Vidity: A Question of Value

23 Nov, 2015 By: Thomas K. Arnold

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Could Vidity be the key toward driving sellthrough sales and bringing the business back to the transactional model it has traditionally relied upon for sustainability and growth?

Shifting the business back toward one based on individual transactions, in which consumers make a conscious choice to purchase a certain movie or TV show, and away from the subscription model represents the biggest challenge, and biggest opportunity, for the beleaguered home entertainment sector.

It’s really a question of value: how do we make consumers realize the value in watching and owning newly released hit movies, fresh off their theatrical runs, in gloriously sharp detail and bright, vibrant colors? Owning the actual movie file, either as a Vidity download or on a Blu-ray Disc, gives the consumer unrivaled quality that far surpasses what you get with streaming, free of such vagaries as bandwidth limitations and buffering or even the need for an Internet connection or an account to a certain retailer for playback. Considering the complexities involved in some of today’s digital ecosystems — which not only offer less than Blu-ray-quality digital files but also require one to authorize or register a device, in addition to the uncertainty of not knowing what movies can play when or where and the inability to easily copy, move and share content — it’s no wonder consumers are challenged in having a “valuable” digital experience.

It’s truly a remarkable selling point — and one that needs to be exploited by studio marketers, particularly with the advent of an enabling technology like Vidity that lets consumers buy a movie or TV series once and then move or copy that movie to watch it wherever and whenever they want, on every device imaginable, from an elaborate home theater system to a tiny smartphone. And because the movie is locally owned — Vidity gives consumers a pack of files for all formats — there’s never a need for Wi-Fi.

Throughout the home entertainment industry’s nearly 40-year history, the driving force has always been the transaction model — and if the business is to survive, it is critical that we get back to it by focusing on both the existing value and the added value presented by Vidity.

The videocassette rental business was built on rental transactions — each time a customer rented a videocassette, the retailer made money, money that in time was shared with the studios.

When DVD came along and the business shifted from consumer rentals to consumer purchases, the transaction model remained unchanged — only this time, instead of renting a videocassette for $1 or $2, the consumer bought a disc for $20 or $25, the bulk of which was profit.

Movie sales lived and died by their box office, and when the box office was weak the studio marketing machine shifted into high gear to drum up interest — in the hopes, quite often realized, of turning a box office dud into a money-maker. Indeed, by 2001 home video sales were generating more money for studios than theatrical ticket sales.

With the advent of digital delivery, however, the transactional model has been overrun by subscription streaming, led by Netflix. For less than $10 a month consumers have access to hundreds of movies and TV shows, and studios that are trying to get consumers into the habit of buying films and TV shows electronically have been hampered by this value proposition. Even at $10, consumers don’t see the value in buying a movie if for the same amount of money they have unlimited streaming access to the entire Netflix library.

The studios do have one potential trump card, which is the fact that new releases aren’t available for streaming. They must be purchased, either on Blu-ray Disc or as a download, through iTunes or a handful of other digital channels.

And yet disc sales have been trending downward, to the point where they now generate less than half as much revenue as they did a decade ago — an estimated  $16.6 billion in 2006 to $6.9 billion in 2014. Meanwhile, digital sales have yet to really take off, having only cracked the $1 billion mark in consumer spending in 2013 ($1.19 billion, inching up to $1.55 billion in 2014, according to numbers compiled by DEG: The Digital Entertainment Group).

The studios have been looking for ways to invigorate sales and get consumers excited about buying movies and TV shows again, but the allure of the new isn’t enough. That’s where Vidity comes in. The technology, developed by the Secure Content Storage Association (SCSA), offers consumers that quality, simplicity and value that has been missing in the digital transactional market with the ability to easily store, copy and move digital content, including Ultra HD files, around from device to device, from the biggest home theater system to the tiniest smartphone.

All of a sudden, that Blu-ray Disc they buy from Walmart, or that digital download they obtain through iTunes, becomes flexible, movable, and, since it lives on consumers' local devices, instantly accessible, at any time, at any place, regardless of whether or not there’s an Internet connection.

Vidity is the ultimate “added value,” to use a term studio marketers have been tossing around for years. The only challenge is getting everyone onboard — and then mounting an industry-wide awareness campaign to educate consumers that there is, indeed, life beyond Netflix.

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