Disney may open up digital cloud

Keychest technology allows cross-platform access

As studios search for the Next Big Thing after DVDs, Walt Disney Studios Home Entertainment is working on a system to offer consumers access to movies anywhere, anytime.

The technology, dubbed Keychest, uses the “digital cloud” principle, letting buyers pay one price for permanent access to movies or TV shows that are stored on a remote server and never downloaded — but are always accessible via a wide variety of devices, including cell phones, cable services, PCs and Blu-ray players.

Consumers would access the content by purchasing a digital “key” or password. Disney’s initiative, which other studios are watching, could mark a critical shift in the biz’s tech approach: from the business of selling downloads of films and TV shows to the business of selling access to content. That would be a major alteration in a changing landscape where consumers demand convenient, instant access to entertainment choices.

Disney execs weren’t available Wednesday to provide details on the initiative or on the technology involved, though the Mouse has demonstrated Keychest to other studios and plans to make an announcement about the technology next month.

But according to a report in Wednesday’s Wall Street Journal headlined “Disney touts a way to ditch the DVD,” the plan is to deliver content to nearly any device capable of playing back digital films.

So once a consumer gets the password to “The Lion King,” for example, he could start watching the film on his laptop, then continue on a TV, then view the finale via mobile phone.

Currently, consumers downloading movies are limited with regard to which devices they can watch that download on. So far, ad-supported free online content and digital rentals from services such as iTunes have been more popular with consumers than download-to-own models.

NPD analyst Russ Crupnick, who hadn’t been briefed on Keychest, said it could solve the problem of how the industry gets consumers to pay for digital content by making access to content more convenient than on free online services such as Hulu. Disney is part-owner of Hulu.

Disney’s Keychest initiative comes nearly a year after other studios banded together for the Digital Entertainment Content Ecosystem, an effort to develop a digital standard so that consumers can play digital movies back on virtually any digital device. The difference with Keychest is that the media uses the formats already in place on content sites, while DECE wants to introduce new formats and standards.

Disney is the only major studio not taking part in DECE. Apple, which has links with Disney through stockholder Steve Jobs, is not a DECE member, either and may well participate in the Keychest initiative.

An executive at one digital movie service said Keychest seems to be an attempt to address the same problems that DECE was created to solve and could end up as a competing format, creating a situation reminiscent of HD DVD vs. Blu-ray.

The exec said that Keychest and whatever standard DECE adopts are both still a couple years away from hitting the market.

Disney home entertainment president Bob Chapek told the Wall Street Journal that the studio expects Keychest to take at least five years to contribute measurable revenue to the studio.

The move comes as DVD sales fall sharply while digital sales haven’t yet come close to compensating. Most expect digital sales to remain small until digital content is as easy for consumers to access and watch on devices as a DVD is today.

Some services already offer more limited versions of Keychest. Amazon, for example, stores downloads through its Amazon Video on Demand service in a digital locker so that consumers watching on a PC never have to download a copy of a film or TV episode to their computer. CinemaNow has also said it plans to move to a cloud model.

But Disney intends to make content available through a much broader range of devices.