Smells like ZiVA in Zenith's Divx Player. Retail at $499, with a modem....................................................
twice.virtualmarketing.com
Divx Unveiling Set For CES - -January 8, 1998
By Greg Tarr
Circuit City and Digital Video Express (Divx) chairman Richard Sharp travels to CES this week to introduce key industry figures to the first working Divx DVD players and to clarify some of the misconceptions surrounding the highly controversial pay-per-viewing-period format.
Sharp, who will be a featured panelist on DVD at a CEMA seminar today, told TWICE that Divx will bring key guests to a suite off the show floor to see demonstrations of a Zenith Divx player and unnamed software titles.
The Zenith player is expected to be the first to roll out in two as yet unnamed markets this spring. A national launch is slated for the summer, when Thomson will market the second player, followed closely by Panasonic.
Thomson is expected to show a non-working "mockup" of the Divx player it intends to bring to market, but Panasonic's plans for Divx at the show were unspecified.
Sharp reminded that the goal for Divx is to have a player in the market starting at around a $499 street price, however, he said final pricing will be up to the manufacturers and retailers to determine.
News of the Divx concept resulted in a tidal wave of negative reaction after Securities And Exchange Commission procedures required Sharp to formally disclose the Divx business plan last September. Divx was launched with some $100 million in backing from Sharp's other company, Circuit City.
Thus far, most of the negative reaction has come from early adopters of the so-called "open DVD" systems and from some retailers who objected to carrying a product that would benefit their biggest competitor.
Most feared Divx was proposing a new incompatible format that would confuse the mass market and hamper availability of new DVD software titles.
In fact, Divx players are fully compatible with all open DVD titles and CD audio discs, in addition to specially encoded Divx software.
However, Divx titles will not play on today's "open DVD" players.
What Divx proposes is a new movie "rental" concept. Consumers will purchase Divx DVD movies for between $5-$7 apiece on average and will be able to view that programming as many times as they like in a 48-hour period after the disc has been played. From there on, if the viewer wants to view the movie, he or she will use an onscreen menu to pay for an additional 48-hour viewing period.
The machine -- equipped with a modem -- will take the viewers' billing information and relay it to an authorization center, which will send back a signal "unlocking" the disc for another view.
Sharp said much of the negative reaction to Divx has been a failure to understand the benefits the system was designed to deliver to end users. Movie renters no longer need to return movies, and DVD player owners run less of a risk of being burned on the full cost of a movie they purchased but didn't like.
Retailers who opt to carry either hardware or software stand to profit from a new technology.
Echoing the sentiments of the player hardware manufacturers, Sharp said: "What we've been trying to communicate since September is that Divx is a feature and not a format. A Divx player starts as a fully functioning DVD player, and it adds this capability to it. To call that a format war is an exaggeration. It is another opportunity for the consumer to purchase software and accomplish the objective of watching movies at home in a substantially different model than is currently available today."
"From a design perspective," he continued, "we've certainly achieved our objectives in building a system which we think offers very clear and significant benefit to the consumer, as well as protects the intellectual property rights of the studios."
As for the company's need to recruit other consumer electronics dealers as partners in marketing Divx players, Sharp said Divx views the market from two halves: hardware and software. As for hardware, he said, manufacturers that are making Divx players will offer those machines to retailers just as they would any other DVD player.
"At the end of the day, it will be their decision as retailers as to whether they think the product that Divx has to offer will be attractive to their customers and the profitability model works for them," said Sharp. "We are retailers as well, and the way we generally manage our business here is, we request our suppliers to provide us with an attractive gross margin to begin with, and then let them worry about running the rest of their business."
When asked what he expects from other CE retailers, Sharp said: "At least one of our significant competitors has publicly indicated that they would like to carry the product. If it were Circuit City, and it were our merchants looking at this, we wouldn't opine one way or the other about whether we were going to carry this product until we could see it and have specific understandings about cost, and retails, and all the things you would want to know before you made a firm decision."
Regarding software distribution, Sharp said that "Because of the Divx model, we also have the flexibility to use other forms of retail distribution, such as grocery stores, drug stores, mail order, and so forth." |
