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Disney Eying Physical Media Alternative

20 Oct, 2009 By: Erik Gruenwedel

The Walt Disney Co. is reportedly working on a digital initiative, dubbed “Keychest,” that would allow consumers to purchase movies and TV shows online and watch them on their computers, mobile phones and other portable media devices.

While availability of movies and TV programming on the Web already exists, the Wall Street Journal reported that Disney’s business model would focus on replacing dependence on physical ownership with a digital copy with expanded digital rights management.

The concept, which mirrors a similar effort known as the Digital Entertainment Content Ecosystem (DECE) by Sony, would also appear to mimic Time Warner’s “TV Everywhere” model that earmarks consumers having free access to TV programming across multiple platforms provided they subscribe to it somewhere in the distribution channel.

Keychest would allow consumers to store movie files on separate Internet servers allowing for easier access and reduced storage space demands on users’ computers.

Analyst Richard Doherty, director of The Envisioneering Group, who said he has been briefed on Keychest and DECE, lauded Disney for going public with what he characterized as a “very consumer centric” concept.

“I welcome Disney’s disclosure,” Doherty said. “I think it is wonderful timing. What they are doing is bound to turn up the pace on DECE.”

Doherty said Keychest and DECE do not suggest the potential for a digital format war similar to Blu-ray Disc and HD DVD. Instead, the analyst said the fact the Digital Copy included with standard DVD and Blu-ray purchases can be incorporated in the system augers well for the near-term survival of packaged media.

“I think they found out that someone doing a Digital Copy in Peoria, Ill., has not turned up in Beijing three hours later,” Doherty said. “Disney knows the production of titles and knows what families and individuals like to do with them, so to me that’s a winning combination.”

Bob Chapek, president of Walt Disney Studios Home Entertainment, told the Journal  “Keychest” would not likely deliver “tangible financial results” for at least five years.

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