DualDisc DVD succeeds where DVD Audio failed

DSN Retailing Today, August 22, 2005 by Doug Desjardins

Try as they might, record labels and retailers couldn't generate much interest in DVD Audio. The DVD music format was lauded for its superior sound but never found much of a following outside of musicians and upscale music fans.

But the DualDisc is turning out to be a different story. The music industry's second attempt to reach millions of DVD consumers is working better than expected, with total sales already exceeding 5 million units just 10 months after it was launched in 2004.

"DualDisc has been around for less than a year and it's already had a major impact on the marketplace," said Bill Frohlich, co-president of Sony BMG Sales Enterprise.

Sony BMG is far and away the DualDisc market leader. The second-largest record label in the world has shipped more than 3.5 million DualDiscs to retailers since the format was launched in October 2004.

To date, the biggest success has been the Bruce Springsteen album Devils & Dust, which Sony released in April as the first title to debut exclusively on DualDisc. It became the first DualDisc to debut at No. 1 on the Billboard charts, with 222,000 units sold in the first week, and reigns as the top-seller with more than 500,000 units sold.

While the other major labels are supporting DualDisc to a lesser extent, they've also scored some major hits. Warner Music saw its Rob Thomas release Something to Be debut at No. 1 on DualDisc as did Universal Music Group with the Nine Inch Nails release With Teeth.

One of the advantages DualDisc has over its predecessor is simplicity. The discs, which have a standard CD on one side and a DVD on the other, can be played in any CD or DVD player. DVD audio discs required consumers to buy a special player.

The other advantage is price, since the DualDiscs cost just a few dollars more than a standard CD. "DVD audio discs were much more expensive than CDs or DVDs and consumers didn't get the value proposition," said Russ Crupnick, music division president for research firm The NPD Group. "With the DualDisc, there's very little price differential and people know what they're getting."

But the DualDisc has had its problems at retail. The most common complaint among retailers is that it doesn't get enough promotional support from the labels when a new disc is released.

"It's only going to be successful if the labels spend money on advertising," said Hastings Entertainment president John Marmaduke during a recent panel discussion on music sales. "If the labels are going to rely on minimum wage clerks to tell customers why the discs are more valuable than a regular CD, it's going to be a tough sell."

For their part, record label executives say they don't receive enough advertising money to promote the new format but are working to resolve the issue, an approach that one retailer said could prove costly in the long run.

"A lot of people question why so many new formats fail and one answer is that it takes a lot of money to get noticed by consumers," said Kevin Cassidy, executive vp of retail operations for Tower Records.