UltraViolet: Who's Really Getting Burned?

As entertainment continues to gasp for air and content owners watch their revenues plummet, the industry continues to achieve nothing. Think of the Coppertone Girl if she didn’t do anything about the sun’s harmful ultraviolet rays. She’d end up burnt.

Call me a Fool, but I’d like to expose why UltraViolet is hazardous to the health of both the entertainment industry and the consumer. If it continues on its current course then, in the future, I won’t get to watch my movies the way I want to.

The industry appears to be trying to move to a “watch wherever” model. That’s a good thing because that would allow me to get my content on any of my devices like my TV, PS3, i-Pad, mobile phone, etc.

It’s a great theory, but the way things are going this initiative seems destined to fail.

Are the studios waffling?

The studio-centric UltraViolet was started three years ago when the market was different and they felt that a digital standard was required to continue selling content in a world where disc sales were crumbling.

Time has marched on and I now understand the studios are waffling, beginning to disown the very usage model that allows you to “include up to six people you define as your household” and “access all of your shows and movies from any of up to 12 registered UltraViolet devices.”  (Don’t shoot the messenger.  This is straight from uvvu.com).  They are getting cold feet with this fundamental premise because they feel the model is overly generous and too big of a departure from the current model.  They also are concerned that the members of an account would misuse their rights by sharing content too liberally among members and devices in their account.  You tell me what that really means…

To this day, the business costs of how UltraViolet works is ambiguous.  Commitment to the business model is a long way off.  Who pays for marketing? The studios spent millions promoting Blu-ray; why aren’t they ponying up to market UltraViolet?

Warner Brother’s seems to be confirming this waffling.  Its President announced a “Digital Everywhere App” that allows consumers to manage their video content the way they can with music and photos.  Warner expects the App to connect consumers with and enable other retailers like Amazon, Netflix and Apple.

Wait a minute: we know for a fact that Apple will continue on its own course and never join UltraViolet, and Amazon will refuse to sign up because it is busy with its own cloud services plan. Netflix doesn’t even sell or rent movies so to them a digital locker is irrelevant.  Warner’s ruse of playing nice with retailers that will never launch UltraViolet services is just more waffle.

Could I please have some extra syrup, as this is all a little hard to swallow?

The Sun rises in the West?

Device makers will have to create new devices in order to support UltraViolet.  Since this engineering takes people, time and money, they only add functionality if they think it will help to sell more devices.    It’s too risky to start production with changing and ill-defined specifications. It’s not surprising they are standing on the sidelines and waiting before they invest R&D resources until it is a safe bet.

They are tiring of studio waffling.  With each waffle, device makers push back their ability to deliver UltraViolet-ready devices by a minimum of nine months due to production lead times. For devices to hit stores for the 2011 holiday season, they would have needed to start production in February.  That didn’t happen.

Device makers are unclear on the benefits.  They know it will cost more to build the devices, and they know that no one appears to be stepping up to pay for marketing. The upside was selling more devices supporting an open standard, but now they are not so sure.

They were excited at the prospect of a beautiful sunrise with UltraViolet, but it turns out that they are tired of waiting in the dark only to find the forecast is mostly cloudy (with a chance of meatballs).

Are retailers’ heads in the cloud?

Contrary to what others think, I believe that people learn about new stuff by going to stores.  At the moment, these retailers SELL the vast majority of disc-based content.  As I look at UltraViolet, there doesn’t seem to be many disc retailers involved.  Think of the number of visits that Amazon, Wal-Mart and Target have coming through to learn about and buy products.  Where are the other retailers?  Where will consumers go to learn about UltraViolet without retailers?

The concept of interoperability requires multiple retailers in each territory to launch simultaneously.  Recent estimates would see a top DVD retailer paying $10M in fees alone in the first year to operate an UltraViolet service.  The costs seem high, but retailers will get involved if they understand the benefits.  So far, these benefits are obscured and preventing retailers from committing.

I might be wrong, but maybe consumers don’t need stores or online sites to learn about new products.  Some device makers like Samsung with their TV apps, Microsoft with Xbox and Nokia with their handsets, are positioning to go direct to consumers.  Even Warner Brothers is demonstrating that maybe selling their wares directly to consumers is the future.  I have a foolish idea: maybe they can pick up the nearly 1,000 Blockbuster stores that Dish is dumping in order to reach consumers…

The disincentives are clear.  UltraViolet is expecting retailers to expose themselves and use their resources for the marketing and promotion of the UltraViolet brand.  UltraViolet will provide marketing materials (they will throw some bones like messaging and logos) that retailers will have to license. Other than that, they are on their own to market and promote the UltraViolet experience.  Retailers should not, will not, and do not reach into their own pockets to market other company’s brands.

So who’s getting burned?

UltraViolet burns the consumer.

With studios, device makers and retailers in a game of chicken, UltraViolet will rush to get something to market and water down any meaningful consumer offering to the point of being insignificant.

Think about it – should Sony be the last studio standing in UltraViolet, what good does a service do for a consumer that only has their content? It’s likely that, due to the number of companies involved, the offer will end up costing more than stuff that’s available today.  Would you pay more?  With manufacturer lead times, what if there are no devices that support UltraViolet services? If you can’t buy from retailers that you are used to, then what did 70+ companies over the past three years achieve?

My dream of watching content on all my devices seems further off than ever. With UltraViolet burning consumers, entertainment junkies like me will stop buying and keep in the shade.  I’m afraid that the sunset for entertainment is coming all too soon.


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