Disney says ‘Keychest’ service still in the works, no interest in UltraViolet

Major movie studios Universal, Warner and Sony Pictures have thrown their weight behind UltraViolet – a legal video locker system that provides those who purchase a Blu-ray movie with a digital copy. The Walt Disney Company, however, isn’t convinced the platform will succeed.

Disney says 'Keychest' service still in the works, no interest in UltraViolet

During an investor Q&A session posted at Seeking Alpha this week, Walt Disney Company CEO Bob Iger confirmed that a 28-day rental delay would become the norm for the company’s new movies and that he hasn’t abandoned the Disney Keychest VOD platform, though admitted he understood why critics may think otherwise.

“We haven’t rolled out KeyChest as extensively as we hoped that we would at this point,” said Iger. “We’re in pretty significant discussions with a number of entities as we have been for a while, but there’s nothing really further to report on that.”

Iger didn’t completely write off UltraViolet, but implied that it would be a poor fit for Disney’s successful roster of films.

“I don’t want to sound too critical, but we’re taking a wait-and-see approach on UltraViolet,” Iger said. “I’m not suggesting that we’re not open minded about it, but so far, I’m not sure that it’s proven to be as robust as we’d expected or as consumer friendly as we had hoped.”

Iger was similarly unsure about what to think of Monday’s surprise announcement that Verizon and Redbox will introduce a new disc rental and streaming service this year. Nonetheless, the executive’s interest was piqued.

“I read the Verizon Redbox article about four times, and I even turned it upside down and sideways, and I’m still not 100 percent sure I understand what they’re offering,” Iger said. “But my sense is that it’s going to be another opportunity for us to sell content to the marketplace.”

Disney support or no, plenty is riding on UltraViolet’s success. Home video sales have fallen by billions in the past decade, with losses expected to continue despite the growth of electronic sales. UltraViolet, which launched last year and was recently upgraded so customers could buy full movies over the cloud, could potentially help remedy the situation if consumers latch on.

According to streaming media expert Dan Rayburn, however, they probably won’t.

Rayburn criticized the recent cloud-based expansion, arguing that the pricing structure proves studios are out-of-touch with mainstream audiences. Failing to meet consumers’ demands for high quality and low cost digital content could spell doom for studios, he said.

“What studio executive thinks consumers are going to pay $22.99 to stream a movie when we can buy the DVD for $7 or rent it for less than $2,” asked Rayburn.

Consumers will no doubt be listening for how Universal, Warner, Disney and others answer. (via Home Media Magazine)