Monday, October 22, 2012

UltraViolet marches onward, but can it succeed?

While the last official news from the UltraViolet website is from August 15th of this year, there was an interesting panel last week and some interesting support statements from the BBCFox and Barnes and Noble the previous week.  The title count is supposed to be above 7,000 now, available to more than 5 million consumer accounts through Wal-mart/Vudu and Flixster (as well as the studios' own title websites), with promises to be available soon on the Nook and M-GO.

But is this enough for success?

As both a consumer and industry evangelist, no one would like to see this succeed more than I do, but when you look at the initiative in the cold light of day, it is a tough, uphill climb.  Why the pessimist you ask?  You say its barely been a year after launch and there are already 5 million accounts and 7,000 titles, right?

Well, let's back up and examine what ingredients are required for consumers to "cross the chasm" in market adoption of new products.  With roughly 110 million households in the U.S., UltraViolet (UV) is just approaching the 5% penetration point.  While that seems like a lot of consumers when comparing it to Netflix (22m+ subscribers) and Comcast (similar numbers), the right comparison here is the DVD player install base (near 100%) or the PC install base (also in the high 90 percentile in the US).  So, how do you convince consumers who are clearly buying and renting a lot of DVDs (despite the press to the contrary, see this blog) to start paying a little extra to have digital ownership?

First, consumers need to believe that there will be title ubiquity.  If this is only available on 50% or 75% of the titles that are available on DVD, then this is just another format that complicates their lives ("Hey, I want to get this on UV, but it isn't available...").  I know, I know.  Many of you are going to chastise me with emails and tell me that 5 of the 6 major studios are now supporting UV and that eventually Disney will have to come around.  Unfortunately, consumers don't shop for titles by studio (shocking as that is), nor do they care about the challenges our industry faces.  What they know is that more titles are available to purchase digitally on their favorite list (let's assume the "IMDB Top 100" list represents that) from iTunes, Vudu and Amazon than from UV and for a price that is cheaper than the UV enhanced physical SKU.  What can the studios do about this?  Start by standing up themselves and making a public commitment to start putting every new DVD / Blu-ray title on UV (even if there is a not a UV SKU sold physically at retail) and give a reasonable time table to make their top 90% of SKUs available in the format (only Warner to date has demonstrated this kind of commitment).

Second, it is difficult to crow about having retailers signed up when the largest DVD / Blu-ray sales retailer (Amazon), the largest digital video retailer (iTunes), and the largest digital "rentailer" (Xbox) have not signed up for the program.  No matter how you slice up the markets where the consumers you want to attract are currently buying or renting, each one of these companies represents represents the lion's share of them and I would venture to say you cannot create mass adoption without them.

Third, consumers' appetites are VERY strong for accessing their content through subscription packages.  They sign up in droves for cable, satellite, telco and even Netflix/Hulu packages.  If you want to create mass adoption, work with those subscription services to allow consumers to stream the UV titles they already own thru their services as well (yes, make it part of the deal in your next licensing negotiation).  Once consumers can access the content they "own" through the video services they use to watch the other 35 hours of content each and every week, they will see it as a valuable feature and may consider it during their decision process to rent or buy titles (physically or digitally).

If you are interested, here today's title count.  UV improved by 2% since our last review in September.

I am very curious to see what the marketing campaign leading up to Christmas looks like.

Ok, let the harassing emails ensue.


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