Europe's DVD. Now is time for encoder sales........................
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Special Report from IFA Berlin
IFA is the giant of the European consumer electronics shows. A torrential downpour and chronic unemployment in Berlin did nothing to dampen the spirits of more than 30,000 visitors who poured into the giant halls for five days to see the latest and greatest in electronic entertainment. This year's event was notable in so many ways. The dominant theme was the convergence of the TV and the PC. The biggest announcement was the European launch of DVD. The biggest surprise was the sudden upturn in the fortunes of MPEG-2 multichannel audio. Here is our full report from the new frontier.
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DVD-Video launch in Europe
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It was standing room only for the pre-IFA press conference on 29 August to announce the European launch of DVD-Video. It was a PR triumph for Marijke van Hooren of Philips. She had managed to assemble the Hollywood brat-pack and all the main Japanese and European hardware manufacturers to announce a concerted rollout of DVD in Europe. The roll-call of names was truly impressive:
Warren Lieberfarb, president, Warner Home Video
Benjamin Feingold, pres., Columbia Tri-Star Home Video
Peter Smith, MD, Polygram Filmed Entertainment UK
Bruno Carlson, VP sales and marketing, MGM/UA
Louis Feola, president, Universal Studios Home Video
Doug Dunn, president, Philips Sound & Vision
Katsumi Ihara, pres., Sony Home Audio Video Products
Yoshihide Tsujimoto, president, Panasonic Europe
Thierry Flajoliet, VP mktg, Thomson Multimedia Europe
Mike Brown, marketing director, Toshiba
Masaji Okubo, Pioneer Electronic Europe
Isao Nakagawa, Hitachi Ltd
The five software entertainment and seven hardware companies held two press conferences, chaired by Jan Oosterveld, now senior director for corporate strategy at Philips Electronics. Oosterveld said that success in consumer markets depended not just on product availability but on universal support for a single format. In the US, where the players had been introduced earlier this year, unit sales of hardware had surpassed the 120,000 sell-in point. Software sales had been impressive. By the end of the year it is estimated that some 600 DVD-Video titles will be available in the US. Oosterveld expected similar success in Europe.
The initiative, led by Warren Lieberfarb, then presented a concerted European introduction plan.
Wamer Home Video
Warren Lieberfarb was predictably bullish about DVD's prospects. He pointed to the inexorable decline in video rental that peaked in 1989. It had declined 60 percent since then, due to the increase in the number of TV viewing channels. In 1985 there were 64 channels, in 1996 there were 279. By 2000 he estimated 2000 channels across Europe. Sell-through was a different story. A grand total of 2.5 billion videos were sold in 1996, thanks to lowered prices and increased distribution channels.
Lieberfarb said the migration to Digital TV would ease the migration for video. DVD offered a low cost but high quality alternative to VHS.
The company plans to release 25 movies in the major European territories in Q1. Lieberfarb spoke of the success of DVD-Video in the United States. He was in no doubt that it would be a success in other parts of the world as well: "The sales in the US have been above expectation and it is time to aggressively move ahead now with the release of major titles for the European market. We believe DVD is the future of packaged media for Europe."
The 25 DVD titles scheduled for the European launch range from new releases like Conspiracy Theory, to recent hits like The Bridges of Madison County and old classics like The Wizard of Oz. An additional 10-15 titles will be released each month thereafter. By the end of 1998 Warner expects to have 100 titles across Europe. Thanks to the immense storage capacity of DVD, each disc will have the language of the original release plus around four local languages. Lieberfarb pointed to the immense complexity of the present situation. Typically Warner has to produce 26 language versions across Europe. With DVD this boils down to four - a big saving. All the titles will be priced for sell-through at the equivalent of $25. New titles will be released simultaneously with their VHS counterparts.
Columbia Tri-Star
Benjamin Feingold spoke of 'spectacular' sales in the US - 300,000 in three months - of back catalogue as well as new movies. By year end he expected to have shipped one million DVD discs.
He was excited about the prospects in Europe. Columbia Tri Star Home Video is a Sony company so it will release its first titles alongside sale of Sony DVD players. Ten titles are listed for release in Q1 with more than 30 titles in total by the end of 1998, including a director's cut of Das Boot.
PolyGram
Peter Smith of Polygram said he expected to have released between 15 and 20 DVD titles in Europe by the end of 1998. Titles include Oscar winning films Fargo, Dead Men Walking and Usual Suspects, world hit movies Sleepers, Four Weddings and a Funeral and Trainspotting plus musical titles Lord of the Dance and The Three Tenors. Polygram will also release the Spice Girls movie.
MGM/UA
MGM said it was "absolutely committed" to DVD, "the format of the future." MGM is bringing some all-time classics like Singing in the Rain to DVD as well as new movies. New films will be released for both rental and sell-through. Titles include Hoodlum, Red Corner and the next James Bond movie Tomorrow Never Dies. It will have up to 12 titles in the initial launch and 30 titles by the end of 1998.
Universal Studios
Universal Studios Home Video will release its first ten titles in November in the US. Four of those titles will have digital stereo surround sound audio in English, French and/or Spanish. It will continue with a worldwide rollout following the US launch.
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Platform announcements
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Speakers then announced their new hardware platforms and spoke of the "massive unified roll-out" of DVD "in the spring" but failed to name a specific date. February and March are the nearest we could get. Mike Brown of Toshiba said DVD was 'the next logical step for home cinema, the beginning of the digital video age.'
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IM analysis
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The scene is now set for a major revolution in the multimedia industry, and Inside Multimedia plans to play a major role. The arrival of DVD is a watershed in our history. It is the start of a new beginning, allowing the industry to breach the final barrier and reach into the living room and the great mass of consumers.
As Jan Oosterveld of Philips said at the IFA launch: "For the first time we have a single DVD-Video standard which enjoys the support of both the consumer electronics and entertainment industries."
But DVD is not just the successor to bulky analogue video tape. DVD goes much further. It crosses the boundaries between the PC and the television, offers a replacement for high end DVD audio as well as CD-ROM and is the recording medium of the future. Already he replication industry is frenziedly re-equipping itself for the coming DVD explosion. The biggest problem now will be lack of MPEG-2 encoding capacity as Europe gears up for the spring launch. We predict a bonanza for encoding companies such as Electric Switch.
The time is now ripe for the multimedia producers to get on their bikes and start motoring. |
