Disney to kill the DVD? You must be taking the Mickey

Disney wants to reinvent the way we own films with a multimedia subscription service.

Last Updated: 31 Aug 2010

Disney is usually seen as the ultimate in traditional childhood fare. But the corporation is, with little fanfare, dipping a toe in the high-tech video on-demand market.  It’s gauging interest in a technology, code-named Keychest, that it believes could be the future of the way we own films.

DVDs have been a core of the Hollywood business model for over a decade, after ousting the equally revolutionary video cassette (remember them?). But DVD sales have dropped off spectacularly of late. Disney’s recent quarterly operating loss - its first in four years – may not be entirely unrelated to this fact.

The problem is that in an increasingly online world, DVDs are more and more out of place. They get scratched, you have to carry them around, you can’t play them on your mobile or i-Pod.  But downloading content online isn’t all that great either – it can be slow, and expensive, and movies take up so much space that they won’t fit on many portable devices.

Keychest gets around these issues by storing the data remotely, say on a cloud server, which you can then access with any device or service, wherever you are. So what you buy as a customer is not a physical copy of Shrek or Pirates of the Caribbean, but perpetual access rights to it. If it sounds like the kind of wizard wheeze that Apple's Steve Jobs might have come up with - well, he probably did. He is Disney's largest shareholder after all.

Rather than downloading a copy onto your computer and your phone, and then separately paying to watch it on pay TV, all three could be taken care of in one simple payment. Assuming, that is, that the relevant companies have all signed up to the scheme.

It’s similar to, if rather more ambitious in scope than, the kind of video on-demand services currently offered by the likes of BT and Virgin. Its appeal to movie studios and other ‘IP owners’ everywhere is likely to be limited to the fact that, with Disney’s name on it, Keychest should have cast-iron Digital Rights Management built in. So they can be sure of getting their rightful cut of the proceeds - however small.

But its killer drawback will also be the difficulty in signing up these crucial participants – many of which are direct rivals and are very unlikely to fancy the idea of Disney being in control of distributing their product.

It also looks suspiciously like just another corporate play to establish a lucrative proprietary system under the guise of an ‘industry standard’. This particular industry has been there several times before and is unlikely to want to go back again in a hurry.

Even that proprietary format king Sony (remember Betamax? the mini-disc?) has learned that it needs to co-operate to innovate these days – its Digital Entertainment Content Ecosystem, the main rival to Keychest, is a multi-party venture between movie studios and tech companies, like Intel.

Both schemes are a long way off yet - Disney predicts around five years for Keychest. Here at MT, we can’t help suspecting that they may both end up consigned to the bargain bucket – surely the rise of the web is supposed to bring an end to corporate control of technology, and put the consumer in charge instead?


In today's bulletin:

Mandy gets it in the neck as Royal Mail goes postal
Green downbeat despite 13% more profit at Arcadia
Obama cuts pay of bailed-out bosses - will UK follow suit?
Disney to kill the DVD? You must be taking the Mickey
Older workers not ready to hit the beach yet, says report

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