Jon_Are
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I ran across this article which was written in September, 1998. Very interesting reading; pretty much all of the quotes proved to be accurate.
DVDs Catch On (but Don't Junk the VCR Yet)
By Bruce Orwall - Staff Reporter of The Wall Street Journal
Digital videodisks, the long-heralded "next-generation" technology for watching movies at home, are coming of age.
The size of audio compact disks, DVDs are touted by many as superior to videocassettes and videocassette recorders. But DVD virtues - most notably, a sharper picture - were initially clouded by technological and and political hurdles, including the reluctance of movie studios and video retailers to in any way injure the videocassette cash cow.
Now, a year after the disks' national rollout, studios, retailers and video dealers are warming to DVD. The reason: Just as the videocassette market is showing signs of maturity, DVD is growing more quickly than expected. And after making a strong showing with so-called "early adopters" - the hard-core movie and technology buffs who are always eager to try something new - there are signs that DVD is making inroads with mainstream consumers.
Michael Johnson, president of Walt Disney Co.'s powerful home-video unit, thinks DVD is more than just another new niche product. And Warren Lieberfarb, president of Time Warner Inc.'s Warner Home Video, says, "The vital signs are strong." Time Warner helped develop the DVD technology, and its Warner Bros. unit has been the format's strongest backer.
One significant step for DVD is scheduled for today, when Viacom Inc.'s Blockbuster unit plans to announce the national rollout of a new program to rent movies in the DVD format, for the same price as renting a videocassette. Blockbuster will also begin renting DVD players provided by Philips Electronics NV, giving consumers a chance to try out the machines for five nights at a cost of about $14.99. Blockbuster says the program will be introduced in about 500 of its 3,400 stores.
Jim Notarnicola, Blockbuster's chief marketing officer, says the chain hopes to be a catalyst in moving the DVD format into the mainstream. The ability to rent DVDs is seen as critical to gaining widespread acceptance; to date, most people have seen DVD as a movie format that consumers buy, rather than rent.
Notwithstanding its DVD enthusiasm, Blockbuster isn't eager to hasten the demise of the stalwart VCR. Nor will that happen anytime soon. For all the attractions of DVD - including a feature letting viewers jump to any point in the movie with the click of a button - DVD players can't record TV programs, and models that can record are still several years away.
DVD made its debut in seven test markets in March 1997 before going national. In all, about 500,000 DVD players have been sold to consumers in the U.S. so far, and DVD backers expect that to rise to nearly 800,000 by the end of the year. Shipments to retailers should top one million by the end of 1998. Both figures compare favorably with the earliest years of compact-disk players and VCRs.
Sparking the growth has been a drop in the price of DVD players and wider availability. Hardware prices have now dropped as low as $299. Meanwhile, mass-market discount retailers like Dayton Hudson Corp.'s Target stores, Kmart Corp. and Wal-Mart Stores Inc. are expanding their DVD hardware offerings this fall, giving rise to hopes of a strong Christmas season.
Steve Birke, vice president and general merchandise manager for Target, says that chain began carrying DVD in all 800 of its stores on July 1. "I don't think it's a short-term fad, I think it's a long-term trend," he says. He is expecting a strong holiday season for DVD but adds that "it's got to hit that magical $199 price point" to truly catch on.
Also contributing to the momentum: All the major studios except start-up DreamWorks SKG have finally agreed to issue movies on DVD - and DreamWorks is expected to announce its DVD imminently. The last two major holdouts, Viacom's Paramount Pictures and News Corp.'s Twentieth Century Fox, both agreed to participate in DVD this summer.
Altogether, about 2,000 movie titles will be available by the end of the year, up from about 1,750 now. They can typically be bought for about $19.99 per title; some are already priced at $14.99, though, and many may drop to $10.99 in the not-too-distant future. Best Buy Co, which sells both hardware and software, sells a robust 30 software titles for each hardware unit, says Joe Pagano, vice president of merchandising for movies and music.
