Tuesday, May 8, 2012

Returning to Wal-mart to try the Disc to Digital conversion to Vudu again

Since I visited Walmart previously on the day they first opened their service, I thought I would give them a few weeks to work out the kinks and try again.  I also thought I would test my own theory that I put forward in several blogs (What is holding back digital sell-thru?, Converting your physical disc library to a digital locker).  The short summary of that discussion was that if I had the supposed average 80+ titles in my library as the average consumer, I would find that only 75% would be available on Netflix (reducing the need to purchase) and of the remaining 25%, half would not be available for conversion on Walmart / Vudu.

So what happened?

Well, it turns out I have more than the 400+ titles I thought I had previously.  I have 525 titles in the house (not your average consumer).  Even at $1 a title, I am not willing to pay $525 to have access to this whole library digitally.  So I went thru a fast filtering process:  Would I watch this movie more than 1 more time (ie 1x per year)?  It meant the real "keepers" (for my household) were cult-ish fan movies (Matrix trilogy, Lord of the Rings, Batman, the Marvel Avenger series, Mission Impossible, etc), kids movies (mostly Disney and DreamWorks titles), holiday classics (Home Alone, Christmas Vacation, etc), and classic comedies (The Blues Brothers, Eurotrip, American Pie, Austin Powers, etc).

I came up with 170 titles (32% of my catalog) I thought were worth spending the money on converting to digital under the premise that I would watch them more than 1 more time (otherwise, I would rent since we know the average cost will be $3.50+ per title to convert and renting is not much more and is money spent later when I will watch it instead of now when I might watch it in the future).

Then I started determining which titles I would convert to Vudu / UltraViolet.  While I know that titles move in and out of availability on Netflix, I don't think the average consumer understands that at all.  So my simple logic was that if it was available on Netflix, I would not convert it to digital at Walmart.  I was shocked (and even double checked my process) that only 18 of 170 titles were available on Netflix (11% of the 170 chosen titles).  Netflix losing the Starz catalog (which covered many Disney titles) is a bigger loss than I think was anticipated by all.  In an article in February (a few days before the change), Netflix said they would replace all but 15 of the Disney titles.  That certainly does not appear to be the case as just about every kids' DVD title I have (the stuff they watch over and over again) from Disney and from the other studios is NOT available on Netflix.

While the numbers for UltraViolet / Vudu were higher than Netflix (68 of the 170 keepers or 40% of the target), it is no where near large enough to encourage wholesale consumer adoption at any price point.  Clearly, the desire to have the kids titles, driven mostly by Disney titles, was the biggest contributor to the loss here (probably 20+ titles), but there were also numerous other non-studio titles missing (eg the BBC contributions like Blue Planet, Walking With Dinosaurs, etc).

So I chose 30 of those 68 title (some were available on Netflix, some I just re-filtered) and went to Walmart.  I had high expectations because Vudu made a new feature available online where you can check the title availability and then print the list and take it with you to Walmart which then in turn saves them the data entry process--in theory speeding the whole process up dramatically.  The experience was unfortunately worse than it was on April 16th.  The sweet lady who last time had so much patience was out of it entirely.  I still had to fill in a form--she could not explain why, but rather gruffly told me I had to do so.  I didn't have to re-enter all of the titles, luckily.  We then went thru the list title by title, checking that each of the discs was available and ran into our first major problem--one of my Austin Powers discs was missing.  I said no problem, just remove it.  She said quite adamantly it was not possible.  I asked what my options were and she said I could get management over here, but there was nothing she or any of them could do as the system would not let them remove anything--I was told to go home and find the disc or come back with a new list.  Refusing to be defeated, I let another customer go before me and thought about how they had designed this process.  The printout was itself not material--it was the saved catalog in my account they were accessing.  I pulled out my iPhone, logged into the Vudu site and removed that title from my list.  I didn't print it (I was in the store after all), but she was able to check that it was in fact out of her view of the title list.  Problem solved.

Then we hit the second major snag.  The system in their photo processing center had to print a label to be attached to the paper work before she could ask for my credit card and then stamp my discs.  But that same label maker was constantly being accessed by the photo center as orders from their on-line photo service came in and it printed labels for their pickup.  It kept failing to access the label maker (timing out each time) and took nearly an hour to get thru (after 20+ attempts from the attendant).  When it finally printed the label, her colleague was able to stamp all of the discs, take my credit card, and send me on my way.


After 30 minutes in the car and 90 minutes in the store, I only ended up with 26 DVDs converted (I had to pull 3 before I left because they were suddenly not available on the Walmart list and had the 1 missing disc).  I paid $121 or an average of $4.65 per title for the right to access those titles digitally (streamed to my PS3 or iPad) presumably anywhere in the US.

If the average consumer has 80 titles in their library and filters in a similar manner, they would be faced converting 25 titles and likely finding 10 of them available for a cost of $47.

The conclusions for the industry and the consumer:

  • I just think getting the consumer to fork over $47 for 10 titles they already own for the pleasure of watching them streamed to the iPad is going to be a challenge.  Why not encourage them to spend the level, but for 50 titles (an offer for $1 per conversion at 50 or more DVDs)?  That builds a digital library.
  • College-aged kids (with more time than money) are going to rip DVDs vs. spending 2 hours in Walmart and $47.  If the become a target demographic, something different needs to be done.
  • The studios seem to have reduced the premium title availability at Netflix pretty effectively.  It looks like Netflix is negotiating for strong titles shortly after they are available, but then letting them leave their library 6-12 months later.  
    • This is good for the studios because it creates a reason to purchase digitally, but will not work without signficant education efforts (ie marketing).  
    • This also spells DOOM for Netflix if the education to the consumer works.  It truly means Netflix is a late window video service full of titles that may have once been "A" titles, but have little long term value.  Said differently, it is a service to use when watching something, almost anything, is better than trying to find that same poor content on your cable provider's channel listing.
  • Walmart clearly needs to improve the actual service itself.  I should be able to drop off my DVDs in a box/bag with the list, shop in their store for 20 minutes, and return.  Having to wait at the counter for 90 minutes is a definite service failure that needs to be addressed.
  • Walmart or Amazon should promote a DVD catalog service (iPhone app with bar code scanner) that allows me to track what I do have in my catalog (some independent ones exist for the iPhone, Amazon has the inklings of this service on their website).  It would provide the consumer with a service capability so that I am not renting a title I already own.  It would provide the merchant with an opportunity to tell me when it becomes available for conversion.  It could provide recommendation and discovery engines with valuable seed data to improve the recommendations for watching new content.
  • Ultraviolet needs to drive a consistent consumer experience across all titles (HD availability, streamed or downloaded to a core set of devices including the iPad and several TV service options). 
The real question.  Will others join this service option (Amazon for example)?  Will Apple develop something similar (with their ability to nail the service with simplicity)?

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