Hollywood tale for replacing DVD a cliffhanger

by Greg Sandoval

http://news.cnet.com/8301-31001_3-20042731-261.html?part=rss&subj=news&tag=2547-1_3-0-20

In a bid to sweeten the consumer appeal of a new digital format that could 
succeed the DVD, some at the major film studios want to prevent DVD libraries 
from being rendered obsolete in a format upgrade.

UltraViolet (UV) is the name of new technology standards expected to debut this 
summer that Hollywood hopes will help reignite the public's interest in 
collecting movies and cauterize the bleeding in their home-video divisions. The 
consortium that created UV includes all the big film studios--with the 
exception of Disney--and numerous movie-sector allies, such as Microsoft, 
Nokia, Sony, Comcast and Netflix, said in January that the technology will 
ensure consumers will be able to play their movies and TV shows on a wide range 
of devices and services.

At the core of UV's offer to consumers is the ability to store films on a 
service provider's servers, or what is commonly referred to as the cloud. One 
new feature being discussed at UV calls for asking users to load their DVDs 
into their computers so UV can scan them and verify they possess the movies, 
according to film industry insiders who spoke with CNET. After verification, UV 
would place a copy of the film in the person's digital locker.

Typically, when media sectors have changed distribution formats, consumers are 
forced to shell out more money to update existing libraries. VHS tapes couldn't 
play on DVD players and CD players were incompatible with vinyl albums.

But even as progressive as this sounds, some studio execs acknowledge that 
moving the public to a new format now won't be easy. For one thing, UV's launch 
is coming up fast and important details still need to be hashed out. Insiders 
say consortium members still can't agree on several important issues regarding 
security and whether to offer UV in high-def. Some studios involved are worried 
some among them will break ranks and offer content to other locker services in 
addition to UV, which could undermine UV's negotiating power.

Meanwhile, UV's toughest challenge may be selling the new format to 
Internet-empowered consumers, many of whom are unaccustomed to paying for 
content following years of downloading pirated music and films at file-sharing 
services.

Then there's Netflix. The Web's top video-rental service forces DVD collectors 
to ask the question: why am I buying when Netflix's monthly 
streaming-subscription fee costs less than a typical disc? For their money, 
Netflix subscribers receive access to thousands of catalog TV shows and films. 
According to film industry sources, Netflix is the kind of consumer proposition 
that drives the value of the studios' content down and one reason why they hope 
to nurture alternative outlets.

Linking up with cable 
Here's what we know about how UV works so far: the system is supposed to help 
prevent owners of films and TV shows from being locked into individual devices 
or services. UV's technology is similar to an ATM network and authorize 
accounts on different media players and services. Digital rights management 
won't get in the way because UV's technology will sit on top of the different 
DRM schemes and provide the necessary permissions.

Once a person sets up their UV locker, they will be able to register up to six 
people from the same household to a digital locker. One studio source said that 
those registered from a household will not be required to live at the same 
address. Nice.

This is supposed to be just the start. UV backers have said they will encourage 
entrepreneurs to build new services and business models on top of UV. They hope 
that large telcos and Internet service providers will be among them.

The studios have already spoken to some of the big cable companies and ISPs 
about creating UV lockers, said one film-industry source. Hollywood is telling 
them that by creating their own locker services, they will get the chance to 
engage with customers' entertainment viewing in a way they never have before. 
The studios "would love to have them get in the game," said one insider.

Unlike the DVD or Blu-ray, there may not be much time for potential locker 
merchants to wait and see whether lockers are a hit. The studios are hoping 
that locker owners will behave similar to iTunes users and once they begin 
loading a 100 songs or more into their locker, will get hooked.

Will studios charge for cloud? 
UV still faces plenty of challenges. Some skeptics are suspicious that UV is an 
attempt by Hollywood to trap people's content in the cloud and then charge them 
to access movies they've already purchased. Some doubters say that without 
Disney and Apple, which are not UV members, it will be hard to generate wide 
adoption.

Others point out that building consensus within a consortium is difficult 
because it's hard to get competitors to agree on anything. Apparently UV is not 
immune.

A disagreement over UV's security on the scanning of users' PCs and delivery of 
films has cropped up, according to a film-industry source. The fear is that 
someone who has a DVD scanned by UV and receives locker access to the movie 
could then give their discs to someone else to scan. There would be no way to 
tell whether a DVD had been previously scanned.

For that reason, the studio with the security concerns has lobbied for random 
checks. They want users to be required to reinsert discs subsequent to their 
initial scan to ensure they sill posses the discs. Those who have argued 
against the added security measure point out that requiring people to hold on 
to discs defeats the purpose of cloud video. Eliminating the clutter of DVD 
libraries is one of the benefits of storing movies on someone else's servers.

They also ask what happens to a UV user who is on vacation and asked to insert 
a disc that haven't brought along.

Josh Martin, a video analyst for research group Strategy Analytics, has lauded 
the studios for making DRM invisible to users and enabling families to create 
individual profiles. He said in an interview Friday that UV is a good idea 
"provided it is executed right." Martin cautioned UV's backers from heaping too 
many confusing, burdensome or expensive requirements onto UV users.

He suspects that UV has plans to try and charge users fees to access their 
cloud content, including movies they bought in the past. He thinks this will be 
a tough sell.

"The service offers some important benefits," Martin said. "I don't know that 
there is enough value for each of the individual benefits to say that paying 
for it makes sense."
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