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With Disney Movies Anywhere announcement, things look grim for UltraViolet

140226 Disney Apple UltraViolet splash

Disney has been the lone hold-out from the movie industry’s solution for online sales, UltraViolet. Does the Disney Movies Anywhere announcement and close partnership with Apple spell the ultimate demise of UltraViolet?

2013 was a good year for online movie sales. The business grew 50% last year, to $1.2 billion. On the face of it UltraViolet also had a good 2013, increasing the number of accounts 65% to 15 million. Unfortunately, most of the online movie sales did not end up in those new UV accounts.

Apple’s iTunes store dominates the electronic sales of movies. NPD group last year reported that iTunes had a two-thirds share of movie and TV show sales. What’s more the number of iTunes accounts reached 600 million last year, growing at a reported 500,000 a day.

So, what drove the increase in UV accounts? Disk sales. Many DVD and Blu-ray disks now include a code to gain access to a digital version of the movie in UV format. However, the trajectory of DVD sales is very different from online movie sales. Physical disk sales plummeted 8% last year.

In the light of these numbers, Disney’s move to launch Disney Movies Anywhere (DMA) with close affiliation to iTunes sounds like a no-brainer. It is especially so because Disney knows that Apple products, in particular older iPads and iPod Touches, are heavily used by the kids that form the backbone of the company’s audience.  They know this because so many youngsters now engage with Disney through the Disney Watch Apps.

At the core of Disney Movies Anywhere is Disney’s own online movie format called Keychest. UltraViolet and Keychest are not compatible. When a consumer purchases a Disney movie through iTunes the movie shows up both in iTunes and in DMA, in Keychest format. The other route to getting movies into DMA is through disk redemption codes through the DigitalCopyPlus website.

If all of this news isn’t bad enough for UltraViolet, the recent entry of Comcast into the digital movie sales market just adds insult to injury. Comcast has leapt out to an estimated 15% of online sales. These movies do not use UltraViolet either.

Taking Comcast and Apple iTunes together, up to 80% of the electronic movie sales market is in a format other than UltraViolet. This is pretty disappointing performance for the four years the standard has been in market.

There is another danger for UltraViolet in the Disney announcement: the close integration with iTunes, and the huge market it leverages is very compelling. If others jump on board, and abandon UV this could spell disaster. Just as Warner Bros surprise announcement in support of Blu-ray in 2008 sank HD DVD, another major movie studio embracing the Disney Movie Anywhere approach could well herald the end for UltraViolet.

Why it matters

UltraViolet has made very slow progress since its launch, in part because Disney does not support the format.

Disney’s move to stick with Digital Copy for Disney Movies Anywhere shows the company won’t support UltraViolet anytime soon.

Were another major studio move to the Disney Movies Anywhere approach, it would likely signal the end for UltraViolet.

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(2) Comments

  1. Disneys movies anywhere only strengthens the need for Ultraviolet. Movies anywhere only supports itunes which you don’t have on your devices unless it happens to be an apple device, problem is, now days most are android, not ios. If we are going to use digital copies we need a universal platform that will work with ALL manufacturers devices and platforms, not just apple. Ultraviolet is doing it the right way, Disney just took a step in the wrong direction, unless of course you are married to apple.

  2. Exactly right. Disney is angering a majority of their customers by their obstinance. The only people writing articles like this one are apple fanbois who see their favorite company ready to lose market share in yet another area. It took Android no time flat to vastly exceed Apple’s market share in smart phones and that’s because while there a ton of Apple groupies, there are way more of us who know how badly they suck and will take ANY alternative, especially ones that are significantly better such as UltraViolet.

    At first, UV was just another form of digital copies I got included with my discs that I didn’t understand. After taking the time to figure out my options and especially after finding out that I can convert my discs to UV digital copies, I am 100% in support of UV and nothing else. The only other acceptable alternative would be a service that does exactly what UV does, just by someone else.

    So… 100+ companies sharing a single technology that has a set standard and let’s everyone play on the same level… or a handful of massive corporate holdouts who think they should get to have a stranglehold on their markets such as Amazon, Comcast, Disney, and Apple who do their own thing and force you to buy ONLY from them. Hmmm, which will I pick? I think I’ll vote with my wallet and tell the mega-corporations to go shove it. I haven’t bought a Disney movie since November and won’t be buying another until they get on board with UV. I’m not giving one company control over my digital library. I’m giving my dollars to the service that let’s me buy and access from multiple places. If Vudu ticks me off, I can head over to CinemaNow, or even buy directly from Sony and watch there. To hell with buying everything under the sun Apple just so I can access my movies.

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