Walmart-UltraViolet Deal: A Bold, Innovative Way to Launch an Entertainment Product

13 Mar, 2012 By: Thomas K. Arnold

Today’s announcement by Walmart that it will participate in the UltraViolet project marks a turning point in the way a new entertainment product or technology is traditionally launched.

Generally the Hollywood-CE partnership takes aim at the early adopters, hoping to wow the tech heads and then ride their wave of enthusiasm into the mainstream where it either catches on like wildfire (DVD) or slowly builds over a period of years until it becomes the new standard (Blu-ray Disc).

With UltraViolet, the studios and their partners are taking an unprecedented approach: They are going directly to the masses, hoping to win over middle America right away. And they couldn’t have picked a better partner than Walmart, the country’s top DVD and Blu-ray Disc seller (40% market share) and biggest retailer, period, with more than 3,800 U.S. stores that each week are visited by about 100 million customers, representing nearly one-third of the country’s total population.

But having Walmart on board so early in the game isn’t just a marketing win. It’s a strategic win, a tremendous vote of confidence that underscores my belief that with UltraViolet, Hollywood truly has built a better mousetrap in which the big winner is the consumer.

Too often, I think, we lose sight of consumers, who want to pay as little as possible for as much as possible and, at the same time, are looking for the easiest, simplest way to get what they want. Walmart has always put the consumer first, studying consumer trends and habits and then reacting, as it did with $4 prescriptions. We all know how big a success that was, and with UltraViolet Walmart is gearing up for an encore. Forget all the naysayers who keep harping on home entertainment as being a business in decline. Walmart obviously sees bringing digital functionality to physical discs as a winning combination, both for our business and, more importantly, for the consumer.

I have to agree. UltraViolet began as a way to turn a Blu-ray Disc into the be-all and end-all of home entertainment. Consumers buy a movie once and then send a copy into their very own digital locker up in the cloud, where they can access it anytime they want, on any device they want, in perpetuity.

A brilliant concept — in my book it’s one of the smartest things our industry has ever done.

The only thing better — I remember thinking back when UltraViolet was launched — would be to provide consumers with a way to do the same thing with their existing disc collections. And that’s precisely what Walmart is bringing into the game.

The first phase of the transfer process will be limited to retail, but that makes sense. This is a revolutionary concept, and consumers will need a little hand-holding. Phase two will involve online transfers, something that’s already on the way courtesy of specially equipped Blu-ray Disc players from Samsung.

The transfer fees for disc-to-digital conversion are reasonable, and I think both segments of the UltraViolet business model — buying Blu-ray Discs with cloud storage included in the purchase price, and sending discs you already own into the cloud — will feed off each other.

Wearing my consumer hat, I’m thrilled. And once I explain the concept to my friends, most of them are equally enthusiastic, especially the ones who have accidentally mailed a Redbox disc to Netflix or downloaded a movie from iTunes only to lose it when their computer crashed.

UltraViolet promises to be one of our industry’s true transformational moments. And with Walmart onboard, the potential impact is huge. It’s all about keeping the customer satisfied.

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About the Author: Thomas K. Arnold