Hold on, folks. Another “home movie” format is heading our way. The much-ballyhooed Digital Video
Disc (DVD) is on the verge of entering the marketplace. Are you gonna be ready?

A small cousin to the 12-inch disc currently available, DVDs are identical in size (5-inch diameter) to
audio compact discs. The important distinction, however, is that a DVD holds digital video information in
addition to its audio tracks. And those digital capabilities promise an image that’s at least as good as, and
probably better than, today’s analog laser video discs.

But why was this format created? Don’t consumers and videomakers have enough choices now with
VHS, S-VHS, 8mm, Hi8 and 12-inch laser discs? Why bring another fighter into the ring?

Why Another Format?

“Electronics companies continually develop new products. They give this technology to their sales and
marketing departments who then figure out how to create a demand for the product in the market. It’s not
so much the public needing the product as it is these companies telling us we need the product,” says David
Goodman. Goodman, president of U.S. Laser Video Distributors in Fairfield, NJ, due to the nature of his
business, has been “in the know” about DVDs since their inception. “Without a doubt, DVD offers some
great advantages to the consumer. First, the disc is able to hold four instead of video’s normal two hours of
programming. This creates all sorts of possibilities. Programmers could conceivably fit two movies or two
versions of the same movie on one disc.”

And how interesting that would be. The real cinema buffs out there may be able to buy a copy of
Terminator 2 that contains a director’s cut as well as the original version of the flick. Or, for the family
viewers, a disc may contain PG and R rated versions of a film.

“The issue of space is also a primary advantage,” Goodman continues. “If you look at laser discs in their
present form, they take up a lot of vertical and horizontal space. They’re not thick, but really are sort of
awkward for the consumer and the rental facility. With two movies fitting on something the size of an
audio CD, the space problem isn’t a question. It makes collecting more of an attractive choice for the
consumer.” And if people start buying to collect, DVDs may really take off.

The Big Boys’ Opinion

This type of wide-spread acceptance is what will make or break the format. At the first annual
Laserdisc Conference and Exhibition held in May, several panels discussed the probability of DVD’s
success. Representatives from heavy-hitters in the home video market such as Panasonic (manufacturer),
Columbia Tri-Star (program producer) and Uni Distribution (video distributor) manned the chairs to come
up with what they called “guesses at best.” One group of panelists believed that DVD had a chance of
quickly surpassing the current installed base of Laserdisc players. This number hovers at around 1 percent
(or 2 million) of U.S. households, in comparison to an 85 percent penetration for VCRs. Others weren’t
quite so optimistic, citing projected sales of DVD machines at 250,000 units. Brian Hoffman, national
marketing manager for consumer video at Panasonic, stressed that multiple formats and manufacturers may
have something to do with slow initial growth.

Wait a minute. Did you say multiple formats?

Format Wars, Part Two

Well, now’s as good a time as ever to discuss the one drawback of DVD. Presently, two company groups
are developing DVD formats: Sony Corporation and Phillips have created a one-sided model, while
Toshiba and Time Warner have joined forces to come up with a 2-sided version.

The main problem with this is the fact that these two individual formats are non-compatible. Can
anyone say Beta vs. VHS? Panasonic is now pitching a third DVD format based on Toshiba’s technology,
one that offers an incredible 18 gigabytes of storage.

“The competing formats present exactly the same setup that the video market experienced with Beta and
VHS formats,” continues Goodman. “It’s hard for an industry to take off when two forces are splitting the
potential income. Which format the public may choose as the winner is anyone’s guess. Just the fact that
two markets will exist as DVDs enter the market presents a barrier to buyers. There’s talk, and just talk, that
a common format will be developed. Again, nothing concrete has come of it.”

Another concern is where this new format will fit with consumers’ current choices. The panelists were
quick to say they learned many lessons with the initial marketing of 12-inch discs. Several of the mistakes
made in the marketing of the larger disc that may have prevented it from becoming a popular video product
will hopefully be avoided with the selling of DVD. While videotape seems sufficient to many home users,
there still is a substantial group of consumers who want better quality in their home entertainment options,
and that’s where DVD will be aimed. The question of whether DVD will be a replacement option or simply
an addition to current gear is still up in the air. As Goodwin sees it, “Most people buying the format will
purchase it as an addition to their already-owned system. The device will sit on top of the VCR, like many
videodisc players currently do.”

Spinner-racked Discs

Allison Kajganic tends to agree. She’s a front-line sales rep for Infinity Distribution, a midwest video
distributor dealing in B-titles.

