DVD begins long road to acceptance

Discount Store News, August 4, 1997 by Robert Scally

The first real effort to transform DVD from a good idea into a viable mass market product was launched at this year's Video Software Dealers Association convention that took place in Las Vegas July 8 to 12.

Home video formally entered the digital age this past March with the introduction of the digital video disc (DVD) format in seven test markets.

As this year's VSDA convention got underway, Warner Bros. Home Video and a consortium of hardware makers announced that they would expand distribution of digital video disc (DVD) players and software beyond the seven test markets where the format premiered.

Using the VSDA as a backdrop, Universal Studios Home Video became the most recent major player to announce that it would begin selling its films on DVD.

Walt Disney Co.'s Buena Vista Home Video, Twentieth Century Fox Home Entertainment and Viacom's Paramount Home Video have yet to announce plans regarding DVD.

Buena Vista, Fox and Paramount executives have remained mum on the issue of DVD.

Talk swirled about the convention concerning Zoom TV, a term that is actually a code word for a DVD-based video rental scheme being developed, in part, with the reported cooperation of Circuit City. Several Hollywood studios have allegedly shown an interest in Zoom technology as an alternative to the video rental market.

The concept of the Zoom technology itself has been kept under tight secrecy by its developers, and just a few sketchy details of how it would work have emerged. The Zoom format would use a version of DVD technology to allow films on disk to be locked or unlocked either temporarily or permanently depending on if the consumer is renting or purchasing the title.

The dawn of the digital age for home entertainment is forcing some very important issues to the forefront that retailers, movie studios and consumer electronics manufacturers will have to face. So far, fewer than 1 million DVD players have been sold, and the format still faces a long road to mass market acceptance.

Most observers of the consumer electronics and home entertainment industry agree that no one can afford another format war that confuses consumers.

"The success of DVD all depends on marketing," said Leonard Maltin, film and video critic for "Entertainment Tonight" and author of a popular guide to the movies.

If the studios and the consumer electronics firms don't handle marketing the new format properly, the format will not succeed with the average consumer, Maltin said.

A format war would be disastrous, he added. "Everybody remembers VHS and Beta." But DVD has more going for it than many other consumer electronics formats, industry experts said.

DVD has the advantage of also being an excellent medium for computer data storage, DVD players can also play the current generation of audio CDs and will be able to handle high-capacity audio disks that will most likely become the standard if the format succeeds.

The entry-level base price for a DVD player currently hovers around $499, far lower than initial hardware prices for the early generations of VCRs, audio CD players and home computers.

The quality of DVD is also stunning compared with VHS.

Maltin believes DVD is a superior medium. "My daughter and I did side-by-side comparisons with laserdisc, VHS and DVD, and the difference was remarkable."

The initial price point is likely to fall rapidly into the $299 to $350 range, causing a rush to the format that could create an installed base of several million players in three to four years.

Russ Solomon, president of the Tower Records/Video chain said that he sees the conversion to DVD from VHS as the preferred home entertainment medium will be more rapid than the conversion to audio CDs from vinyl record that took place in the late 1980s.

Best Buy's video merchandise manager Joe Pagano said that the rollout of DVD in the four months leading up to the VSDA convention had been the strongest he's seen compared to other types of new technologies and formats.

Wal-Mart has also given DVD a chance, carrying the format in about 82 of its stores during the seven-city limited rollout.

But critic Maltin and other pundits pointed out that, no matter what, VHS isn't going to disappear overnight the way 12-in. vinyl LPs did. He explained that the industry failed to get behind laserdisc, a disc-based format with superior picture quality to VHS tapes, and the format has a consumer base of only about 2 million players.

"It's been pretty poor," Maltin said. "Before you get 70 million or 80 million VCR owners out to take a chance on a new format, you're going to have to convince them its better than what they already have."

Some home video industry executives said privately that they think some of the expectations for DVD are overblown.

One exec at a major studio that is promoting DVD agreed with Maltin that VHS will not be going away anytime soon.

The executive said that he thought it would be optimistic to say that 12 million DVD players would be on the market in three years.

Despite the hoopla over new technologies, the Hollywood studios are still concentrating on extending their lines with high-margin catalog and direct-to-video offerings. Building big brand-name home video events that generate retail traffic is still a top priority for the major studios, and the medium of chose is still VHS.