Today @ VSDA: Thursday, July 9th

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Site created 12/15/97.

page created: 7/12/98

Today @ VSDA!

Thursday, July 9th

Back to the Convention Center.

Thursday at VSDA began with another quick trip to the Press Room, but alas (as you are all aware) there were no DVD announcements to be had. There were, however, dozens of studio press packets to pick up (about 100 lbs worth it seemed!), and many of them had pix and info on upcoming DVD releases. More on that later.

L to R: Ben Feingold (Columbia/TriStar), Emiel Petrone
(Phillips, DVD Video Group), Warren Lieberfarb (Warner Bros.).

The main DVD event on this day, was a special DVD Panel Discussion late in the morning. Entitled, "DVD Video: The Future is Now," the discussion was focused on trying to get more video retailers to adopt DVD for sale and particularly for rent.

You may remember that, during yesterday's DVD Video Group luncheon, Jeffery Eves of VSDA mentioned that their research indicates that among all those consumers who are considering buying a DVD player in the coming months, rental availability of movies is a key factor. Keeping that fact in mind, the major supporters of DVD are working to make it as easy as possible for small video stores to add DVD to their rental inventory.

On this particular panel was: Ben Feingold (president of Columbia/TriStar Home Video), Warren Lieberfarb (Warner Home Video), Emiel Petrone (Phillips Electronics and the DVD Video Group), John Thrasher (vice president of Tower Records), Joe Pagano (Best Buy), Mark Vrieling (owner of Seattle's Rain City Video) and Mitch Lowe (co-owner of Video Droid). Moderating the discussion was Thomas Arnold of Video Store Magazine.

As I entered the ballroom, Widescreen Review editor Gary Reber spotted me and invited me to join him in the front row. As we readied our respective notepads and settled in for what was sure to be an interesting discussion, Gary pointed out some special guests for the proceedings: a group of executives from Divx were seated a few rows behind us. Among them were president Paul Brindze and marketing director Josh Dare. Apparently, they had NOT been invited to speak. But, as moderator Arnold told the assembly, "the success of DVD rests with the video retailer. There will be no discussion of Divx here." Not that that prevented Warren Lieberfarb from getting a few jabs in (more in a moment).

To kick things off, the crowd was again shown the DVD Video Group's presentation (the same one from yesterday's luncheon). Then Arnold began the round of questioning for the panel, asking Tower's Thrasher how his company is doing with DVD. "Just one year into the rollout, Tower is selling 25% more DVD than we ever did laserdisc in the 15 years that we carried the product - and we carried it heavily," he responded. Mitch Lowe agreed that DVD is an exciting product, adding that when renting DVD, there is no 'ramp-down' like there is with VHS. "Our customers are renting not just new titles, but well into the catalog."

A key point made to all retailers in the crowd, was that DVD can be a money maker right now, instead of just a sexy format, but that retailers must make a long-term commitment to grow their markets. "For both studios and retailers, the strategy is to build an incremental business that brings in lapsed renters," noted Lieberfarb. Several panelists expressed the position that DVD does not cannibalize VHS sales and rentals.

Vrieling stated that in his stores, he began renting DVD to customers in mid-97 for $15, which included a player for 3 nights with 3 movies. For a time, he was worried that he'd made a bad investment... until Christmas, when many of those who had rented players from him earlier, purchased players of their own and became active DVD movie renters at his stores. Added Lowe, "People are willing to drive an extra distance," to patronize stores with good DVD movie rental selections. But he noted that wide selection of product is the key - retailers can't just rent 10 titles (and no players) and expect anyone to care. "Customers want to see lots of product on the shelves."

Tower's John Thrasher (left) and Joe Pagano of
Best Buy (center) join Feingold in DVD discussion.

To emphasize the fast-growing nature of the DVD market, Emiel Petrone again stated here that "CEMA is projecting 1 million players sold into retail, and 2,000 movies by the end of the year." Pagano repeated Best Buy's findings that for every 1 player sold, 28 movie titles are sold. And Lieberfarb again mentioned that 10% market penetration for DVD was possible by the end of 2002, dependent on, "complete studio support - DreamWorks and Fox - and day & date releases." Lieberfarb said that the two studios, "owe it to the VHS rental base to level the playing field." And in a clear jab at the Divx folks on hand, Lieberfarb told retailers that, "you owe it to yourselves to prove that the existing rental model works for DVD."

