Technology | Media | Telecommunications

Friday, June 07, 2013

Why UltraViolet Doesn't Meet the Needs of Consumers

Historically, people have disliked digital rights management (DRM) systems that are imposed on them by the entertainment industry. Regardless, the ongoing concern over digital video piracy has motivated big media companies -- such as Warner Bros. -- to pioneer new approaches.

The latest effort is known as UltraViolet (UV) -- it's intended to restrict the copying of recorded movies and television shows, and yet still allow some flexibility for the customer who purchased the content.

The industry creators say that UltraViolet is a free, cloud-based digital rights collection that gives people greater flexibility with how and where they watch the movies and TV shows that they purchase. Therefore, UV attempts to enable viewing video in a multi-platform environment.

According to the latest market study by ABI Research, active UltraViolet accounts -- those with multiple movies and TV shows -- will exceed 65 million worldwide, that's up from the estimated 6 to 8 million at present and depending on the action from key holdouts the base could reach as high as 108 million by 2018.

Most UltraViolet accounts currently have one user. However, multiple users are supported per account and ABI expects to report that there will eventually be more multi-user accounts -- as the UV system matures.

The North American and European regions will continue to offer the most market potential for UV, but as retailers and content holders extend the business model from purchases (EST) to include rentals (TVOD) the opportunities should expand.

"After a shaky start UltraViolet is starting to pick up steam. However, several key players are not supporting the UV ecosystem," said Michael Inouye, senior analyst at ABI Research.

Apple, Disney, and Amazon remain the most notable holdouts in the U.S. market, but other ecosystem players like Microsoft could further fragment the market if they do not adopt UV support.

As more users sign up the pressures to support UV will certainly mount. While ABI expects the number of holdouts to decline, reaching universal support will prove a long uphill battle.

Long term continuity of a consumer’s digital library (for EST) is another key uncertainty that could diminish UV’s appeal. Consumers are looking for access on all their devices as well as assurances they will not be forced to repurchase digital rights to content they thought they already owned.

ABI believes that while the move from physical media to electronic media for video content is underway, consumers continue to opt for subscription services and premium rentals rather than purchases.

The ease of accessing and storing digital video libraries must approach that of digital music.

If competing video libraries gain consumers’ trust without joining the UltraViolet ecosystem, many of the components of UltraViolet will help facilitate B2B commerce, but will fail from a consumer perspective.

As an example, I have an UltraViolet account with one movie in it -- that is connected to my Walmart Vudu account. I wanted to move some of my existing DVD disc collection to that account, but there is a per-disc fee imposed to convert the content that I already own.

Therefore, as it stands today, the UV offering clearly isn't a "free" solution to the multi-platform viewing needs of consumers that want to purchase content once and view it anywhere they choose.