at launch, not just one or two titles." Economics will have the last word. If it moves the needle, UltraViolet will succeed.

Edited presentation by Steve Brown, CEO of Cinram

No industry is successful unless the consumer votes with his pocket money. And the consumer will do so if his relationship to the technology is easy, satisfying and an experience. It's not the 10 million accounts that matter. A user is someone that uses the system repetitively, habitually. It's the number of visits to those accounts that is really going to drive the commercial awareness of the UltraViolet product worldwide. If people who have accounts don't use it, it's useless for the industry's bottom line.

Ultimately, consumers have a straightforward attitude to video: they want to buy it, they want to store it and they want to watch it. These are all three experiences that bring them fulfilment. There are many great products - and I believe UV is a great product - that died of poor execution. Focus on the consumer. No consumer I have come across has bought a disc because it's pretty, round and shiny. They buy it for content. They want to view that content when they want on what they want, and they want this experience to be a good one.

First, it has got to be
easy, because easy is good. The success or failure of any media industry is ultimately based on what the consumer is going to look at. If it's complicated it will bring about failure. Look at the operating instruction on the UV website. That, in and of itself, is part of the problem and we need to find a solution. Because, if you can tell me the last time you saw operating instructions with iTunes, it will be the first time.

The consumer has to embrace the way UV is taken to market, he has to vote by repeatedly going back, and it has to be easy, because that's good. There is a litany of examples of how 'easy' means 'good.' With a kitchen microwave, more people press the one-minute button twice rather than programme the clock for 2 minutes. Easy is the first mantra.

The second one is
satisfaction. Once you have accessed that content in an easy way, you want to consume this purchased content in an easy fashion as well. That's exactly what is going to drive a habitual behaviour and possibly be a better alternative to iTunes.

Third. As you move forward, you have to remember the
experience. If your experience has been both easy and satisfying you will go back for more. If you log into a UV account and the initial encounter gives you stress, a sense that it's too difficulty for me, it will surely be the last time you will go through the procedure. Picture this: you are getting home on Friday night after a tough week and sit down to watch the latest movie. You sit with your loved one, you put a BD disc in the player and a menu comes up. In addition to saying 'Choose scene selection' and 'Alternate ending,' it also says 'Play and save a copy to my UV account.' If you don't have a UV account, it may say 'Please enter your username now and enjoy your movie and go back and log in later.' That has got to be that simple!

The average consumer today has a very short attention span, so he will not click 15 buttons to watch something he has already bought. If I buy a pair of shoes today and I fly to New York tonight I expect to be able to wear those shoes in New York. I don't expect to see a message popping up telling me I have only the rights to wear them in Europe. Likewise, I buy a movie, watch it when I want, anytime I want, irrespective of what country I am in. I bought it, it's mine. We have to make it that easy as an industry or we will fail. And we don't need to fail.

History has been written many times, but in this particular case we should not be writing history we should be studying it. Because people have been failed owing to poor execution. If we execute UV well, it will be the suitable alternative to iTunes and everybody will love it. The advantage of iTunes is the autocratic manner with which it is ran. I fear management by committee is never a solution, but if we get together as an industry, everybody wins without protecting their turf.

My view is that the next step needs to be, in fact, a leap. If we make that leap, UV will be a suitable alternative that delivers the profitability we all really need, and the consumer won't even mind because consuming UV will be an easy and satisfying experience.

In a Q&A, Tim Wright, VP Worldwide New Media and Technology, Sony Pictures Entertainment, asked the Cinram CEO whether DECE did everything it could to help retailers as the onus for a good UV execution lays on them. "DECE has done everything they thought they could do," Brown responded. "Do I think they have done enough? No, I have a UV account, I find it too clunky. Global transportability is an issue. While I recognise the importance of DRM [digital rights management], at the end of the day I bought it, it's bloody mine. We should never be satisfied with a product at launch. If you are not right you will lose people and you will not know the people you lost."

Observing that international rights is a constant source of confusion, Mark Teitell, DECE General Manager, remarked that UV does not restrict users' ability to watch the content everywhere on the planet. "If I download content on my device I can watch it all over the world. That is streaming which is problematic, it depends on the bandwidth cost. These are problems created by network operators. That has nothing to do with the UltraViolet system itself."

Brown does not accept the reasoning: "If I buy the UV version, that's a UV problem. If you buy a product and are frustrated by the experience and ring an outsourced call centre for support, you would not expect to hear them saying that's not their fault. Ultimately, they are the face of the company I bought the product from. If we want to make UV great, we must accept that this is a problem we have to resolve."

Story filed 17.12.13

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