Architect on multiple Hollywood/digital projects for major device manufacturers here, also have interviewed to head SmartTV department for the world's largest TV manufacturer (TCL, in China).

I finished working in this area in 2010 (left it for the digital currency space) but have seen no suggestion of change. In any case, you heard it here last: the problem is definitely the studios and their insistance on completely outmoded, unfair, obstructive regional licensing.

Digital licensing operates as follows. First, digital releases are not a first-class citizen in the Hollywood world. The 'DVD street relase date' for the consumer country in question is the date that everything is calculated from for billing purposes. Multiple periods are then calculated using blocks of days thereafter, during which the wholesale rate offered for a particular item is progressively discounted. Finally, after some period (eg. 90 or 180 days subsequent to DVD street release in that market) the wholesale drops to a base rate 'back catalog' price unique to that item. Netflix and other services basically prefer these titles as they are cheaper to offer.

In my experience, significant ingestion overhead is present for digital service agencies on every single title. This is because they are more often than not supplied in weird formats, under strange licensing restrictions, with restrictive rules on reformatting (eg. crop requirements) and re-encoding though they're not able to be played on most devices up front, and certainly not in the higher-resolution digital formats studio supplied. Very frequently, audio tracks for non-original languages are supplied as non time-synched files separate to the original, as are subtitles.

So to offer an item, not only do you need to front up to the studio, effectively downpay some cash, figure out a revenue share deal, convince them your DRM is adequate, go through this whole process on a per-market basis, figure out the logistics of moving huge files, put up with delays and their frequent insistence to use weird file transfer mechanisms, but you also need to get any edits accredited, manage your own database of client device capabilities (this is more complex than it sounds, resolution is only a minor components versus various codec support (audio/video/subtitles), non-subtitle support (ie. need to rewrite entire video stream with burnt in subtitles in each language), etc. but also get the results approved, uploaded to an adequately wide range of data centers in a DRM-capable distribution network (what? build my own? yeah...), your studio-approved frequently expensive DRM integration sorted, and manage the changing prices on an ongoing basis as delimited in USD but against a revenue share model with constantly fluctuating exchange rates.

Sound like fun? No, it isn't. And you are competing with higher quality torrents people download for free, on or before DVD street release date, in the very first market to ever have the title. That's why nobody does it.

The industry could reap immense additional profits if they'd only drop the control-freak old-school management, normalize and prioritize their digital output, and allow all media consumption to become a low price flat-rate experience at some reasonable post-cinema release date, like +30-45 days. Oh, and drop the DRM and the military police style back-channel raids on New Zealand residents who choose to make a point of their untenable and laughably outmoded outlook.