Hollywood's Plan to Sell DVDs to People Who Don't Like DVDs

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Hollywood has always profited from movie format innovations. Until recently, the studios would make huge bucks every time electronics companies come up with a new kind of tape or disc. (Own Titanic on VHS? You must have the DVD, too! Then don't forget the Blu-ray!) The cloud-based UltraViolet is the latest format, and it's a little bit different. Now, when you buy a DVD or Blu-ray movie from participating Hollywood studios, you'll also receive a 12-digit access code to the UltraViolet digital version that can be watched on any device yjay cam run the Flixter app. Early reports say that the UltraViolet titles won't cost more than regular DVDs, but still we're left to wonder why someone who prefers the convenience of digital streaming would be interested in owning a physical copy of a movie at all? Studio executives don't seem to have a great answer to that question, but whether its redundant or not, UltraViolet works great, they say (see the explainer graphic below). Critics seem less sure.

The cloud is the future. This isn't really news, but the way that movie studios are keeping a tight grip on streaming rights shows some novel methods of competing in the digitally dominant media space. Right now, everyone from Apple and Amazon to Netflix and Blockbuster have to secure licensing deals in order to stream movies directly from the cloud. The UltraViolet consortium--which includes pretty much every major studio except Disney--hopes to give consumers another, more direct option of streaming directly from the studio. In doing so, Hollywood holds on to heftier profit margins by avoiding splitting the pie with a technology partner. Disney is in fact going totally solo and launching their own streaming service in the next few months called Disney Studio All Access. After all, streaming services are clearly more convenient. "[Cloud storage] gives the benefit of ownership without the issues of long download time, storage constraints and the lack of interoperability," says Disney executive vice president Lori MacPhearson. 

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So why even bother with the DVD version? In the near term, this is consumers' only option. Hollywood is trying desperately to figure out a way to keep the high profit margins they earn from selling DVDs and sweetening the deal with a digital copy is better than doing nothing. "We want to emphasize the concept of 'buy once, play anywhere,'" Time Warner's president of digital distribution Thomas Gewecke explains to The Wall Street Journal. However, the requirement of buying a physical copy has some experts scratching their heads, however. "We are in a preservation game," James McQuivey, media technology analyst at Forrester Research, tells Reuters. "We are trying to preserve an eroding base of DVD and Blu-ray spend. I don't see any way in which this is going to reverse this slide."

This is about Apple and Amazon isn't it? According to the folks backing UltraViolet, the answer is yes. Hollywood owning their own digital rights management (DRM) format and streaming capabilities mean they won't have to depend on technology built by Apple and Amazon in the near term. As Peter Kafka at AllThingsD argues, however, the studios are inevitably linked to Apple and Amazon because they the device on which people want to watch movies:

For now UltraViolet is leaning on Flixster, which is already well-distributed on both iOS and Android--which means this should work on Amazon’s Kindle Fire, too. But there will be plenty of places for Apple or Amazon to flex their muscles and make it more difficult for UltraViolet down the line. On the other hand, the studios pushing UltraViolet have stuff that both Apple and Amazon want--digital rights for their movies and TV shows--so there could also be some horse-trading.

Kafka adds that this entire fiasco makes one very strong assumption that people actually want to own movies. "If you can pull down whatever you want from the cloud, whereever you are, who cares whether you 'own' it or not?" he says. "This concept used to be hard for people to grasp, but not anymore--which is why Netflix, despite its months of missteps, still has some 24 million subscribers."

This article is from the archive of our partner The Wire.