Hollywood’s content ecosystem moves a few steps closer to launch

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The Digital Entertainment Content Ecosystem, an inter-industry effort to set open technical standards for selling movies and TV shows online, announced yet more incremental progress today. The group disclosed that it had settled on a common file format (a version of H.264), chosen a company to build a crucial online storage service (Neustar) and settled on five DRM technologies (from Adobe, Intertrust, Microsoft and Widevine, plus the mobile phone industry’s OMA V2). Oh and yes, it announced a whole bunch more participants. The group now includes every major Hollywood studio except Disney, all the major consumer electronics and cable set-top manufacturers, a few top PC and mobile-phone companies (but not, ahem, Apple) and a couple of big retailers (Best Buy and Tesco).

The technical accomplishments announced today were necessary but not sufficient for DECE-compliant products to start rolling out. DECE President (and Sony Pictures exec) Mitch Singer said in an interview that the group still has to ‘finalize’ its specifications, a process that he expects to be completed ‘in the next few months.’ No disrespect to Singer, but based on the DECE’s efforts thus far, I wouldn’t be surprised if a few months stretches into next year.

And that’s the problem. DECE is trying to make legitimate digital distribution more appealing than it is today, and more competitive with illegal sources online. Its goals are compelling -- enabling people to watch the videos they buy anywhere they go, on any device they own -- but they’re predicated on a couple of assumptions that seem to be losing validity with each passing day.

First, the DECE system seems geared toward increasing the sale of downloadable movies by improving the value proposition (both for the consumer and the retailer). And it certainly would do that for people who have multiple DECE-compliant devices -- for example, an Internet-connected Blu-ray player, a laptop and a WiFi-enabled portable video player. But those same devices can make their owners less interested in owning movies and more interested in streaming them on demand from a well-stocked online library. The only advantage that ownership conveys today over renting is that some studios delay their online rentals for a few weeks. That’s not much of an advantage. Throw in the possibility of paying a flat monthly fee for viewing all you can stream, as Netflix does (albeit with a smaller selection of movies), and the incentive to buy a title drops even further.

It’s worth noting that the number of movie rentals far outstrips the number of purchases, and that the former is rising slightly while the latter is trailing off. Check out this year-end report from Adams Media Research (courtesy of Variety’s VideoBusiness.com) for the 2009 numbers. That’s despite the fact that the online side of the home video business is still in its infancy.

Second, with Disney pursuing an alternative approach and Apple not interested in joining, DECE can’t offer a comprehensive service. That makes the pitch more, err, nuanced -- ‘Watch most of the movies you buy, on most of your devices!’ isn’t exactly a stirring call to action.

The best hope for DECE is that it is already headed toward widespread availability based on the individual efforts of its members. For example, DivX and the tandem of Widevine and Sonic’s CinemaNow already offer many of the benefits that DECE promises. When DECE’s specs are settled, it will be easier for other companies to build on the pieces that DECE members have assembled on their own. And some enterprising company may devise a way to translate the infrastructure the DECE is building into a great on-demand video service that capitalizes on impulsive demand as well as Redbox does. But if the raison d’être for DECE is to persuade people to spend five to 10 times as much to buy a title as to rent one, it may already have run out of time.

Illustration courtesy of the DECE website.

-- Jon Healey

Healey writes editorials for The Times’ Opinion Manufacturing Division. Follow him on Twitter: @jcahealey