Most of you have probably heard of the Ultraviolet disc-to-digital program. It’s the entertainment industry’s way of providing digital rights to the titles you purchase in physical form so that you can access your movie collection from any device. It’s been out for about nine months now, so I thought I would look into how it, and sales of physical goods in general, are doing. Let’s look at some stats first, and then I’m going to share some personal experience regarding UltraViolet.
According to the Digital Entertainment Group (DEG), sell-through of packaged goods shrunk by 0.62% overall in Q1 of 2012. There were sharp declines in brick-and-mortar rental and physical subscriptions (-39.42% and -48.12 year-over-year respectively). Blu-ray sales were up 23% or $541 million in Q1. However, DVD sales were $1.51 billion, down 7% YOY. Finally, the kiosk business was up 30.13% representing $523 million in sales. Taken together, this data suggests that while American consumers are increasingly adopting the Blu-Ray format it wasn’t quite enough to keep overall sales growing. But physical goods rentals like Red Box and other kiosk vendors still has legs.
Now let’s look at the overall revenue picture for digital entertainment. Total digital sales (includes EST, VOD, and Subscription Streaming) grew by 74.43% or accounting for just over $1.21 billion in sales. The big gain was in Subscription Streaming which saw a 545.43% YOY increase in Q1 of 2012. Netflix just announced that they had a record-breaking 1 billion hours of viewing in June. Clearly, consumers are enamored with subscription services and even content limitations and windowing do not deter consumers who ultimately want convenience and access for one low price.
I asked Mark Teitell, the GM and Executive Director of Ultraviolet to give me an update. Here are some points he sent over:
- The consumer base of UltraViolet users continues to grow, and the pace of that growth has quickened in the last several months – helped along by the launch of Walmart/Vudu, along with more content becoming available and various studio-initiated promotional programs to make people aware of UltraViolet.
- Currently there are 6,000+ titles available with UltraViolet in the U.S. – including over 3,000 available via Vudu’s EST offerings. The Walmart/Vudu program isn’t “just” disc-to-digital, but includes EST as well as new-release DVDs and Blu-rays that come with UltraViolet. Titles are available from Fox, Paramount, Sony Pictures, Universal, Warner Bros and also DreamWorks Animation.
- With UltraViolet, consumers who own any one of those movie / TV show titles can stream or download them to PCs/Macs, iOS or Android mobile devices, and Xbox 360 / PS3 consoles, as well as get streaming access on a wide range of Internet TVs and connected Blu-ray players from many leading OEMs.
- In early June, we surpassed 3 million households that have UltraViolet accounts.
- Looking forward, there is a growing array of campaigns and promotional offers to build awareness and usage of UltraViolet, including one major promotion that studios and Walmart/Vudu have been running recently, a pan-industry UltraViolet social media campaign that has begun, and plans for TV / mass advertising campaigns in the relatively near future
- Additionally, on the industry side, there is a material and increasing number of “B2B enabler” type companies who have announced UltraViolet solutions that make it faster, easier, and/or less expensive for consumer-facing companies to deploy UltraViolet.
I have seen one social media promotion on Facebook where people share that they got a free title and that as their friend you could get a free title. VUDU is currently running a promotion on its site with an offer to convert one disc and get five free titles.
As the first U/V titles were retailed in October 2011, I think 3 million registrations is a very respectable number. With the above promotions and more to come, I predict they will have 5 million before end of year.
So speaks the Oracle of IVA, AKA Rhodes Mason
Click here to read about my UltraViolet experience.