DVD developing at retail

Discount Store News, Nov 3, 1997 by Laura Heller

DVD--the shiny round object--has

caused a fuss since its inception, but

now, nearly nine months after its much

hyped retail rollout, the latest home

entertainment technology may actually

be living up to expectations.

Within the first six months of the product's introduction,

200,000 DVD players were sold in the

United States, and sales are expected to reach almost

500,000 units by yearend, according to the Consumer

Electronics Manufacturer's Association (CEMA).

More importantly, studios are showing increased

support for the format. More titles are

being made available by an increasing number of

sources each month. DVD detractors are dropping

like flies, and software is finally reaching the

mass market on a national level.

Hardware manufacturers are stepping up production

and promotional campaigns. A slew of advertisers

recently hit the consumer media--TV,

magazines and newspapers--touting

the benefits of DVD and boosting

public awareness of the new format.

For those not familiar with the term, DVD

stands for Digital Video Disc or Digital Versatile

Disc because the format is being used to record

music and computer software in addition to

movies. It offers superior picture and sound quality,

a 500-line resolution vs. VHS' 240 lines, and

can store up to 133 minutes of full-motion video in

a single-layer CD-size disc.

DVD has a host of other options as well. For example,

some movies are viewable in a choice of pan-and-scan

or widescreen formats; or English, Spanish or

subtitled for the hearing impaired. The potential

functions of DVD are far greater than those currently

available, and studios expect to add features to the

software as the technology progresses.

DVD's biggest proponents see it as the technology

that will ultimately replace VHS, Laserdiscs

and CDs. With the advent of DVD-ROM for

personal computers, DVD may actually be the key to

convergence--the Holy Grail that will finally tie

together all home entertainment products.

But DVD had a rocky start. Originally, scheduled

to launch in 1996, the date was pushed back

several times as the format was held up due to

copyright and technical concerns. The viewing

quality of DVD renders each disc essentially a

master. Studios concerned about property rights

and piracy refused to release their product on

DVD until an acceptable encryption system could

be developed and agreed upon.

That finally happened in the beginning of 1997.

A consortium of several studios and hardware

manufacturers hit on an acceptable encryption

system and began with a seven-market regional

test in March. DVD launched nationally in August

and sales have been slow but steady.

As of the beginning of August, 144,451 DVD units

were shipped, according to CEMA. Just how many of

those models were sold to consumers is not known,

but many in the industry anticipate the number to

jump dramatically during the fourth quarter.

Compared to introductory sales of previous "new"

technologies, DVD is doing a brisk business. Home

VCRs were introduced in 1975 but took two years to

achieve sales of 200,000 players. CD players

debuted in 1983 and sold a mere 35,000 during the first year.

According to CEMA,

projected sales of DVD

players may reach 1.4

million in just two

years after the format's

introduction, far

surpassing initial sales

of both VCRs and CD

players, both of which

sold through at just

under 250,000 units in

their first two years.

But DVD will not

reach mass market

penetration until two

things occur: Players

must be brought down

to more attractive

price points for consumers,

and a larger

number of titles need

to be made available.

The criteria are being

met on both ends.

Sony has dropped the

price of one of its

models to $599 from

the "early adopter" model

originally selling for $999, and some

players are now selling for less than $500.

Available software is multiplying rapidly.

Nearly 350 titles are expected to be released by

the holiday selling season.

Warner Home Video is DVD's biggest backer.

President Warren Lieberfarb has worked closely with

the consortium of companies involved in the development

of DVD, the encryption system and national

launch. Subsequently, Warner has been the most prolific

of the studios in releasing titles in the format.

In addition to releasing hit titles day and date

to sell-through with VHS, the studio boasts the

largest movie library in the world and is steadily

converting those films to DVD. At press time, the

studio had approximately 85 titles available in

DVD and continues to add more every month.

Columbia TriStar was another initial proponent of

the format. It has 20 titles in release including such

recent hits as "Jerry Maguire" and "Legends of the

Fall" and will release nine more

through the fourth quarter.

"The Net," "Wolf," "The

Fan," "The People Vs. Larry

Flint" and "Johnny Mnemonic"

all street Nov. 11. Columbia

TriStar will follow up in December

with "My Best Friend's

Wedding," "The Fifth Element"

and "Des Boot: The

Director's Cut '97" on Dec. 9.

"My Best Friend's Wedding" is

the first title Columbia TriStar

will release day and date with

VHS, to be followed by "Air

Force One" on Feb. 10, 1998.