Ben Feingold was more diplomatic, but equally enthusiastic about DVD. "We've been optimistic the whole time, but quite frankly, software and hardware sales exceeded our expectations," he said. "Our challenge now is to meet demand expectations in what is a very hot market." On an interesting note, Feingold cautioned retailers not to downplay the size of the DVD market, quoting a Microsoft belief that CD-Rom will be dead by the year 2000, replaced by DVD-Rom. "In a very short period of time, many PCs will be shipped with DVD-Rom drives. Do not underestimate the impact of this penetration."

Mark Vrieling of Seattle's Rain City Video (left) and
Mitch Lowe of Video Droid and NetFlix (right).

When asked what the retailers on the panel would like from the studios to help their DVD efforts, Mitch Lowe asked that there be less-slippery release dates for DVD titles. And product shortages were also a problem, particularly with DVD-9 (dual-layered) titles. Feingold noted that Columbia/TriStar is concerned about possible production capacity issues in the 3rd and 4th quarter, but that his studio is working to plan titles far enough in advance to remedy this issue. He also added that, "quality of product is our chief concern." It was also noted that additional DVD-9 replication plants were coming on line over the next few months. When asked what was more important, making release dates or taking the time to add more supplementary materials to titles, Vrieling and Lowe quickly agreed, "Both."

Of far greater concern to Tower's John Thrasher, was the absence of two particular studios from the DVD fold. "It's ludicrous that 15 months into this, Fox and DreamWorks aren't involved," he noted irritably. "It's a shame that greed is preventing this format from being as big as it can be." This sentiment brought a definite reaction of agreement from the audience. When asked if he had expressed this opinion to Fox directly, Thrasher said very disgustedly, "Yes." Best Buy's Pagano added that his company too, is strongly (but privately) imploring Fox to join the DVD bandwagon.

Feingold wrapped up the discussion by pointing out to retailers, "Digital is the entire future of the home entertainment industry, and DVD is the first stake in that."

When it was all over, I milled around afterward and observed as the Divx execs quickly gathered a number of reporters for an impromptu spin-control session. And after a quick and friendly chat with Divx's Josh Dare, it was off to the show floor.

The DVD Video Group's booth, modeled after a 'video store
of the future', shows retailers how to rent DVD in their stores.

Now, many of you are probably saying that nothing of interest happened in the way of DVD at VSDA, but I believe that's incorrect. The closed and open DVD discussion sessions alone revealed to me just how seriously the industry regards DVD, even for a new format. And based on a number of conversations I had today with studio execs and industry insiders (both on and off the show floor), I can tell you very seriously that Fox has quietly and privately decided to commit to the DVD format.

It would be difficult to explain to someone who wasn't there, just how close Fox came to announcing DVD support at the show. A couple of weeks ago, it was apparently decided to make a statement at VSDA, similar to Paramount's DVD announcement of a few months ago. They were planning to announce support only, with little in the way of title or time-frame information (again, similar to the Paramount announcement). But at the last minute, word from the top came down to postpone the announcement until specific title and release date information has been decided upon.

Several industry reporters at the show were aware of these facts, and when it became clear that there would be no announcement at VSDA after all, everyone was trying to pin Fox execs down for a quote. So when I bumped into Fox's Steve Feldstein at the Image Entertainment booth, and he was kind enough to acknowledge my presence and say hello, I decided to give him a break and not ask about Fox's DVD plans (which I think he appreciated). "I suppose you're the guy everyone wants to talk to right now," I said jokingly. He nodded, pointing at his blank lapel. "That's why I'm not wearing my badge," he admitted wearily.

Now, having checked the Internet briefly since returning from the show, I notice that there is already a lot of talk of angry phone campaigns and boycotts against Fox, until they announce DVD support. I say this: be patient... Fox is coming to DVD. If you're going to call them about it, politely encourage them, rather than simply railing angrily at them. Yes, they have all the titles we want on DVD. But they're only human, and they have definitely gotten the angry message that DVD supporters have been sending them these last few months. Let's try a little positive reinforcement for a change, no?

And note to Fox: when you do finally announce DVD support, let's have a serious commitment, please. Day and date releases (you can start with X-Files: Fight the Future), 16x9 enhancement, special edition releases and lots of good catalog product!

The Fox booth heavily promotes the holiday release
of X-Files and a re-issue of Planet of the Apes.

As for other activity on the show floor, Universal is heavily promoting their upcoming releases (on VHS and DVD) of The Apostle, Primary Colors and the re-issue of American Graffiti.

A flurry of activity at the Universal Home Video booth.

However, there is no word yet on DreamWorks DVD releases (they were oddly quiet about this subject on the show floor), but I'm told by a number of sources that Peacemaker, Mouse Hunt and Paulie are definitely in the works for DVD release later this year. We'll have to see how this plays out.

Universal Home Video also distributes
DreamWorks video product.

Thursday, July 9th (Page 2)