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Hopes for the Hollywood “cloud” darken

June 1st, 2012 |  Published in Digital and Mobile Technology, Media 2.0








1 June 2012 – Hollywood studios banking on a cloud-based locker system to revive home entertainment sales face an uphill battle after a new report showed a slowdown in purchases of film content from Apple’s iTunes store.  While revenues from subscription rental services such as Netflix are increasing, sales of feature films on iTunes – the largest US online movie retailer by sales – have slowed, according to the report from IHS Screen Digest, a media research firm.

Online film revenues in the US more than doubled in 2011 to reach $992m and are on course to double again in 2012 to $1.9bn, said Dan Cryan, the author of the report. But subscription rental services such as Netflix drove this growth, with total digital rental revenues rising 355 per cent to $727m. Revenues from online film purchases increased by less than $6m, or 2.4 per cent, to $236m in 2011.

With consumers turning away from buying films online in favour of renting them digitally, the outlook is bleak for UltraViolet, a new industry-wide, cloud-based locker system that Hollywood hopes will stimulate purchases of film content.  When consumers go digital, they go to rental.  There’s just no interest in owning anything.

UltraViolet has the support of most big Hollywood studios, including Warner Brothers and Sony Pictures and several consumer electronics groups and retailers, including Walmart and Best Buy. They hope UltraViolet will replace lost income from sales of physical discs; DVD sales slumped 20 per cent in 2011 to $6.8bn, according to the Digital Entertainment Group, which represents studios, retailers and consumer electronics groups.

UltraViolet allows consumers to buy a film, whether on a physical disc or digitally, and then watch it on the device of their choosing. But it has been slow to take off and consumer reviews have been mixed. Bob Iger, chief executive of Walt Disney, which is not participating in UltraViolet, recently said it was “not as robust as we expected or as consumer-friendly as we hoped”.

Walmart, the biggest US retailer of physical discs, recently launched a “disc to digital” initiative to speed take-up of UltraViolet. Customers can pay $2 per disc to convert their existing DVDs to cloud-based files that can be streamed or downloaded to any device.


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