Disney to offer more ways to watch digital movies

DIGITAL: 'Keychest' on-demand solution moves storage to the digital cloud

By Jennifer Netherby -- Video Business, 10/21/2009

OCT. 21 | DIGITAL: In a bid to transition consumers from buying DVDs to buying digital movies, Walt Disney Studios Home Entertainment will reportedly unveil technology next month that could make digital movies as accessible to consumers in coming years as the DVD is today.

Dubbed Keychest, consumers would pay one price for permanent access to a movie or TV show across a wide variety of digital formats, be it iPhones, cable services, PCs, Blu-ray Disc players, connected TVs and other devices capable of playing back digital films, according to a report in the Wall Street Journal.

Disney’s initiative would apparently shift the digital business from one in which consumers buy digital movie downloads that can only be played back on a limited number of devices, to one in which consumers could access films they buy from a digital cloud for on-demand viewing on any number of devices.

The move comes as DVD sales fall sharply, yet digital sales have yet to come close to compensating. Most expect digital sales to remain small until they are as easy for consumers to access and watch on devices as a DVD is today. Right now, when consumers download a movie from a movie service, they are limited in the devices they can playback that movie on. So far, digital movie rentals and ad-supported online content have been more popular with consumers.

NPD entertainment industry analyst Russ Crupnick, who hadn’t been briefed on Keychest, said it could solve the problem of how the industry gets consumers to pay for digital content, by making buying a film more appealing than turning to free online services such as Hulu.com. Disney is part-owner of Hulu.

Disney home entertainment president Bob Chapek told the Journal that the studio doesn’t expect Keychest to contribute measurable revenue to the studio in the next five years.

Disney’s Keychest initiative comes nearly a year after the industry banded together for the Digital Entertainment Content Ecosystem, an effort to develop a digital standard so that consumers can playback digital movies on virtually any digital device.

DECE’s membership includes every major studio, except Disney, as well as major companies in every other segment of the digital business, including Best Buy, Netflix, Comcast, Microsoft and Samsung. Apple, whose iTunes service accounts for the overwhelming majority of movie download sales today, is not a member. WSJ speculated that Apple will be involved in Keychest.

The Keychest announcement came on the eve of DECE’s monthly meeting with member companies, being held Thursday in South Korea. Asked about Keychest, DECE president and Sony chief technology officer Mitch Singer said “imitation is the sincerest form of flattery.”

Singer noted that DECE already has 45 major companies as members, which together reach into most American homes. Unlike Disney’s initiative, Singer stressed that DECE is pushing an open platform so that consumers can play movies they buy on any device they own. Singer noted that Disney has been invited to take part in the initiative.

DECE doesn’t just aim to make digital playback ubiquitous, but also wants to tie digital movies to DVD and Blu-ray purchases. For example, a consumer would be able to buy a Blu-ray film in a store and then go home and stream that same movie through their cable box or on another device, without paying an additional fee.

An executive at one digital movie service said that Keychest seems to be an attempt to address the same problems that DECE was created to solve, and it could end up being a competing format, reminiscent of HD DVD vs. Blu-ray. But Singer noted that there’s no reason companies couldn’t support DECE and Keychest as well as other digital platforms.

Some digital movie companies already store digital movies in digital lockers for consumers, similar to what Keychest proposes to do. Amazon, for example, stores downloads consumers purchase through its Amazon Video on Demand service on a digital locker so that consumers watching on a PC never have to download a copy of a film or TV episode to their computer. CinemaNow also has said it plans to move to a cloud model, so that digital movies customers buy are never downloaded but always accessible.

But Disney would seemingly seek to make digital films available through a much broader range of devices than those services and others are currently available on.

Disney execs weren’t available Wednesday to provide details on the initiative.