Audio Week
Mon, Nov 24 1997
Argument over copy protection merits of Divx and open DVD by Divx Entertainment Pres. Paul Brindze and Warner Home Video Exec. Vp Jim Cardwell cooled quickly in only heated exchange at otherwise-civil Kagan Seminars panel on "Home Video and DVD" at Motion Picture Production & Finance seminar Nov. 12 in L.A. Other panelists were Philips DVD Entertainment Group Exec. Vp Emiel Petrone, Columbia TriStar Home Video Pres. Benjamin Feingold, PolyGram Video Pres. Bill Sondheim. Hollywood Video Pres. Jeffrey Yapp was no-show. Most major video chains have had presentations by Divx, Brindze told us, although he wouldn't name any. "Not one of the chain executives we have sat down with said the consumer was not understanding the benefits," he said. "The retailers know the product answers a consumer demand." New format has one distinct advantage for rental consumers, Brindze said: "The one hot button the consumer has is bringing the rental back." Warner's Cardwell called Divx "cannibalistic" and said it could result in worse economies than exist with VHS. He said Divx would introduce "monopolistic" participant to revenue stream, although he didn't name majority owner Circuit City. He said Divx will have "significant costs" associated with it -- billing system, accounting -- not seen with open DVD. Divx won't be able to compete with video-on-demand and related modes, Cardwell said. Divx will affect rental market, and experience in Europe has shown negative results in competing for piece of declining business, he said. Sellthrough, on other hand, has grown despite proliferation of other delivery modes, Cardwell said, and Warner believes open DVD provides incremental business and is better rental product. Feingold referred to Divx as "tweener" -- not fitting into any one category, rental or sellthrough. Open DVD already is "establishing price points in the $19.95 and $14.95 range," he said. "We are hard-pressed to find where the margin is in Divx." Brindze told us Divx expects retailers to sell discs at $4-$5 -- "What we generally hear is $4.29 to $4.49." Rental stores "chose to miss their key position in the early days of sellthrough, letting this market go to the Wal-Marts and Targets who picked up the slack," Brindze told attendees. "If there is a consumer demand for a product, there will be a retailer there to serve that need." Open DVD already is serving need, Petrone said, using statistics to back up comment. "Since the startup it's sold 250,000 {players} into the market, and we see the year ending up at 500,000, a phenomenal first-year effort. Neither VHS or the audio Compact Disc came close to that." He said studio support with more than 600 titles "gives the consumers lots of confidence," with consumer sales of more than 700,000 to date surpassing "anything ever launched." PolyGram's kiosk for rental stores with Philips player has sold 500 sets, he said. Sondheim gave Divx "even-handed" comment, saying "it has some marketing elements" -- referring to consumer database that Divx can develop as "very sexy and very important."
(Copyright 1997 by Warren Publishing, Inc.) |
