While VOD continues to grow, Electronic Sell Through (EST) does not, leading many to conclude that digital ownership simply does not make sense to consumers. One of the ways the industry has tried to course correct (a race against the clock to figure out the new model until DVD is gone completely) is by introducing Ultra Violet, an authenticated cloud-based locker that utilizes a "pay once, play anywhere" approach. The service--deployed by a consortium of studios, cable companies, device makers and retailers--has managed to attract 800,000 users in the US. While this is certainly not critical mass, it may be an indication that we're on the right track. But are there other levers that could be pulled to give digital sales a jump start? The research arm of private equity trading firm BTIG released an article that suggests that the answer lies in one simple word: price. Their argument is simply that digital files are inherently worth less than DVD. No one seems to be buying HD movies on iTunes for $20 but would they for $10? It's certainly a much more reasonable upsell from the $4 rental customers are considering side by side in the same digital storefront. But is this incremental revenue or further cannibalization of DVD? All fair questions that will only start to be answered as studios and content owners start to push and pull these windows. For example, FOX is releasing Prometheus digitally two weeks ahead of the DVD release at an HD price of $15. Things could start getting interesting.
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