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Analyst: Create Digital Movie Sellthrough Window Ahead of Disc

3 Jan, 2012 By: Erik Gruenwedel

'Horrible Bosses'

Hollywood’s hope that cloud-based digital locker UltraViolet will reinvigorate physical and electronic sellthrough will remain a pipe dream unless studios create a specific window for budget-priced electronic sellthrough ahead of Blu-ray Disc and DVD, an analyst said.

Richard Greenfield, analyst with BTIG Research in New York, says studios should create a window for electronic sellthrough of new releases up to four weeks ahead of Blu-ray Disc and DVD. Titles should be priced at $10, which is twice the current transactional video-on-demand price for new releases in high-definition.

Launched last October via Warner Home Video releases Green Lantern, Horrible Bosses and Crazy, Stupid, Love, UltraViolet largely is an unknown to consumers — a perception studios hope to diminish through promotions at next week’s annual Consumer Electronics Association confab in Las Vegas. Sony Pictures Home Entertainment (The Smurfs and Friends With Benefits) and Universal Studios Home Entertainment (Cowboys & Aliens) released their first UltraViolet titles last month.

Despite the influx of subscription-based video-on-demand services and TV Everywhere platforms such as HBO Go, there are more than 40 million households with access to electronic sellthrough of movies via digital connectivity, according to Greenfield.

He said the studios’ hope that automatically enabling users to access physical and digital sellthrough of movies priced from $15 to $20 via select electronic devices is not aligned with a consumer mindset increasingly impacted by low-cost kiosk disc rentals at the supermarket. With Hollywood coming off a poor box office in 2011, the impetus to own instead of rent new releases will be undermined unless the titles represent major movie franchises or catalog releases.

Compounding user adoption is the fact that accessing Warner UltraViolet titles requires registering with its proprietary movie recommendation site, Flixster.com. And initial titles could not be viewed via the iPad or iPod Touch, since Apple prefers that its users acquire content from iTunes.

“Even if more retailers, beyond Warner-owned Flixster come on-board to support Ultraviolet (still a big ‘if’), we believe the studios will need to shift the windowing of electronic sellthrough (EST) to at least two weeks, if not four weeks ahead of DVD/Blu-ray,” Greenfield wrote in a Jan. 3 post.


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