UltraViolet: Analogue Conservatism Masquerading as Digital Innovation

When UltraViolet – the movie studios cloud locker play – was announced last year it rightly caused something of a stir.  Finally the uber cautious movie studios were taking a lead in digital content strategy.  However since then the project has faced a number of criticisms ranging from clunky implementation through to lukewarm consumer adoption (approximately 1 million users have registered to use the service since its October launch).  This week Ultraviolet got two welcome boosts, in the shape of Dreamworks signing up to the initiative and, more importantly, Walmart pushing ‘Disc to Digital’ – its implementation of UltraViolet – across US stores. But as encouraging as these developments are, UltraViolet remains doomed to failure unless it undergoes substantial change.  UltraViolet is an evolutionary, sustaining technology at a time when the movie industry needs transformational innovation. Disc-to-Digital is a Sustaining Innovation Designed to Protect Analogue Business Models With Disc-to-Digital consumers are expected to take their old DVDs and Blu-rays into Walmart so that they can then pay $2 per title for the privilege of being able to watch the movie again via Walmart’s VOD service.  DVD owners have to pay $5 if they want to view the HD version. In short, consumers are expected to pay an extra fee to watch an old movie they have already got and have already paid for.  If this ever takes off I will eat my hat….if I wore one. The problem with Disc-to-Digital is that it is a sustaining innovation designed by the movie studios to protect their traditional business while at the same time giving the gentlest of nods towards digital.  But as appealing an option as sustaining innovations can appear they typically leave traditional companies vulnerable to decimation by disruptive technologies that do a much better job of meeting consumers’ needs.  Recent history presents us with illustrative precedents: while the record labels locked downloads in DRM file sharing went global; while Nokia clung to keypads Apple and Android touch screen smartphones stole their market leadership.  Disc-to-Digital is no different.  The movie studios are missing a crucial opportunity to grow their market with transformational innovation. The Physical Video Product Transition Needs to Start Now Of course with transformational innovation comes disruption, but the price of doggedly clinging to modest incremental changes while consumer behaviour lurches forward in quantum leaps is to end up like the news or music industries, presiding over dramatic loss of revenue.  Movie studios have been partially cushioned from disruption by the unique experience that movie theatres continue to deliver even in the face of numerous digital alternatives.  Although the day-date release debate continues to rage, of more pressing need is overhauling physical sales strategy.  DVD and Blu-ray sales are crucial to studios and are often the way that movies actually end up turning a profit.  Blu-ray proved to be a mistimed and ill-judged last throw of the physical product dice.  Titles priced too high for marginal additional consumer benefit, at exactly the same time that consumers were being presented with a host of new ways to get video content into their living rooms, such as VoD, PPV, IPTV and PC streaming. The net result was that Blu-ray failed to drive the universal format replacement shift that DVD had done.  Many consumers will simply skip Blu-ray, ignoring the last chapter in physical video formats en route to on-demand alternatives. All of which underscores just how important it is for movie studios to play a proactive role in driving the digital transition of their customers, even if that comes at the cost of hastening the demise of the evolutionary dead-end that is Blu-ray.  If movie studios don’t hold their customers’ hands on this journey then consumers will make the move without them and a priceless opportunity to have some degree of control over the digital transition will be lost. This Narrowing Window of Opportunity is the Most Pressing Window Argument Forget the release window debate for a moment, this narrowing window of opportunity is the window that the movie studios should be occupying themselves with.  The book publishers have been uniquely fortunate to be able to help shape their industry’s digital transition by being intimately involved with the technology that triggered readers’ digital transition i.e. eReaders.  Although the digital cat is already out of the bag for video, the digital consumption journey for mainstream consumers is only just beginning and the movie studios have the opportunity play an influential role in that process in a manner that record labels and newspapers would bite their hand off for. UltraViolet could yet prove to be the vehicle – the importance of having most of the big studios pulling together should not be underestimated.   But charging your most loyal customers $2 for the privilege of watching an old movie they’ve already paid for is not a strategy.  The role of UltraViolet should be to deliver new, high quality, convenient digital experiences for customers, not to squeeze extra income out of them for products they have already paid for. Until that change is made though UltraViolet will remain a sustaining innovation aimed at protecting the old way of doing things and as such wholly inadequate for helping the movie studios transition their physical sales businesses.

For more on media product innovation strategy get my latest report ‘The Media Format Bill of Rights’.  Just sign up for email updates to this blog to receive your free copy.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s