She sees a great future for DVD, but like everyone else, all she can offer are guesses. “You know, this
market always surprises me. We’ll get a title (what distributors call “videos” whether they’re speaking of
movies, instructional tapes, kid-vid, etc.) that I’m sure is going to be a top seller. And then it dies. I never
know if it’s because of the price, the packaging or the title itself. Maybe I just made a bad prediction about
what the market wanted. Consumers are very picky when they’re buying something for their collection.
Sure, if it’s priced right, you’ll get the impulse buyers every time. But for the higher-end stuff, you gotta be
careful because you never know what the public is going to want. And, there’s always the problem that
some consumers view videotapes as not a very archival product. They just don’t think it’s worth buying
because it won’t last. That’s the reason I think you see more laser collectors than video collectors. At least
serious ones anyhow.”

And that’s why Kajganic is betting on DVD. She sees it as a way to entice more consumers to become
collectors rather than just occasional impulse buyers. “People readily buy, keep and collect audio CDs.
Why don’t they do the same with video? I think it has some of the stigma of the 8-track. Those nasty things
are actually quite similar to videotape cassettes. You get burned once, you don’t let it happen again. DVD is
like vinyl. It’s a one-piece system. No moving parts. It can’t be easily broken. It can’t mess up rewinding.
You won’t get dropout. People will like the permanency of the format and that should create a good amount
of sales.”

And what about the player units themselves? What type of marketplace penetration will a new “black
box” receive? “I don’t think the American public is as afraid of technology as it used to be,” Kajganic
responds. “Before the electronics revolution, it was a major household decision whether to get a remote
TV, VCR or microwave. The consumer had a fear, that developed from what I don’t know, of not being
able to use the unit. It’s different now. DVD can be embraced if the pricing and usability of the units appeal
to the public. I’m sure that initially the player units will carry some hefty retail prices. But that should drop
as the product begins to infiltrate the market. Just like any other electronic toy.”

Kajganic believes the one holdback to the whole scheme may be the multiple formats the competing
electronic firms will shove onto the store shelves. That, she says, is a good way to limit initial public
acceptance. “Didn’t these people learn anything from the VHS-Beta fight? I understand that everyone
believes their system offers the greatest benefits, but why couldn’t they just get together, just this once, and
agree on a common format? It would make it simpler for everyone involved. The consumer would love it,
and video distributors wouldn’t mind either. Nobody wants to start collecting a product with the fear that
they may not be able to use it after several years because it’s not being manufactured. Would you start
collecting DVDs if you thought the format may change in a couple of years? Ask a Beta collector for an
answer to that one.”

On the bottom line, however, Kajganic sees a bright future in DVD. “It definitely is a move in the right
direction. Everything else has gone digital; why not home video?”

D-videomaker?

This all sounds well and good. But what are the implications of DVD for the videomaker? Is this just
another format to confuse us in our hunt for the most efficient and effective format, or will DVD deliver
“the promised land” of video delights? We’ve already heard about the improved picture quality and CD-like
audio, and the small size will be great in a shooting environment, too. So, when will the gear be on the
market?

Unfortunately, recordability functions have not been high on the list of priorities for manufacturers.
Development of DVD “camcorders” and editing gear is assuredly taking place, but as with any new
product launch, what the market will bear is what becomes important.

Goodwin doesn’t view the non-recordability situation as a hold-back to sales of the home units. “Most
consumers rarely record anything with their VCRs, much less know how to program the unit properly. And
laser disc players don’t record. So I don’t think the recording option will matter that much with initial
market penetration.”

The panel at the Laser Conference seems to agree. Hoffman summed it up by saying that “We’ve trained
consumers to rent, so playback is the real issue.” And it’s not like off-the-air program recording would be
any better quality than videotape. If the source (the cable feed) is inferior, the recording is going to be
inferior. Plain and simple.”

Kajganic offers her own upbeat message. “Whenever a product can be used in the home, it only helps
the rest of the market. The growth of our sales (of pre-recorded movies) practically mirror the growth in
camcorder sales. People become familiar with something and they want more of it. I hope DVD cameras
will arrive sooner than camcorders did.”

You won’t get DVD quality on a home recording. Unless you are using a DVD camera and deck
arrangement, in which case the quality of the picture would be outstanding. And generational loss due to
degradation of signal would be a worry of the past. The digital domain erases such headaches. It may all be
“pie-in-the-sky” for the time being, but somehow I think people regarded the coming of videotape with the
same caution. Technology spreads quicker than fire these days and it probably won’t be long before we see
a magazine called Digital Videomaker.

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