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Digital cloud’s dark lining

Fears of Apple entry loom over buy-once plans

In a bid to get consumers to buy more content, Hollywood in the last year has embraced a buy once, watch anywhere strategy.

It a strategy that includes the participation of major studios, TV networks, cablers, telcos and retailers, and its initiatives are driven by both hope and fear.

“What everyone hopes is that the ability to access content anytime and anywhere could lead to greater consumption,” Lionsgate digital president Curt Marvis says.

Early trials by Comcast and HBO suggest the watch-anywhere concept can indeed increase viewership, and Mitch Singer, Sony’s chief technology officer and president of the Digital Entertainment Content Ecosystem consortium (DECE), argues the industry must come to a consensus on a plan — and soon.

If they do nothing, the homevideo industry fears it likely will see one of two daunting alternatives become reality: an increasingly fractured business where content is tied to devices and formats, turning most consumers away from buying — or a world where Apple is the dominant retailer for TV and movies, able to dictate terms the way it has with music content.

Indeed, Apple is the elephant in the rumpus room few people want to talk about as competing plans take shape: Disney’s Keychest; DECE (which Disney rejected); and TV Everywhere, from the cablers and telcos. All would like to step in and at least give Apple’s iTunes some competition.

The various players in this space, though, don’t agree on even the most basic technological strategy for their plans.

The DECE wants a single, open standard to support several digital formats, allowing consumer electronics manufacturers to choose which one to include in their devices. Studios and content owners would be required to make their content playable with all chosen formats.

DECE would seem to have the clout to create such a standard. It comprises a slew of technology and consumer electronics companies, including Intel, Microsoft, Comcast, Best Buy, and every major studio but Disney.

However, getting all those major companies to agree takes time, and “all the companies know that time is not necessarily our friend here,” as one DECE insider says.

Disney, on the other hand, believes a unifying digital standard is unattainable, says a studio insider, adding, “We don’t have what we had 10-15 years ago where one technology replaced another.”

Later this month, Disney is expected to unveil details on Keychest, which would let consumers buy content stored on a so-called digital cloud and accessible on a broad range of devices without being downloaded. The plan is expected to lean on existing digital formats.

While no one publicly has signed on to Keychest, which Disney is shopping to other Hollywood studios and other potential digital partners, the town is watching warily, since many expect Apple to becoming involved. Apple topper Steven Jobs is the Mouse House’s biggest shareholder, thanks to the Pixar acquisition, and Apple is by far the dominant player in legal downloads.

But competitors would like Apple to open up its iTunes ecosystem, so that they, too, can sell content playable on Apple devices, and, maybe more importantly, play back iTunes downloads on competitors’ devices.

For its part, Apple makes a great deal of money selling those devices and has no particular incentive to open things up.

Keychest may also help push DECE efforts forward. While some have questioned whether Disney’s technology is vaporware, at least one analyst is predicting it will debut before any standard DECE format and attract other studios.

“For Disney, it’ll work, and if it works for Disney, there’ll be others trying it out too,” In-Stat principle analyst Gerry Kaufhold predicts.

Meanwhile, rumors surfaced last week that Apple is pitching the networks a plan for unlimited paid TV downloads through iTunes. Proposed cost: $30/month.

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