Posts tagged ‘digital’

UV Doesn’t Smell Right

What a day for UltraViolet articles.  I understand that the group is planning a flurry of press releases based on some announcements that it is ready to launch, and the media is beginning to smell something isn’t quite right.  Being I’m still the skeptical Fool, I wanted to do a brief roundup of recent dubious UltraViolet coverage.

We all know what’s going on in the declining entertainment business, and today’s Financial Times does a nice job in telling it straight.  In no uncertain terms, if Hollywood can’t figure out digital and address the decline in home entertainment, Hollywood will stop making movies.  With big film concepts being shelved because they’re too expensive, we’re beginning to see the slowdown in new releases. It terms of digital dreams like UltraViolet saving the day, the FT had this to say:

Yet for all of the enthusiasm, Ultraviolet increasingly looks like a last throw of the dice for an industry desperate to preserve its retail business model. It is clear why Hollywood wants to keep selling movies: the profit margin on a DVD sale is more than 65 per cent – close to double the margin on a rental. Selling an electronic format is even more profitable because there are no manufacturing costs and minimal distribution costs.

But consumer behaviour has changed radically in the five years since DVD sales reached their peak, making it difficult to predict demand for a cloud-based rights locker. After all, consumers hardly lack choice when it comes to streaming movies or online TV programming.

The FT correctly sniffs out that UltraViolet’s positioning of selling $14 digital movies to consumers isn’t quite right.  With more and more options to rent and acquire content, UltraViolet runs the risk of being vDOA – Very Dull on Arrival.

The Hollywood Reporter talks about how retailers are bracing for a holiday season that doesn’t look so bright.  Retailers may afterall turn to digital to help ease their pain.  Hollywood Reporter, however, points out a glaring pimple on the face of the industry’s transition to digital: like it or not, there may be TWO major digital offerings this Holiday.  Disney’s All-Access with its Keychest digital locker competing with UltraViolet will supposedly be available soon (which is a bold statement to say that either will be ready).  By the way, All-Access content won’t work in the UltraViolet digital locker and vice versa.

Execs deny they want to start a format war, but let’s get serious for a moment.  There are two ecosystems that don’t play the other’s content.  No format war? That doesn’t quite smell right to me.

Keep your eyes, ears and nose peeled for more critical news of UltraViolet.  You’ll catch a whiff of something not right as well.

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UltraViolet: Who’s Really Getting Burned?

UltraViolet: Who's Really Getting Burned?

In light of UltraViolet’s recent flurry of announcements about it being “ready,” let’s take a moment to revisit the truthiness of it coming to life…

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.

UltraViolet: Who’s Really Getting Burned?

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.

UltraViolet: Who’s Really Getting Burned?

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.

Do you see a disruption here?

As a follow up to to my bit on 8-tracks versus digital sales, following is a remarkable history of recorded music from 1973-2010 that will make any music exec’s stomach churn just a little more. The data really hit me like a ton of bricks after visiting a friend of mine who works at one of the few remaining music labels.  I was struck by a few things that weren’t altogether positive. 1) What on earth do all those people working at a label actually DO? 2) When will the grim reaper arrive?  I sensed a strange tension as the super-cool-chic music folks tried to hide their fear that a gaunt rich dude in jeans and a black mock turtleneck sweater was coming to slay them.  3) Where do old school music execs end up when their shift is done?  I mean these guys in their day partied.  Where do they end up now that the glory days are long gone?

Anyways, check out the happy times in 1998 versus the dreary days of 2010 in the album sales.  And then have a look at the singles trends.  It is breathtaking!

Not so much purple going on here

I'd say the purple is trending upwards

I surrender to Apple

You have to hand it to Apple for its awesome-ness .  I saw an article this past week that talked about Apple’s 64.5% share in EST/iVOD consumer spending in 2010.  Sure, they are down from 74.4% in 2009, but owning more than two thirds of any market is an impressive feat.

However, we have seen competition intensify with Zune, PlayStation, Amazon and Wal-Mart.  And competition will continue to intensify with industry plays like Ultraviolet , confusing people even further.  So what’s on my mind today is this:  is there room for more competitors and new stuff in video? Or will people settle for (or to some, surrender to) the simplicity and workability of Apple?

Is there room?

