DVD99 Shows Hollywood Is Ready To Take On TheMass MarketBy Larry Jaffee

Moving DVD to the next level of wide consumer acceptance was a recurring theme earlier this month at DVD99, the second annual conference hosted at Universal City, California by Miller Freeman PSN and the International Recording Media Association. At last year's meeting, much of the discussion centered on how the format was ripe to take hold, but at that stage it would have been presumptuous to declare a slam-dunk. But the fourth quarter of 1998 removed any question of DVD's fast growth, not to mention future revenue and profit generator for entertainment packaged media in the new millennium. That point didn't escape the Hollywood community, much of which made DVD99 to hear the several dozen experts who have been producing the relatively young medium. It also obviously is already figuring in the operations of the numerous replicators, authoring houses, packagers and other support services in attendance. At final tally, the event had some 900 attendees - nearly tripling the previous year's turnout. ""We're through the early adopter stage,"" pronounced conference chairman Phil Pictaggi, Universal Studios Home Video senior Vice President of Business Development and Operations. ""We no longer need to sell units to retailers and consumers to show that it's a viable format,"" he added. Keynote speaker Ben Feingold, President of Columbia TriStar, provided a brief state of the industry with impressive facts and figures: DVD-Video has a growth rate four time of CD; the 23 million discs produced in the first half of 1999 equaled the entire production of 1998; 10,000 U.S. stores are renting and/or selling DVD titles. IRMA Executive vice President Charles Van Horn cautioned that the industry not get complacent ""and pat ourselves on the back about a job well done...Despite a tremendous lift-off, DVD still has a way to go as far as customer awareness and mass market purchases are concerned.""According to research from the Consumer Electronics Manufacturers Association, ""DVD still has probably no more than a 60 percent awareness level by the general public...So that still leaves 40 percent of the U.S. population having no idea what a DVD is...Even the current customer is in danger of disappearing if he or she sees DVD as nothing more than a movie machine that doesn't record,"" Van Horn advised. He urged the industry's ""creative departments to push the envelope - s long as we recognize that this is not a small LaserDisc or Video CD-ROM, but rather an entirely new entertainment medium."" Van Horn also pointed out that VCRs and VHS videotape aren't going away anytime soon: while 1.3 million DVD players were shipped in the first half of 1999, 10.3 million VCRs, including TV/VCR combos, were shipped during the same period - a 27 percent increase over 1998. But from a content holder's perspective, DVD has allowed Columbia TriStar to bring ""old movies to a new generation,"" said Feingold, citing ""Ghostbusters"" as an example. Considering how DVD and the Internet (i.e., potential for piracy) have put pressure on movie windows, Feingold proposed the simultaneous distribution of a movie in any way that the consumer would like it. He mused whether households with small children would pay a premium to have a first-run movie electronically delivered through a broadband system. ""Everybody in the [packaged] supply chain will have to move faster,"" he said. Feingold's personal vision of simultaneous distribution was surprising given that he works for a movie studio, which usually is opposed to any tampering with the present window structure (i.e., theatrical, home, video, pay-per-view). But in any case, DVD, he noted, has pushed home video product to be simultaneously released for rental and sell-through (at wholesale sell-through prices), which runs counter to the way VHS has evolved over the past two decades. Feingold's home video studio comrades at a following panel session also praised DVD for reinvigorating back catalog. Jeff Fink, Artisan Entertainment president of sales and marketing of home video, said his company has sold 3 million DVD units of 80 releases. Janet Wheeler, Columbia TriStar Home Video director of sales, said the studio will release 85 titles between July 1 and December 31. John Powers, Warner Home Video vice president of worldwide DVD market development, said that the company's research recently showed consumer awareness at 70 percent and intent to buy at 30 percent - very high for a new technology. ""We always viewed it as a collectable business,"" he said. Extras are the key selling point, emphasized Fink. ""We have a sign in our DVD room: ëIt's the features, stupid.