DVD Player rental programs. Can they make DVD a household word???????????????????????????????
onlineinc.com
Player Rental Programs Crop up as DVD-Video Popularity Spreads
Major motion picture studios and electronics manufacturers are counting on the winter gift-giving season to propel DVD-Video products into the mainstream. The industry's optimism about the future of DVD is fueled by the technology's impressive first-year sales, which far outpaced the debuts of both the compact disc and videocassette.
According to the Consumer Electronics Manufacturers Association (CEMA), DVD player sales to U.S. dealers exceeded 437,000 units in 1997-12 times the number of CD players sold in their first year and twice the VCRs distributed in that product's first two years. Consumers purchased 340,000 of those DVD players last year and began shopping for DVD movies in stores and online. Sales may have been strong, but there are still millions of Americans to whom DVD remains virtually unknown, and many of these potential customers appear to place a high priority on home entertainment. CEMA reports that more than 15 percent of U.S. households have installed home theater systems, for which DVD is a format far superior to VHS.
Based on this successful debut, cinema production companies are stepping up their investment in the burgeoning technology this summer in preparation for the busiest selling season-September through December. Most film studios have formed alliances with DVD manufacturers and joined the DVD Video Group, a 40-member organization that seeks to promote the technology across product lines.
"It's been a constant struggle to create awareness, but I have confidence DVD is here to stay," says the group's president, Emiel N. Petrone. "DVD delivers exactly what it promises." In addition to featuring wide-screen viewing, DVD offers viewers high-resolution pictures, theater-style audio, multilanguage programming, and CD-like durability.
Many traditional "first-buy" customers are shopping for their DVD titles online. VideoServe.com, a popular Internet video site, started the first online showcase devoted to DVD products in January, and the company reports that DVD is already accounting for 11 percent of the site's sales. Petrone says these initial customers are also purchasing primarily the higher-end hardware units. Many of the more basic DVD players, competitively priced around $399, are still on the shelves.
Petrone says DVD Video Group members are attempting to lure average customers by switching their focus from retail sales to the rental market. Video stores are seen as the key to bringing DVD into the mass market by allowing consumers to sample the technology without buying, says Petrone, also a Philips executive vice president. Philips and Polygram were the first to team up to hit the rental stores, he says. They were followed by Toshiba and Ingram, and most recently the Time Warner Entertainment Company. All the major studios now have DVD divisions and the number of movie titles has gone from 800 in 1997 to 1,200 this year.
Time Warner recently launched a nationwide rental program after test-marketing in five cities in the spring. Warner's program teams the video division with several hardware manufacturers to provide starter kits for rental stores containing between two and eight DVD players, and 40 to 100 movies titles, depending on how much each store owner is willing to invest in the new format. Time Warner predicts DVD will be in a million homes by early 1999. Gail Becker, a Warner Home Video representative, says, "It may not be a household name yet, but the growth in DVD has shown that this is becoming a mass market product."
-Lauren Wiley
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