Rumor mill: Amazon in talks to join Ultraviolet, threatening Apple's online content lead

Could Amazon (NASDAQ: AMZN) join the Ultraviolet consortium? According to The Wall Street Journal citing unnamed sources "in the know," the subscription- and transactional-video on demand provider is in talks with at least three studios: Warner Bros., Sony Pictures Entertainment and Universal Pictures.

Ultraviolet provides a "digital locker" to users who can access their entire collection of digital movies and TV series regardless of where they purchased it--as long as the retailer is an Ultraviolet participant. While every major studio except Walt Disney Co. backs the technology, only a few large retailers are participating--among them Target (with its Target Ticket program) and Walmart.

If Amazon, with its large transactional catalog and immense customer reach, joins the consortium, it could change the balance of power in online video sales. Apple (NASDAQ: AAPL) currently holds the lead, 58 percent of the market, through sales via its iTunes service. But that share is down from its highest point in 2008, when Apple held 78 percent of the online movie sale and rental market. WSJ said that Ultraviolet has played a key role in eroding that share.

Right now, Amazon Instant Video customers must use an Amazon app to view their owned or rented content. If the retail giant is able to connect its digital locker to other retailers--and the technology required to do that is a sticking point for some critics of the move--Ultraviolet customers would be able to see all of their Amazon videos in the same "locker" as their other digital content.

Signing Amazon could be a huge bump for Ultraviolet, which has grown slowly and has only about 20 million registered accounts.

"Amazon's participation could boost those numbers. With a market share of 15%, it is bigger than all of the digital retailers currently participating in Ultraviolet combined, according to IHS," the article said.

Bringing Amazon on board may also reduce some of the dizzying complexity in using Ultraviolet that has stymied customer growth, according to The Verge. "Amazon could potentially skip the confusing redemption codes altogether," wrote Chris Welch. "Think of the company's AutoRip program for CD purchases; you buy a physical disc and instantly get a digital copy without having to do anything or even think about it. Apply that formula to Blu-ray and you're onto something."

For more:
- The Wall Street Journal has this story
- The Verge has this story

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