Martin: How Ultraviolet's DRM could impact the wireless industry

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Josh Martin Strategy AnalyticsI'll admit upfront that I am by nature a skeptic. This attitude has served me well in my chosen profession and my presumptions of failure are often prescient. I remember MovieBeam and wondering how it would succeed. I recall hearing about Microsoft's Plays for Sure DRM scheme and being skeptical. And FloTV never sat quite right with me.

Enter Ultraviolet. The initiative is a broadly backed consortium attempting to increase the usability of digital content through rights stored in a digital locker. Basically, a user who downloads Ultraviolet supported content can play said content on any Ultraviolet supported device. This may sound familiar as it certainly has been tried in the past with little success. But this time it could work because the key players have actually learned from past mistakes. Ultraviolet could inherently change the mobile video market by ushering in an era where consuming on a mobile device is as easy as buying a DVD, a movie for your PC, or a show for your TV.

So, here are some of the key lessons that should separate Ultraviolet from past mistakes:

  1. The content follows users. Content is not locked to a specific device but to a user (or a family of users) which means that users will be able to transfer/stream content to a wide array of devices making content more flexible than DVD - not less (which much digital content has historically been).
  2. UV supports multiple DRM schemes. The most important difference between Ultraviolet and Plays For Sure is UV supports various DRM schemes and either changes the DRM "wrapper" when a file is transferred between devices or allows a user to download a new file that is suitable for that specific device (i.e. you wouldn't want to transfer a 1080p file to your phone). This increases utility while reducing end user complexity.
  3. Families will be able to create individual user profiles. This may not seem important but the ability to allow individuals access to particular pieces of content but not other content is not only important for a parental control but it will also enable enhanced personalization.
  4. There is broad industry support from players across the value chain. This doesn't necessarily guarantee success (See: HD-DVD) but having broad industry support--especially of content owners--will make UV more compelling.
  5. There is a desire to merge physical and digital not necessarily replace it. Digital copy (a digital file included with a DVD or Blu-ray) set the stage for the merging of physical and digital and the willingness to envision a world where both exist is important to success.
  6. It's about more than just streaming. This is of the utmost importance for mobile consumption. With tiered broadband becoming the norm, dead-zones still existing, and a desire to have content on-board the ability to sideload a file will be integral for success.
  7. There are more connected devices today than ever before. One challenge for Plays for Sure and other initiatives was that users had to upgrade all their hardware to take advantage of it. But with the influx of connected TVs, Blu-ray players, and of course mobile phones the ability to upgrade existing hardware to support this is possible (and necessary for success).

That was a pretty rosy picture of UV, wasn't it? I bet you're nearly ready to go out and buy some Ultraviolet stock, stock up on Ultraviolet devices, and purchase a t-shirt publicly declaring your love for Ultraviolet! But before you leave the house here are some things Ultraviolet will need to do to make this a success:

  1. Ensure existing connected devices are upgradable to support this. Making users upgrade all their hardware will immediately make this an unattractive offering.
  2. Make native applications. The app economy can really help Ultraviolet succeed by providing a direct to consumer outlet. Instead of having to be embedded on a device (although that's an option) Ultraviolet can distribute an application that allows users to access the content they have access to immediately putting the technology into the hands of millions of users.
  3. Get Disney (and maybe Apple) on board, now. Simply, in order for consumers to believe in this technology all major content owners must be on board and as of today they are not. Disney is necessary for this consortium to succeed because without the majors, consumers will look at this as another incomplete offering. Apple also isn't on board (interesting how Apple and Disney are so in sync) and while this is a bit of a downer if Ultraviolet can distribute to iOS devices via an app it may not matter if Apple is directly involved but failure to create an iOS app will lead to failure.
  4. Give examples as to how this will work to users. DVDs are great because almost everyone has a DVD player ensuring a viewer they can bring a movie to a friend's house or their car and watch a movie. Ultraviolet will need to make it that simple to download content to another device for playback to demonstrate this is as flexible as physical formats.
  5. Make it ubiquitous. Netflix's streaming service has succeeded because it is everywhere and Ultraviolet will have to do the same so they should start seeding the market with devices in advance of commercial launch to build awareness and increase the user base.

So, how could this impact the mobile space?

  1. Ultraviolet could give Carriers a way to get back into distributing content. Since carriers are looking for new ways to inject themselves into the digital media revenue stream selling Ultraviolet content would eliminate consumer fear that purchased content is locked to that specific carrier. In addition since content is not restricted to video carriers can build robust stores with various offerings.
  2. It could help network congestion. By not requiring users to stream video content users may sideload content or download files via WiFi to their devices which would reduce network load from streaming.
  3. It could reduce Apple's stranglehold on digital content distribution. With more than 14 million iPhones and 4 million iPads sold in the last quarter Apple's dominance in digital distribution remains unquestioned. Ultraviolet could potentially tap into these users in a way other stores have not yet been able to.

I am definitely more bullish on Ultraviolet after hearing it discussed than I was just a few days ago. But the simple truth is studios can still grasp defeat from the jaws of victory if they get too greedy. Charging for "extra" rights to support various devices will turn consumers off. Having convoluted usage rules will make it unattractive. Charging too much for a license will turn users off as well. But conceptually this could really change things.

Josh Martin is a senior analyst for wireless media services in the Global Wireless Practice of Strategy Analytics.