í"" Powers noted that ""there is a lot of material [suitable for a DVD] in the Warner archives, but it takes time to go into the vaults and see what's there.""Sandy Friedman, DreamWorks Home Entertainment head of worldwide operations, noted that since DreamWorks is a fairly new studio there isn't a back catalog to tap. Hence, every DVD release is a major event. Friedman played impressive snippets from DreamWorks' forthcoming animated DVD of ""Prince Of Egypt,"" which features a music video that seamlessly switches to the nearly two dozen native languages spoken in the countries where the movie was distributed. Speaking of demonstrations, Mike Mulvihill, New Line Home Video Executive Director of Home Video Production and DVD Development, during an afternoon panel on artistic vs. business decisions, played riveting clips from the feature-loaded (director's commentary, isolated music score) DVD for ""The Corrupter."" He noted that it's usually easier to get access to the cast and filmmakers for new releases, compared to back catalog, because in the latter scenario they're typically promoting a forthcoming movie to the press. Co-panelist Michael Stradford, Columbia TriStar Home Video executive director of DVD marketing and programming, noted that at his studio DVD ""prep time begins as soon as a movie is greenlit."" As far as back catalog he noted that Columbia TriStar tracked down actors Gregory Peck and Anthony Quinn (both now in their eighties) for interviews in a making-of feature for the classic ""Guns Of Navarrone."" In regards to widescreen vs. full picture, consumers interviewed during ""Studio Day,"" when Hollywood studios meet consumers, showed an even preference. So for the time being, when it makes sense, movies will be offered in both ways on the same disc, underscoring the need for higher capacities, as promised by DVD-18. Even though the market in two years has moved much faster than anticipated, Wheeler said there was still a need ""to appeal to a broader market than videophiles."" She urged the industry to focus on added values for consumers, including the ""interactive generation"" and children. DVD interactivity with the Internet was discussed in detail by separate speakers Todd Collart, President and CEO of InterActual Technologies, and Mark Waldrep, President and CEO of AIX Media Group, Inc. Collart noted that one in five of the consumers who purchased the Lost In Space DVD went online to the movies dedicated Web site to take advantage of DVD-ROM features. DVD-ROM is still regarded as something of a Holy Grail in that there's a dearth of software and game titles given the installed drive base already present. Some replicators that ramped up for DVD over the past two years anticipating ROM work are sitting on extra capacity, observed panelist Bob Pfannkuch, Panasonic Disc Services Corp. (PDSC) president and CEO, during the manufacturing session. His observation was echoed by Rick Marquardt, Senior Vice President and General Manager of Warner Advanced Media Operations. IRMA projects that North American DVD-Video replication will total 125 million discs and 165 million worldwide. By 2003, IRMA estimates 450 million in North America and 970 million worldwide. Panelists discussing the game market agreed that DVD-ROM software has been slow coming, but they reported that developers are working on titles that will be released shortly. Bill Rehbok, Vice President of VM Labs, explained his company's Nuon technology that gives a DVD-Video player interactive DVD-ROM-like capability from a remote control. Similarly, Jay Smith of Adrenaline Interactive demonstrated his company's ""TV Mouse,"" a remote control that moves the cursor and direct the action of, for example, a football game. Rehbok noted that there are 16 million hardcore gamers in the U.S., and the best-selling game had sold 7 million copies. He expects DVD-ROMs to be developed for two distinct market segments: the hardcore vs. causal gamer. Guido Henkel, a game producer for Interplay/Black Isle Studios, said he thought that software publishers are yet willing to make the financial risk in regards to DVD-ROM because the market isn't developed enough. The second day largely focused on DVD-Audio - with a primer provided by PDSC General Manager Harvey Mabry, whose company is looking forward to replicating such discs. ""[Listeners] will feel a richer connection to the music than they ever did before,"" said renowned record producer Jac Holzman (The Doors), now of Warner Music, during a producers' panel. Paul Bishow, Universal Music Group's format launch director, said that DVD-Audio will make artists think differently about the way they record music. ""Making-of films will show up on DVD-Audio discs. We'll consider the visual elements as part of the process from the day they step into the studio,"" Bishow said. DVD-Audio will enable labels to provide far more information than currently found in CD booklets: interactive ""bouncing ball"" lyrics, biographies, discographies, links to Web sites and videos, he added. The record companies present representing Warner, Universal and BMG were largely supportive of the potential that DVD-Audio offers, but wouldn't provide pricing specifics or announcements of the first titles available even though the product is expect to hit retail shelves within several months. Mike Fidler, Sony Electronics Inc. Senior Vice President of Home Audio/Video Marketing, provided a hardware viewpoint of players. Of the forthcoming market rivalry between DVD-Audio and Sony's Super Audio CD, which he believes the press has wrongly portrayed as a ""format war,"" Fidler said he hoped ""success will be measured in relative terms rather than absolute."" He added that there's no reason why either or both ""can1t be successful in their own right.""Source: Replication News