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Turf war puts bucks in flux

CES Daily Spotlight: UltraViolet

In the world of Apple, users buy a piece of content once and can play it on their Mac, iPad, iPod and iPhone.

With UltraViolet, the studios are attempting to replicate that success on a much larger scale. But creating a content-sharing ecosystem that spans widely divergent companies in the digital Wild West is as hard as it sounds.

The first major stumbling block to UltraViolet ubiquity came when one major studio — Disney — declined to join DECE, the UltraViolet consortium. Instead Disney trumpeted its own digital rights locker, Disney Studio All Access (DSAA), powered by its proprietary Keychest technology.

Since the initiative was announced in January 2010, however, news about DSAA has slowed to a trickle. A Disney rep told Variety : “Disney remains committed to the DSAA initiative. We are looking to launch in the next several months as we continue working to create the greatest consumer value and experience.”

Why go it alone? Disney believes — perhaps rightly so — that its brand is strong enough to do so. Disney is not alone. Any company with a toehold in content distribution — from Amazon to Wal-Mart — is vying for a chance to establish its brand. “We’ll see if consumers tolerate it,” says Screen Digest analyst Tom Adams. “The whole point of interoperability is that we want one standard, not three.”

To say the digital distribution industry is in flux would be an understatement. As a result of this instability, roles shift, allies become competitors and competitors join forces. The recent multibillion-dollar deal between arch-rivals Verizon and a consortium of top cable TV companies can attest to this.

Elsewhere, U.K.-based streaming movie service LoveFilm — an original UltraViolet supporter — was pulled out of the group by its new owner, Amazon. But that rivalry doesn’t prevent Amazon from promoting sales of UltraViolet-enabled DVD/Blu-ray discs or LoveFilm from signing a deal with Sony Pictures Television, a studio that’s a key player in forming and promoting UltraViolet.

The prospect of digital rights wars may be overstating the case but the studios’ interest in UltraViolet as a way to prop up the sales of packaged media isn’t shared by the many players out to make a name for their own brand. Why enable users to buy content they can consume on other platforms? “Apple holds you in their Apple world and makes it so their devices benefit,” says BTIG analyst Richard Greenfield. “If I’m Amazon, do I want the consumer watching on the Best Buy platform?”

Instead, Greenfield believes “in a rental access world, there’ll be lots of winners, not just one or two.” Will UltraViolet be just one of those winners? The answer is a qualified yes. A Mac user can already watch UltraViolet content on Apple iOS devices using Flixster Movies, an app released in October, 2011 by Warner Bros. For that matter, Amazon Cloud Drive, which features streaming and downloading, could support UltraViolet files.

In an environment of brands competing to build out their platforms, competition is likely to win out over cooperation in the near term. As Adams puts it, “You’re seeing the wrinkles that new technology is bringing to the industry.”

It’s simply too early to tell what that will mean for the future of UltraViolet or any other digital rights system. “The market technology could reduce the chance that multiple formats kill a consumer’s interest in this kind of consumption,” Adams says. “On the other hand, anything that contributes to consumer confusion is a bad thing.”

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