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Obstacle to on Demand DVDs Removed

locked_cd.jpgDownload a movie from any download service and chances are, you can’t burn it onto a DVD, at least one that will play on any machine (e.g. your home DVD player).  It’s a matter of copyright protection.  Store bought DVDs are encrypted with what is essentially a digital padlock called a Content Scrambling System (CSS).  Your home DVD player was manufactured with the keys.  Your computer, similarly equipped to unlocking the file when it comes to playing a movie, doesn’t have the tools to make a lock of its own.   That may soon change.

Thursday, the DVD Copyright Control Association (DVDCCA), a trade association that oversees these issues, agreed for the first time to begin licensing the encryption technology to consumer device makers.  Consumers will benefit from this change but the biggest beneficiaries are the many movie download services currently dotting the Internet.  From CinemaNow to Amazon’s Unbox, to iTunes to Netflix, all stand to gain with this roadblock to their advances removed.

Soon, a consumer will be able to download a movie to their computer and watch it in any room, or any player, in their house.  DVD’s burned for “backup” won’t be limited to use just on the computer.  Consumer’s also won’t need to have a cumbersome connection of computer to TV, or be forced to watch their purchase on their computer screen.  This change could really help push growth for online services from Netflix and Blockbuster (whose bargain purchase of Movielink could now prove a great buy), or Apple’s iTunes rumored rental plan, as well as the various retailers.

The change could also have a marked impact on traditional “brick and mortar” retailers too; and not just from potential lost DVD sales as the market shifts online. Instead, the move also brings with it the possibility of a new business model capable of replacing some of the revenue that might be lost to downloads.   More specifically, allowing this technology to be licensed means kiosks or in-store print-on-demand DVD services could become economically viable.  Imagine, a kiosk inside Best Buy has a library of 20,000 films stored on its hard drives (or accessible via its network connection).  You push a button, wait a few minutes and the machine burns you your DVD. 

With the premium placed on shelf space, retailers are often limited in the titles they can display.  The idea of these kiosks would apply the long tail of the Internet to in-store DVD sales.  Out of Print or hard to find titles could become a thing of the past.  Best Buy, or WalMart or Target could sell a far vaster catalog of titles than presently available.  They could reallocate shelf space to other high margin items but not lose the DVD market.   You could order online and pick up at the store even. It’s a concept of print-on-demand not dissimilar from what HP is working on in Sacramento (which was  profiled here on Metue).  Now, however, it could go from a model built around behind the scenes manufacturing to in-store use.  That’s a compelling market proposition.  With the new licensing changes it could be a reality in the not too distant future.

Back to consumers, and download services for home use, many computer DVD burners may require upgrades to support new changes.  It could also be a while before license deals are formally structured; both with regard to the Copyright Control Association and the content owners themselves.  Still, the stars are aligning for change.  Print-on-demand DVD’s and downloadable movies could become far more prominent in the not too distant future.

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