Unlimited potential

Post, Dec, 2004 by Matthew Armstrong

DVD is like the snowball rolling down the mountain, gaining momentum and getting bigger with every rotation.

If the rush by studios to get their popular older titles--both film and television--was not enough to supercharge the market, well then let's just bring the music labels into the mix with dual CD/DVDs, add an HD DVD format (or two?) and there's nothing on the horizon that is going to halt this avalanche in the foreseeable future.

JEFF STABENAU

President

Blink Digital

New York, NY

(www.blinkdigital.com)

STRENGTHS: "TV. It was huge this year and it will be next year as well. Anything that had a life on TV in the last 50 years will make it out on DVD at some point. That's generating a lot of sales and helping to push the market to a new level. We're doing a ton of television and I know everyone else is also."

WEAKNESSES: "It's hard to point out a weakness in the DVD market. There's definitely softness in the market in music DVD. Music DVD sales are up but there was so much consolidation in the market with Arista and Elektra being absorbed, Warner Music being sold, executives switching companies, that it impacted the amount of content that is being developed. So year to year sales are going up, but not as much as it could be."

OPPORTUNITIES: "HD and music dual-disc CD/DVDs. 2005 will be a big year for these new formats and they will have a chance to prove themselves. I don't know how it will turn out but HD DVD will be introduced in some form in 2005 and the dual disc will get a solid introduction. It will be up to consumers and others to decide if that works. I'm not sure how successful they will be. Dual disc has a huge opportunity because that is, in a way, a consolidation of formats. It's trying to resolve the issue of having CDs and bonus DVDs, and turning them into a single product. It will also distinguish itself from downloadable content even more. That has widespread support among the labels and they all will be releasing dual discs."

THREATS: "The competing HD formats are definitely a threat to the rollout of HD DVD. Studios will be reluctant to support a technology that has competing formats. Sony and Toshiba both are pushing their formats, and they are both similar, they both rely on the same MPEG compression technologies and it wouldn't make much of a difference to consumers, but it's one of these corporate battles. Studios may be reluctant to invest until the format gets decided.

"But generally DVD is not like other industries where there is a big danger of it being replaced."

OUTLOOK FOR 2005: "Post continues to evolve with less expensive solutions. A dual-processor G5 today competes with SGI platforms of a few years ago. So that enables artists to own their own equipment and open their own three person shop, and that has impacted the market and will continue. On the higher end, the cost of storage has gotten so low that digital intermediaries has become a viable working solution for bigger projects."

DAVID WEISSMAN

General Manager

Video Arts, Inc.

San Francisco, CA

(www.vidarts.com)

STRENGTHS: "The strength for us, and even the newbies, is that since the market is in a mature phase there are a lot of people that are willing to share their knowledge and there are good resources. It's a different culture than it was. In the late '90s the DVD authoring culture was kind of secretive. People that worked in the market at that time were reluctant to share what they knew. Now people are willing to share what they know. We have strength from having done it for a while and making mistakes and learning. New people in the business that are willing to learn from the veterans can take advantage of that."

WEAKNESSES: "New service providers in DVD have a lot of advantages in that they can buy powerful authoring software at a low cost. But their disadvantage is that they don't know the software they buy doesn't give them all the advantages that they will need or that their customers will require of them. So that puts them at a disadvantage because they're just learning how DVD players work. There's an assumption by the newbie in the market that all players behave the same. Unfortunately that's not true."

OPPORTUNITIES: "A new market has emerged in the past three years--retail point-of-purchase DVD. Creating DVDs to be seen in large chain stores in the US. Also, the growth in episodic television. We do a lot of Japanese anime. We do Pokemon DVDs. You have to shove a ton of content on a disc with five to 15 episodes on a disc so the discs, in effect, act as babysitters. The other market is the music video/music documentary market--retrospective of a band, concerts and interviews. Accessible DVDs for people with disabilities: these have talking menus, so as you use the remote a voice calls out the name of the button to tell what it does.

"We're eagerly awaiting HD DVD. We're hoping there will be one standard, though we're not very optimistic about that. HD DVD will, for a time, fend off the possibility of Internet delivery."

THREATS: "New service providers. The first wave of new companies entering the DVD market already hit us over a year ago with DVD Studio Pro, in particular, hitting the market. We're still going through a transitional phase where there are tools that are cheap and accessible, and it becomes more difficult for clients to differentiate between service companies. They see everyone using the same tools and if they don't know what they need in a DVD and how important it is for the DVD to behave properly in all players, they may think that everyone is using the same software and anyone can do it. We started facing that over a year ago. We had some clients taking that capability in-house. It's similar to what was faced with desktop editing when Avid and Media 100 came out and there was a challenging transitional phase, but there was a recognition that it's more than just the equipment, it's the creativity, technical chops and experience in producing these projects. It's not how much money you have to pay for your equipment but how good you are at doing a task. It's not that easy a thing to present--that you are better at doing something than someone else. You have to get the opportunity and demonstrate it.