UltraViolet, movie studios’ digital format, stumbles in its first year on the market

Published 4:00 am Thursday, January 12, 2012

LOS ANGELES — When Jason Mockford bought a DVD of “Harry Potter and the Deathly Hallows: Part 2” with the words “digital copy” on the box, he assumed that he would be able to watch it on his iPad.

But the digital version of the film was accessible only through a new technology called UltraViolet. It required him to register on two websites and download new software. It wasn’t compatible with the iTunes application he uses for all his other music and video.

Finding the process too difficult, the 30-year-old San Luis Obispo, Calif., resident said, “I just stopped at some point because it asked me to do too much.”

If UltraViolet were just a new tech demo for geeks, a rocky start might not matter. But the new format is Hollywood’s next big thing, an ambitious attempt to drive consumers to keep buying movies as they abandon discs in favor of tablets, smartphones and Internet-connected TVs.

“Getting UltraViolet right is the single most important strategic issue for studios in 2012,” said Spencer Wang, head of Internet and media research at Credit Suisse. “All CEOs for the major entertainment consortiums need to be focused on getting it right.”

The stakes are enormous. Film studios derive about half of their total revenues from home entertainment sales. Yet overall consumer spending on home entertainment dropped 2 percent in 2011, the seventh consecutive annual decline, according to Digital Entertainment Group, which collates digital media sales.

More notably for UltraViolet, revenue from consumer movie sales, as opposed to rentals, dropped 12 percent.

At a standing-room-only media event at the Consumer Electronics Show in Las Vegas on Tuesday, backers conceded that things hadn’t gone quite as smoothly as hoped.

“The best way to describe the launch is we built this great house, it had an incredible foundation, and in our excitement to move in, there was some finish carpentry that still needed to be done,” said Sony Pictures Chief Technology Officer Mitch Singer.

UltraViolet has been in the works for more than five years, as more than 70 movie studios, electronics makers and retailers have tried to build a unified ecosystem for selling and storing movies online.

The first UltraViolet movies became available last year, their access codes sold with the discs for films including “Green Lantern,” “The Smurfs” and “Cowboys and Aliens.”

To watch a movie via UltraViolet, consumers have to use a code that comes with compatible discs to register on two websites. They then need to install two new pieces of software on a PC and a new application on a mobile phone or tablet to download the film.

About 750,000 people have bought compatible DVDs and registered for UltraViolet. But chatter on message boards, tech blogs and Twitter has been largely negative as consumers found it confusing and buggy.

Even within Hollywood, there have been fissures among the studios backing the technology.

Some home entertainment executives, who were not authorized to discuss the matter publicly, said the Warner Bros.-led launch happened prematurely. It would have been better to wait, these insiders said, until the technology worked smoothly and more retailers were selling UltraViolet-compatible digital copies online.

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