There are still stumbling blocks in Hollywood for DVD. Not all studios are releasing films on DVD simultaneously with their release on videocassette. Paramount Pictures sent box-office king "Titanic" sailing into the home-video market last week without a DVD offering, and so far there are no plans for one.
At Twentieth Century Fox, Patricia Wyatt, consumer-products president, says that studio announced its entry into DVD last month because the format appeared to be reaching a "critical mass." But Fox is being very cautious, not wanting to drain business from videocassettes. "I think we need to look carefully at the dynamic between the two formats," Ms. Wyatt says.
Many of the movies that aren't yet available on DVD are exactly the titles that people build movie collections around. Steven Spielberg, director and producer of some of the biggest movies ever made, has blocked the release of most of his films on DVD. A spokesman for Mr. Spielberg says he is waiting for the market to mature.
Disney plans to show its faith in the DVD format later this year when it hopes to release its summer hit "Armageddon" on DVD and videocassette simultaneously. Disney will also offer a DVD version of "Beauty and the Beast: The Enchanted Christmas," a made-for-video sequel to the original animated hit. But Disney's Mr. Johnson says the company's animated classics won't be released on DVD until the format achieves broader market penetration.
A remaining wild card is Digital Video Express, or Divx, a videodisk format developed by electronics retailer Circuit City Stores Inc. and a Los Angeles law firm.
The Divx system, like DVD, comprises a player and discs. But under the Divx system, a customer wanting to see a movie pays $4.49 for an encrypted disk that can be played for 48 hours beginning with the first use; after that period, encryption resumes. If the viewer chooses, the disk can be recharged permanently, via modem, for an additional charge. While Divx's encrypted disks can't be played on a DVD player, DVD disks can be used with a Divx player.
Divx's national rollout is a month away, but there are signs that its start will be rocky. For one thing, the Divx partnership is late in raising $100 million in financing for the next year of development and operations. For another, industry insiders are saying that results in two test markets - San Francisco and Richmond, Va. - aren't encouraging.
Nevertheless, a Digital Video Express spokesman says the company is convinced its product will be a successful complement to DVD. He declines to discuss specifics concerning the test markets but says the company is pleased with the results.
DVDs Catch On (but Don't Junk the VCR Yet)
By Bruce Orwall - Staff Reporter of The Wall Street Journal
Digital videodisks, the long-heralded "next-generation" technology for watching movies at home, are coming of age.
The size of audio compact disks, DVDs are touted by many as superior to videocassettes and videocassette recorders. But DVD virtues - most notably, a sharper picture - were initially clouded by technological and and political hurdles, including the reluctance of movie studios and video retailers to in any way injure the videocassette cash cow.
Now, a year after the disks' national rollout, studios, retailers and video dealers are warming to DVD. The reason: Just as the videocassette market is showing signs of maturity, DVD is growing more quickly than expected. And after making a strong showing with so-called "early adopters" - the hard-core movie and technology buffs who are always eager to try something new - there are signs that DVD is making inroads with mainstream consumers.
Michael Johnson, president of Walt Disney Co.'s powerful home-video unit, thinks DVD is more than just another new niche product. And Warren Lieberfarb, president of Time Warner Inc.'s Warner Home Video, says, "The vital signs are strong." Time Warner helped develop the DVD technology, and its Warner Bros. unit has been the format's strongest backer.
One significant step for DVD is scheduled for today, when Viacom Inc.'s Blockbuster unit plans to announce the national rollout of a new program to rent movies in the DVD format, for the same price as renting a videocassette. Blockbuster will also begin renting DVD players provided by Philips Electronics NV, giving consumers a chance to try out the machines for five nights at a cost of about $14.99. Blockbuster says the program will be introduced in about 500 of its 3,400 stores.
Jim Notarnicola, Blockbuster's chief marketing officer, says the chain hopes to be a catalyst in moving the DVD format into the mainstream. The ability to rent DVDs is seen as critical to gaining widespread acceptance; to date, most people have seen DVD as a movie format that consumers buy, rather than rent.
