Hollywood Still Doesn't Get It

A consortium of movie studios and electronics companies has banded together to launch UltraViolet -- which is supposed to make watching movies on all of your various gadgets easier. Although I applaud Hollywood for moving toward digital distribution, I'm afraid the studios still don't get it.

The trailer looks good
On the surface, UltraViolet looks promising. Time Warner's (NYSE: TWX  ) Warner Bros., Viacom's Paramount Pictures, Comcast's (Nasdaq: CMCSA  ) Universal Pictures, and Sony (NYSE: SNE  ) Pictures have all signed on, so acquiring content shouldn't be a problem.

The service hits a lot of the right notes on the tech side as well. Microsoft (Nasdaq: MSFT  ) and Intel (Nasdaq: INTC  ) have both joined the consortium, giving the service some tech cred. UltraViolet's description includes all the hot buzzwords, like "cloud" and "digital locker." It even spells its name with a capital letter in middle, like all the cool kids in technology.

But that's about it
All the promise of the service starts to break down when you look into how it actually works. If you go out to purchase either Horrible Bosses or Green Lantern on DVD or Blu-ray this week, you'll find a 12-digit redemption code for a digital copy of the movie. After you have created an UltraViolet account, as well as a Flixster account -- Warner Bros.' social movie portal -- and entered the 12-digit code, you can stream your movie through Flixster's website and App. At the moment, UltraViolet has no set-top-box support, but the service should eventually be available on the Xbox 360 and connected TV's.

The idea is you buy a movie once and watch it anywhere. In general, I like this, but UltraViolet missed when it made the first purchase a physical copy. It marks the service as an attempt by movie studios to reinvigorate DVD and Blu-ray sales.

Frankly, fighting to preserve physical media is a waste of time. Services such as Apple's iTunes and Microsoft's Zune Marketplace allow users to buy or rent HD movies from the comfort of their couches. Meanwhile, Netflix (Nasdaq: NFLX  ) streaming, Hulu, and Amazon.com (Nasdaq: AMZN  ) have introduced consumers to the concept of paying for access to a buffet of movies and shows rather than owning them outright. With so many better options, DVD and Blu-ray will most likely go the way of VHS and compact discs.

Foolish takeaway
I know it's early, but I'm betting that UltraViolet will tank. Its only differentiating factor is that you get a physical copy to go along with your digital options. Once the demand for optical discs dries up, I don't see a place for the service in the already crowded online video market.

If you would like keep an eye on UltraViolet, as well as the ever-changing world of Internet video, then add these companies to your Watchlist. We'll keep you up to date on all the latest news and analysis.

The Motley Fool owns shares of Apple, Microsoft, and Intel. Motley Fool newsletter services have recommended buying shares of Netflix, Amazon.com, Apple, Intel, and Microsoft, creating bull call spread positions in Apple and Microsoft, creating a diagonal call position in Intel, and creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Fool contributor Patrick Martin owns shares of Netflix. You can follow him on Twitter, where he goes by @TMFpcmart03. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 12, 2011, at 7:28 PM, dgrayxplane wrote:

    Another possible differentiator would be if you can get streaming movies that you can't get anywhere else. Even if the DVD is a throwaway that might be worth it far some fans.

  • Report this Comment On October 12, 2011, at 8:42 PM, prginww wrote:

    Did you do any research whatsoever before writing this article or did you just look at some commercial for a Blue Ray disc that came with an ultraviolet code?

    It took me about 15 seconds of research to find out you will be able to buy ultraviolet media online. So it's not tied to physical media, just that some physical media will ALSO include a code for you. Just look at the uvvu website:

    "For online purchases, you can easily add new titles directly to your library as part of your purchase process. Before you complete your check-out, you'll be given the opportunity to log into your UltraViolet account (or create one if needed), and your movie or TV show will be automatically added to your Digital Library. For purchases of an UltraViolet-enabled movie or TV show on disc, your title will come with in-package instructions on how/where you can log in (or create an account) to add it to your library."

  • Report this Comment On October 12, 2011, at 9:33 PM, pmart wrote:

    @realtechwiz, I assure you that I do research my articles, but I did miss the connection to online stores. Sorry about that.

    It looks like UltraViolet won't run its own store, but instead will give you the option of storing media you purchased from other retailers in its locker.

    Now, if the idea is we get used to buying access to a movie rather than buying a copy, then this model makes no sense. Microsoft and Amazon both allow you to stream your purchased content directly from their stores. Why would you need to add an extra layer (to if you remember it also requires?

    The short answer is because UltraViolet was designed to help prop up sagging physical sales.

    So yes, you can buy UV media online, but I don't think it'll matter.

    -Patrick

  • Report this Comment On October 12, 2011, at 9:34 PM, zymok wrote:

    What if anything stops someone who likes physical media from buying a DVD and then reselling the digital access code?

  • Report this Comment On October 13, 2011, at 11:40 AM, AngRaymond wrote:

    Just a brief comment- a lot of us are tired of the ability of 'service providers' to license viewing of a movie, music etc- without actually owning it as the terms of use of most of the service providers allow THEM to decide to continue to provide the service. ie- they can shut you off whenever they want- and since all you have is a license to use- you lose your access. MANY people- want actual copies now- or at least actual ownership- which this doesnt provide. Ask the Kindle users who lost a copy of a book they thought they owned...... We want the option to OWN- and without that option- I want a physical copy of anything I pay money for-- so this option is great!

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