DIVX NO, SAY SONY AND TOSHIBA
Who cares about Circuit City and Paramount, anyway?
by David J. Elrich
e-town.com
NEW YORK, September 10, 1997 -- Sony and Toshiba have turned a mighty thumbs-down on the fledgling DIVX DVD encryption technology. (In case you haven't noticed, E/Towners are up in arms about DIVX, a disposable-DVD scheme revolving around a disc that self-destructs within 48 hours. Other variations let the disc play longer for additional fees.)
Sony spokesman Rick Clancy told E/Town: "We are not involved with DIVX, haven't had discussions with them and have no product plans related to those technologies. We will keep an eye on it and see how it progresses." They're pleased as can be with consumer reaction to their reference DVD players and software sales of brother/sister company Columbia TriStar Home Video. "Consumers have responded well to the open standard as it is today," Clancy said.
Toshiba won't incorporate DIVX technology in its DVD players either, opting for the "open" DVD standard. "We have no plans," said Toshiba Marketing VP Steve Nickerson -- but "if the market embraces it, we'd be silly to ignore it."
He stressed nothing is on the drawing boards. "We haven't seen any materials that say this is something consumers want. Earlier in the year we did focus groups trying to understand people's reactions. We showed them two different formats: one you buy and collect and one you borrow and pay as you go. In the groups I observed personally there wasn't a single person who wanted to borrow the disc."
He noted these were early adopter/early majority types. "If you can't attract these people it's not a viable concept. They have to embrace it if there's any chance for mass market acceptance." Nickerson isn't claiming Papal infallibility for his research: "That doesn't mean those focus groups are 100 percent accurate." Still, he said he doubted whether consumers would embrace a pay-per-view disc system. "Consumers have PPV options right now. Do they need this in the marketplace?"
Nickerson was puzzled by the timing of the announcement, just as stores were gearing up for the fourth quarter sales blitz. He said the TV business has suffered a bit because of the confusion over digital TV. DSS has also suffered because of pricing issues and consumer confusion. "Here's the one product stores could demonstrate and generate some excitement. Why create confusion?" E/Towners have asked the same question on our Message Board. Why indeed?
Toshiba and Warner Home Video -- whose Warren Lieberfarb also has spoken out against DIVX -- hope to bury DIVX under a $30 million marketing and promotion avalanche. Beginning in October, the two companies will place print and TV ads, put DVD trailers on select Warner VHS cassettes and offer cross promotions. In one a Warner Home Video catalog will be placed in a Toshiba DVD carton with a special offer for people who buy multiple titles.
Here's E/Town's two-cent analysis. There are so many unanswered DIVX-related questions: Will competing retailers put themselves at a price/margin disadvantage to Circuit City? How will video stores -- the studios' biggest customers -- react to a technology that ostensibly puts them out of business since you'll be able to buy DIVX discs anywhere? And attention, Al Gore: These discs are disposable. Can't you see our environmentalist friends on the tube chanting, hey, hey, Circuit City, how many landfills have you stuffed today? I don't know what's going to happen six months from now but DIVX discs are shaping up as '98's Glass Coaster of the Year, taking over from all those AOL discs that fill our mailboxes. |
