Warner Brothers Unveils New App to Transform Home Entertainment

CNBC.com

Warner Brothers

The way iTunes changed music, Warner Brothers wants to change movies. Today the studio gave me an exclusive look at an entertainment app it's been working on for years - the ultimate destination for people to buy *all* digital movies, not just Warner Brothers'. It's an app code-named 'Digital Everywhere,' and it's set to launch this summer.

'Digital Everywhere' isn't a retailer like iTunes, but rather it gathers all the various ways movies can be bought or rented. It also organizes an individual's entire library of digital movies and TV shows - not just Warner brothers. And it will consumers to access their library from any internet-connected device - a TV, laptop, iPad or smartphone - through a cloud authentication system, called UltraViolet, that will be released this summer from a studio consortium.

Warner Brothers goal is to push consumers to buy instead of rent. The studio's looking to change the proposition of ownership, making owning a digital file more valuable than it is now, when it's stuck on the device where you bought it, and more valuable than owning a DVD, since you don't have to cart it around with you. The studio is eager to drive higher digital sales to compensate for the decline of the DVD business, which fell from $20.2 Billion in US revenue in 2006 to $14 billion in 2010. Now the industry's digital revenues are still relatively miniscule-- just $2.5 billion in the US last year. Needless to say that's not near enough to compensate for physical discs' decline.

'Digital Everywhere' aggregates all available information on a movie - trailers, clips, reviews from Rottentomatoes.com, articles from Entertainment Weekly, and release schedules. Plus it includes all the film and actor data like you'd find on IMDB and Box Office Mojo. And the app organizes everything consumers have purchased. It brings DVDs, the movies on a hard drive, digital films from iTunes, Netflix queues, and eventually digital Amazon purchases, into one easily-sortable library.

The app also makes it easier to find a movie - gone are the days of searching multiple services to find what you want. Just open the app, and type in a movie name, browse the thousands of titles, or search by genre. When you click on a title it shows you all your options - rent or buy a digital file from iTunes, buy a DVD from Amazon, stream it on Netflix or add it to your Netflix queue. Eventually Warner Brothers plans to add a range of other options - rent or buy a digital file from Amazon, or even DVR a movie by clicking to your cable provider's upcoming schedule.

'Digital Everywhere' aims to drive sales by organizing and aggregating your library and making it accessible from everywhere, but it also expects social sharing to drive new revenue. The app integrates Facebook - letting you share recommendations with your friends and see what they're watching or like. It also has a remarkably comprehensive recommendation engine - if you link all your accounts to the system, it calculates suggestions based on a combination of everything you've watched on Netflix, your entire library, and how you've rated films.

So why is Warner Brothers creating an app that will help the rest of the industry ? The studio has a lot on the line with the biggest home entertainment marketshare of any studio, 20 percent. And the studio and its home entertainment chief Kevin Tsujihara, have a history of industry leadership. Tsujihara pioneered releasing Video-on-Demand the same day as DVD releases he's credited with ending the high-def format battle. And thanks to him, Warner Brothers is the first and only studio to rent movies on Facebook.

How can Warner Brothers get away with linking to content from its rivals? As long as consumers plug in their username and password for the likes of iTunes and Netflix it's just aggregating your information, along with a ton of public information, from across the web.

The app is going into beta testing soon, and should launch within a few months. We'll be watching to see how movie fans respond, whether other companies (like cable giants like Comcast ) get on board, and whether it does seamlessly integrates into the cloud. If it does, this could really be a game changer for Hollywood's home entertainment business.

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