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The Sky Is Not Falling on UltraViolet

1 Jun, 2012 By: Thomas K. Arnold

For the life of me, I cannot fathom how a responsible a media outlet like The Financial Times would commit one of the most serious blunders imaginable in the world of watchdog journalism: Take two random data points, connect the dots and draw a half-baked conclusion.

But that’s just what the august FT has done, with an that essentially asserts a slowdown in electronic sellthrough means the imminent death of UltraViolet.

That makes about as much sense as saying that New York Mayor Michael Bloomberg’s proposal to ban super-size sodas in New York City means sales of French fries at California McDonald’s are in trouble.

The FT cites a report from IHS Screen Digest, a media research firm, that revenues from subscription rental services such as Netflix are increasing, while sales of feature films on Apple’s iTunes — which by some estimates controls upwards of 90% of digital movie sales — have slowed.

“With consumers turning away from buying films online in favor of renting them digitally, the outlook is bleak for UltraViolet, a new industrywide, cloud-based locker system that Hollywood hopes will stimulate purchases of film content,” the FT asserts, quoting Dan Cryan, author of the IHS Screen Digest report, as saying, “When consumers go digital, they go to rental. There’s just no interest in owning anything.”

Uh, no, Dan. Analyzing trends we’ve seen materialize throughout the last couple of years clearly indicates that consumers want their movies two ways: To simply watch, they stream — it’s easy, convenient and cheap. But to own, they still want something tangible, something they can hold, look at and file away — like Blu-ray Disc and DVD.

The two markets are co-existing quite nicely, and the latest numbers compiled by DEG: The Digital Entertainment Group on behalf of the studios even indicate the slowdown in disc sales has been arrested.

What’s happening is nothing more ominous than market segmentation, much like the book industry years ago splitting into the paperback and hardback camps — or, more recently, gamers splitting into console and computer factions.

Cryan is correct in saying that when consumers go digital, they go to rental. In the music industry, digital downloading worked because it’s cheap and easy — you can buy single songs for 99 cents, the same price for which we used to buy vinyl singles back in the pre-CD era. The entire downloading business, in fact, was birthed by a blindsided and arrogant music industry that first took away consumers’ sampling mechanism, the single, and then jacked up the price of CDs to more than $20. Consumers didn’t want to spend $20 for an entire album on which they might only like one or two songs, so they rebelled and began swapping song files over the Internet.

The movie business is different. We don’t buy movies like we buy music. In music, the lure is individual songs; in movies, you don’t buy individual scenes you happen to like. You buy the whole enchilada. And when you’re buying an entire two-hour movie rather than a couple of three-minute songs, you’re not going to want to buy something fleeting and ethereal that could very well disappear with your next computer crash — particularly when you’re paying 10 times as much as you would for a single song.

UltraViolet is simply a way to extend and expand your purchase of a physical disc by giving you access to that content on a wide range of mobile and other devices. You’re not replacing a physical product with a digital one; you are enhancing it.

It’s silly, therefore, to say that because people aren’t buying digital copies of movies, UltraViolet is a flop. You still need a disc to tap into the promise of UltraViolet, at least at this point. And last I checked, the studios were still selling an awful lot of discs.

Our job in the media is to carefully and thoughtfully analyze and interpret the news.

Invariably, that means pouring water on the flames of hysteria and debunking any “sky is falling” notion some may harbor — not perpetuate it.

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About the Author: Thomas K. Arnold

Thomas K. Arnold

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