WSJ article on DVDs
April 15, 1999
Tech Center
DVDs Are Making Biggest Hit
With Personal-Computer Buyers
By EVAN RAMSTAD
Staff Reporter of THE WALL STREET JOURNAL
David Schornack bought a laptop computer with a built-in DVD player in
December in the belief that he would soon use lots of the advanced disks for
his Tulsa, Okla., software business.
Now he finds that though he does use the player, it isn't for software. "I've
been watching movies on it," he says, noting that his Dell laptop has a 15-inch
screen. "I never figured a laptop could do something like this."
In an unexpected twist, digital videodisk
players designed for use with personal
computers have sold much better than
those designed for use with TV sets --
even though nearly all of the DVD disks
available contain movies. Hollywood
studios have put 3,000 movies on the
high-capacity disks, which look like CDs
but offer better picture quality than
videotape and can hold extra
information. By contrast, few software
makers have found a good use for the
technology, sometimes called digital
versatile disks.
More than five million DVD players were built into PCs or sold as PC add-ons
last year. A DVD player designed for a PC sells for about $180, just $100
more than a CD-ROM player. Meanwhile, U.S. retailers sold just 1.6 million
DVD players that attach to TV sets.
Hardware Outpaces Software
Computer users usually want the most-advanced technology, but in this case,
the software technology hasn't improved as quickly as the hardware. This same
dilemma may affect audio-only DVDs when they become available this year.
The issue for all media producers is how to profitably use the extra data space
on a DVD. A DVD's minimum capacity is about five gigabytes of digital
information, more than eight times the average 600 megabytes on a compact
disk. The extra capacity is attractive for holding video, because when it is
digitized, or converted into computer language, it turns into far more digital bits
than sounds, graphics or text.
In the computer industry, though, most software makers don't use the full
capacity of a CD. The average CD-based software program fills just 300
megabytes, or half the disk, says Bob Abraham, a partner in Freeman
Associates, a Santa Barbara, Calif., research firm that specializes in the
data-storage market. "Most of what is available [in today's software market]
can be distributed easily on a CD," Mr. Abraham says.
In addition, while programming tools are similar for CD-based and
DVD-based software, the device needed to record a DVD costs more than
$10,000, compared with a few hundred dollars for a machine that records a
CD. And such a DVD recorder has been available only for a few months;
before that, developers had to spend thousands of dollars to get disk samples
made at firms that duplicate DVD movies.
Production Costs Limiting
So why aren't DVD software developers taking advantage of all that
video-storage capacity? The key reason is the high cost of video production.
Hiring actors and doing on-location filming is more expensive than the
animation used in most computer games. Though the disks are a technical
breakthrough, PCs themselves are running behind; they can't yet process video
in the milliseconds needed for fast-moving "twitch" games that are a staple of
the PC-software market. Developers say it may be a few years before
computer processing speeds improve to where they can blend fast-acting,
finely detailed animated characters with filmed backgrounds that don't change
as quickly.
For the most part, current software DVDs are simply repackaged CD-ROMs.
Simon & Schuster Interactive, for instance, has transferred a few CD-based
programs onto DVD, a process that costs as little as $30,000 and quickly
turns a profit. "The development costs are too high to take the risk to come out
right away on DVD," says Gilles Dana, senior vice president in charge of new
media.
But that hasn't stopped a few people from trying. Multimedia 2000 Inc., a
Seattle start-up, has created 11 DVD software programs, including nine
originals for DVD and two that started on CD. The company has had trouble
getting shelf space in retail stores, however, and recently opened a Web site to
sell dozens of multimedia titles, not just its own. "I often feel like someone who
got to a dance two hours too early," says Paul Bader, Multimedia 2000's
president.
Eugene Evans, a former executive from Viacom Inc.'s defunct software unit,
formed his own company, Infinite Ventures Inc., to try another approach with
interactive games played on a TV's DVD player. The player's remote control
will run the games, the first of which are based on adventures of Sherlock
Holmes. "It's got a limit to what it can do," Mr. Evans admits, but says he is
counting on the video quality and narrative to sell the disks. He plans to sell
them from a Web site first and then move to stores.
About 16 million DVD players are expected to be built into this year's
Windows PCs and Apple Macintoshes, according to a forecast by Dataquest
of San Jose, Calif. But the turning point in the popularity of DVDs as consumer
software may be next year's rollout of Sony Corp.'s Playstation II. Software
makers then will be able to spread the cost of a new DVD title against the
sales that can be expected for a title that will also play on the most popular
video-game device. "That's where DVD can have a really profound impact,"
says Bobby Kotick, chief executive officer of Activision Inc., Santa Monica,
Calif.
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