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Shedding Light on UltraViolet Performance

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The ultimate success of UltraViolet depends on one thing: Do consumers see it as handcuffs or freedom?

UltraViolet (produced by Digital Entertainment Content Ecosystem; DECE) is a licensing system that lets consumers do more with their digital media than they could otherwise: They can buy a DVD and stream a copy from a friend’s house, or they can load the movie on a smartphone. That’s the freedom perspective. The handcuffs perspective comes from the fact that UltraViolet is a tiny bit of freedom given to consumers to keep them satisfied so that they don’t notice they no longer have complete control over their media. For example, they can’t loan a downloaded movie to a friend when they’re done with it or sell a TV show download online once they’ve viewed it.

I was introduced to UltraViolet at a kickoff panel during 2011’s CES, where Mark Teitell, general manager of the DECE, and executives from participating studios explained that it was a way to sell the idea of virtual movie libraries to consumers. People weren’t buying digital copies of movies because they were afraid of being locked into one ecosystem, and because they were afraid technological changes would leave their collection obsolete, the panel said.

The goals were to offer a future-proof system, get all participating studios and technology makers working together, and sell some movies. Even then, people in the industry I interviewed didn’t have high hopes for UltraViolet. Disney and Apple weren’t involved, after all, and it was hard to imagine consumers buying in.

Hoping to discover whether or not consumers have warmed to UltraViolet since it became commercially available in October 2011, I spoke with Teitell. Consumers have created about 12 million UltraViolet accounts, and there are currently more than 9,100 UltraViolet-enabled titles.

That’s what the DECE will say. What it will not say is how many of those accounts are active. Do people set up their UltraViolet accounts and then instantly forget about them, because that’s one more password to remember? Or do they regularly visit their online collection and re-watch favorites? The DECE isn’t telling.

The reason, says Teitell, is that Walmart was the first major retailer to sign on, so giving detailed stats about UltraViolet use is essentially giving information on Walmart. With more retailers starting up, such as Best Buy and Barnes & Noble, he sees that changing. In fact, he predicts that by this time next year, the DECE will give detailed information on UltraViolet performance.

Based on one thing Teitell was able to tell me, I don’t think the idea of virtual libraries is taking off. Teitell said that most people who get UltraViolet rights to content do so by buying a DVD. Rather than buying online content with the knowledge that they can view it in a variety of places, consumers are buying DVDs and then, presumably, setting up an UltraViolet account so they can download the electronic copy promised on the package. Downloads, Teitell said, have proven more popular than streams.

That means UltraViolet rights aren’t a selling point, but they are a value-added extra. I suspect that when the DECE does finally reveal details on consumer usage, we’ll find that the majority aren’t heavily invested in it.

So there’s a third option, it turns out, and it’s significantly less compelling than the other two. Consumers don’t see UltraViolet as freedom or handcuffs; they see it as a freebie that comes with a disc. With physical disc sales declining each year, that’s not a great place to be. I doubt that many outside the industry even know what UltraViolet is or what companies are involved. Even those who know what it is probably aren’t certain about the usage rules.

If most major studio new releases are now UltraViolet-enabled, as Teitell told me, and the number of consumer accounts is growing, then those involved can call it a success. But UltraViolet is far from the digital rights panacea that it was meant to be.

This article appears in the June/July 2013 issue of Streaming Media magazine.

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