Notwithstanding its DVD enthusiasm, Blockbuster isn't eager to hasten the demise of the stalwart VCR. Nor will that happen anytime soon. For all the attractions of DVD - including a feature letting viewers jump to any point in the movie with the click of a button - DVD players can't record TV programs, and models that can record are still several years away.
DVD made its debut in seven test markets in March 1997 before going national. In all, about 500,000 DVD players have been sold to consumers in the U.S. so far, and DVD backers expect that to rise to nearly 800,000 by the end of the year. Shipments to retailers should top one million by the end of 1998. Both figures compare favorably with the earliest years of compact-disk players and VCRs.
Sparking the growth has been a drop in the price of DVD players and wider availability. Hardware prices have now dropped as low as $299. Meanwhile, mass-market discount retailers like Dayton Hudson Corp.'s Target stores, Kmart Corp. and Wal-Mart Stores Inc. are expanding their DVD hardware offerings this fall, giving rise to hopes of a strong Christmas season.
Steve Birke, vice president and general merchandise manager for Target, says that chain began carrying DVD in all 800 of its stores on July 1. "I don't think it's a short-term fad, I think it's a long-term trend," he says. He is expecting a strong holiday season for DVD but adds that "it's got to hit that magical $199 price point" to truly catch on.
Also contributing to the momentum: All the major studios except start-up DreamWorks SKG have finally agreed to issue movies on DVD - and DreamWorks is expected to announce its DVD imminently. The last two major holdouts, Viacom's Paramount Pictures and News Corp.'s Twentieth Century Fox, both agreed to participate in DVD this summer.
Altogether, about 2,000 movie titles will be available by the end of the year, up from about 1,750 now. They can typically be bought for about $19.99 per title; some are already priced at $14.99, though, and many may drop to $10.99 in the not-too-distant future. Best Buy Co, which sells both hardware and software, sells a robust 30 software titles for each hardware unit, says Joe Pagano, vice president of merchandising for movies and music.
There are still stumbling blocks in Hollywood for DVD. Not all studios are releasing films on DVD simultaneously with their release on videocassette. Paramount Pictures sent box-office king "Titanic" sailing into the home-video market last week without a DVD offering, and so far there are no plans for one.
At Twentieth Century Fox, Patricia Wyatt, consumer-products president, says that studio announced its entry into DVD last month because the format appeared to be reaching a "critical mass." But Fox is being very cautious, not wanting to drain business from videocassettes. "I think we need to look carefully at the dynamic between the two formats," Ms. Wyatt says.
Many of the movies that aren't yet available on DVD are exactly the titles that people build movie collections around. Steven Spielberg, director and producer of some of the biggest movies ever made, has blocked the release of most of his films on DVD. A spokesman for Mr. Spielberg says he is waiting for the market to mature.
Disney plans to show its faith in the DVD format later this year when it hopes to release its summer hit "Armageddon" on DVD and videocassette simultaneously. Disney will also offer a DVD version of "Beauty and the Beast: The Enchanted Christmas," a made-for-video sequel to the original animated hit. But Disney's Mr. Johnson says the company's animated classics won't be released on DVD until the format achieves broader market penetration.
A remaining wild card is Digital Video Express, or Divx, a videodisk format developed by electronics retailer Circuit City Stores Inc. and a Los Angeles law firm.
The Divx system, like DVD, comprises a player and discs. But under the Divx system, a customer wanting to see a movie pays $4.49 for an encrypted disk that can be played for 48 hours beginning with the first use; after that period, encryption resumes. If the viewer chooses, the disk can be recharged permanently, via modem, for an additional charge. While Divx's encrypted disks can't be played on a DVD player, DVD disks can be used with a Divx player.
Divx's national rollout is a month away, but there are signs that its start will be rocky. For one thing, the Divx partnership is late in raising $100 million in financing for the next year of development and operations. For another, industry insiders are saying that results in two test markets - San Francisco and Richmond, Va. - aren't encouraging.
Nevertheless, a Digital Video Express spokesman says the company is convinced its product will be a successful complement to DVD. He declines to discuss specifics concerning the test markets but says the company is pleased with the results.