My unsolicited opinion is yes, of course there is always room for new stuff.  But any new companies have a sheer cliff to scale.  Not only does the service or product have to be absolutely perfect and better than Apple, but people have to know about it.  And that takes loads of innovation, marketing, product refreshing  and starting all over again.  In this day and age, once a product/service is released, it begins becoming obsolete on day 2.

Who’s it gonna be?

So who’s going to be the courageous new competitor?  One camp out there thinks that – of all things – Wal-Mart and Vudu have a shot.  Well, I think that’s ridiculous.  Wal-Mart just doesn’t innovate or have the right customer base.  They sell cheap crap made in China to make life more affordable – hardly a fit for digital entertainment.

On my optimistic days, I think Ultraviolet has a shot.  They’ve got the right players and the right ideas.  With Microsoft and Sony as members, they represent 17% of the market.  I’m definitely anxious to see them get on with it and launch something, because it could be very cool.

Day 2

But then day 2 arrives.  That’s when the pessimist Fool starts pestering me:  with the consortium-style-United-Nations-procedures way of making decisions, I find it very hard to see UV executing on rapid product enhancements and innovations that are so critical.  There’s just too many companies and people involved.  As a small example, Microsoft’s Zune is out for itself, and Sony is world famous for its ability to not really do anything more once it does something cool (remember the Walkman).

So, in answer to my self-imposed question, given where the market is today, I think people will happily surrender to Apple.   Even though Motorolla’s vision of 1984 may come true, at least my stuff will work, and my Apple shares will be worth something.

Papercuts and shopping

I was just thinking how much it would suck to be a big box specialty retailer these days, and the phrase “death by papercuts” came to mind.  I came across an article today which talked about Amazon’s Marketplace offering which enables specialist retailers to be exposed on Amazon’s store to schlep their goods and services.  Specialist retailers pay a tiny subscription fee plus a referral for each sale to be featured on Amazon’s site.

Sure, this is old news, but it’s worth blabbering about as a warning to big box specialty retailers (think CE retailers like Best Buy, toy stores like Toys R Us, kitchen and bath stores like Bed Bath and Beyond) as well as those folks who have money tied up in retail stocks.   I am increasingly beginning to believe that big box specialty retailers will go the way of the Service Merchandise.  Think about it:  as a consumer, you can do pretty much everything online and buy everything cheaper.  I argue that the ONLY differentiation for retailers is one thing.

Touch and feel.

The human element and service is what retailers will blow hard about.  Really?  I do all my research online.  And when I do get help in stores, it’s generally to go to a different store.

If you don’t agree with me, go your local Best Buy to purchase a fire wire adapter for your Mac.  Stand in the aisle looking dumbfounded at the price, and ask a salesdude why it costs so much.  He’ll tell you to either buy it and return it when you’re done with it, or he’ll give you the web address of his favorite gear store.  It’s baffling.  Doesn’t he get where his bread is buttered?  (As a consumer however, my dear salesdudes/dudettes, please continue doing this because it really helps me out.)

So what does that mean for retailers?

Well, sorry to say, those specialty retailers  will become showrooms for you to touch, feel, taste, smell and see to your heart’s content.  Then, with a simple wave of their smartphone and a click of the bar code with your camera, you price shops on the spot.  You know instantly how much more the retailer is charging to pay for those lights, the nice fixtures and the salesdudes who actually turn business over to competitors.  (Note to the savvy reader: Search on “price scanner” in your phone’s app store and you’ll be amazed.  Amazon just released their own.)

It sucks to be a big retailer.  With one or two clicks, a specialty retailer can be on Amazon’s Marketplace and instantly gain exposure to Amazon’s huge customer base.  While it is hard to get noticed, customers are increasingly turning to online to get their stuff and NOT buying from specialty retailers.  It’s death by papercuts for retailers.

Farmland

As a fun, oversimplified and reckless exercise:  Best Buy has close to 2,000 stores in the US; Bed Bath and Beyond has close to 900; Toys R Us has 840.  Figure an average of 25K fee per store (that’s low by the way), and another 50K square feet of parking space and you get 280.5 MILLION square feet of space.  That’s nearly 6,500 acres of showrooms and parking lots between 3 specialty retailers.  I say we convert those stores to farmland so we can feed hungry folks in Bangladesh…

Other than becoming farmers, what DO YOU think can retailers do?

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