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Studios Tout Streaming With UltraViolet

18 Jan, 2012 By: Erik Gruenwedel

'Dream House'

New combo-pack packaging attempts to bridge consumer understanding of UltraViolet with the concept of streaming

If you can’t beat the concept of (rental) streaming, use it as a marketing tool for sellthrough.

Releases that include UltraViolet sport the words, “All-New UltravViolet. Your movies in the cloud. Now Instantly Stream.”

That’s the sticker on major studios’ new-release movies going forward, according to a presentation by DEG: The Digital Entertainment Group at the Consumer Electronics Show in Las Vegas. Upcoming Jan. 31 DVD/Blu-ray Disc/digital copy/UltraViolet combo pack releases of the The Thing and Dream House from Universal Studios Home Entertainment include the big yellow stickers.

“Sticker and messaging consistency are important first steps toward introducing UltraViolet to the consumer,” said Rich Marty, VP, marketing, Sony Pictures Home Entertainment and Chair, DEG UltraViolet marketing committee. “By collaborating with the other studios within the DEG, the working group has been able to establish a consistent look and feel at the format’s launch, which will make UltraViolet that much more recognizable on retail shelves.”

Since the launch of UltraViolet last fall on select titles by Warner Home Video, the cloud-based digital locker has experienced its share of growing pains — notably in consumer awareness and understanding of what the platform is all about.

To the studios, UltraViolet represents a last stand in the sellthrough of packaged and digital media. No small task, given the economy and meteoric rise in availability of low-cost distribution alternatives such as $1 rentals, kiosks and Netflix streaming, among others.

The use of the term “streaming” may be a ploy to capitalize on Netflix’s popularity and that of other streaming services, such as Amazon Prime, analysts say.

“Instant streaming to me leverages the equity being built by the over-the-top options, particularly Netflix,” said Russ Crupnick, research analyst with The NPD Group. “It helps to position UltraViolet in the consumers mind as equivalent value to the current streaming leader. Consumers understand what streaming is, thanks to Netflix.”

Despite more than 750,000 households accessing UltraViolet since last fall, NPD data suggests consumers don’t yet understand cloud-based storage of any media, Crupnick said. That figure is expected to increase exponentially as the number of UV releases rises, according to Tony Wible, analyst with Janney Capital Markets, who nonetheless wonders whether consumer understanding of UV is the issue.

“We are still skeptical UV can reverse the decline in home entertainment sales, and believe it will only slow the decline due to the irreversible damage caused by cheap rentals and new streaming options,” Wible wrote in a Jan. 17 note.

Indeed, Crupnick wonders if the new combo pack releases now have become overly confusing by the quadruple access options offered consumers. Specifically, the analyst said the sticker portends three concepts to consumers: UV, cloud-based storage and streaming — with the latter as the most important.

“Streaming is really the only benefit statement that consumers need to understand when they buy a disc,” he said.

That might not be enough in a market undermined by low-cost all-you-can-watch rental programs, according to Michael Nathanson, analyst with Nomura. He said weaning consumers off the concept of the movie rental is difficult no matter how seamless UV becomes.

“We are very savvy consumers who have used technology to save money — from free papers online, maps, no photo processing costs and cheap music singles versus albums,” Nathanson said. “Movie rentals — including VOD — offer better value on most titles than sellthrough.”

About the Author: Erik Gruenwedel

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