OK, Here's a Divx list...
JVC
Matsushita
Thomson
Zenith
Pioneer
Dave (where the heck is he going with this?)
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PIONEER DIVX DVD PLAYERS DUE IN SUMMER 1999
02/09/98
VIDEO WEEK
(c) Copyright 1998 Warren Publishing, Inc. All Rights Reserved.
Roster of Divx hardware supporters grew to 5 last week with Tokyo-based announcement by Pioneer that it has become licensee of controversial Circuit City-backed technology.
Pioneer announcement followed same party line of earlier Divx hardware endorsers JVC, Matsushita, Thomson, Zenith. Pioneer Pres. Kaneo Ito said becoming Divx licensee would position his company to offer "customers the broadest array of features available today in digital technology." Company said it expects to market Divx player by summer of 1999, thus becoming first Divx hardware endorser to rule out 1998 launch.
Pioneer U.S. spokeswoman said that's because company's manufacturing plans for 1998 have been completed. She said that Pioneer would make own Divx player, but that specific product plans hadn't been determined, including whether Pioneer plans Divx -capable DVD-laserdisc combination players as it has marketed in open DVD. Spokeswoman said her assumption is that Pioneer's plan to market Divx players by next summer applies only to U.S., but acknowledged they ultimately could be marketed outside U.S.
Although Pioneer Video replication subsidiary didn't figure directly in corporate Divx announcement last week, Vp James Lance said his company will be one of at least 3 Divx replicators at start. Others are believed to be Nimbus, which produced samples demonstrated at last month's Las Vegas CES, and Panasonic plant in Torrance, Cal. Nimbus Vp John Town wouldn't comment on reports that his company would start Divx automation tests this week at Charlottesville, Va., plant and within 4-8 weeks be capable of doing volume runs up to 250,000 discs per month. Citing nondisclosure agreements signed with Circuit City, Town wouldn't even confirm that Nimbus was involved in Divx replication, even though Circuit City Chmn.-CEO Richard Sharp at CES openly identified Nimbus as one of several likely Divx replicators. Robert Pfannkuch, pres. of Panasonic Disc Services plant in Torrance, couldn't be reached for comment. Lance said Pioneer Video plans to start own Divx automation tests in April and could be ready for volume production runs of Divx discs by June. However, he said Pioneer Video has been put in standby mode by Divx in belief that for immediate future, other replicators will supply all product that's needed.
Divx remains on target for launch in 2 "introductory" markets in late April and national launch in July, Circuit City executives told financial analysts in conference call Feb. 5 to discuss Jan. retail sales results. Circuit City Vp Ann Collier said her company views recent JVC and Pioneer hardware endorsements as "early indication" that Divx demonstrations started at CES and mounted in weeks thereafter have been positively received. She repeated claims that additional endorsements are expected before national launch, including at least one new software supporter. However, Collier said Circuit City doesn't expect retailer announcements endorsing Divx until project moves closer to national rollout in summer.
Sharp said Circuit City hasn't announced introductory markets but has "a good idea" what they will be. He said: "We don't see any advantage to telling those who may be our competitors what our plans are." Responding to analyst's question, Sharp said estimates circulating at CES were that 150,000-200,000 DVD players have been installed in consumers' homes, based on CEMA estimates that 350,000 have been sold at wholesale. He said it has "not been a good start for basic DVD." While he praised DVD as "good technology," he said: "Our view has always been that to get the consumer to step up and embrace this, they need a stronger benefit than just better picture and sound quality."
VSDA Pres. Jeffrey Eves found something good to say about Divx in address to video retailers at Assn.'s Regional Leaders Conference Jan. 30-Feb. 1 in Marina del Rey. "It would be out of character for me to get quoted saying anything good about Divx ," he said, "but perhaps we might learn something from the fact that the Circuit City people are confident enough about the future of home video that they are prepared to invest a couple of hundred million dollars in it." However, he emphasized for partisan audience of video retailers that he wasn't endorsing Divx , saying he believes it "will ultimately fail in the marketplace."
Divx Entertainment Pres. Paul Brindze was given largest share of time on DVD panel at conference as he tried to convince skeptical audience of merits of carrying Divx titles. In contrast to Sharp's comments that introductory markets haven't been finalized, Brindze told us privately at conference that they "have been selected." He said markets will feature "full-blown" launches, not tests.
Brindze insisted to retailers that they should be able to make at least $1 on each Divx disc, even if mass merchants undercut them on price: "How many of your regular customers that you service are going to walk out and make their way to a mass merchant to save 50 cents?" With current prices of regular DVDs it takes 8-12 rental turns to break even, he said -- no easy feat given current small 200,000 player customer base for entire country. But Divx "version" of DVD will "make it profitable from sale one."
Divx won't be for every customer in every store, he acknowledged, saying retailers should ask themselves "do I have consumers that would like a product that is a little more expensive -- $4.50 to $5 is a little more expensive -- do I think there are customers who would come in and pay a little more money not to have to bring it back." He said total margin for retailers has been built into original transaction because only "small number" of customers actually come back to rent same movie again and because of technical problems in getting retailers in on subsequent transactions with Divx . He said retailers told company initially, "Give me the margin up front, don't give me bullshit accounting later."
Those who question whether Divx has "proper margins" should realize that real competition for video stores is electronic media, Brindze said: "When a customer rents a PPV movie on an electronic medium there is no retail store anywhere that gets a piece... We have no intention of cutting out the video store." He offered perspective for prospects of Divx and DVD, saying "VHS isn't dead. VHS isn't seriously ill. I don't know how many of you have customers coming into your store saying 'Gee, I really hate the quality of VHS that I get. I'm ready to take the 2, 3, 4 VHS players that are in my home and throw them out -- they [now] cost me zero but I'm going to throw them out because I'm interested in getting a better quality picture to play on my 19-inch TV set.'" He admitted, "We do not anticipate millions of Divx -enabled DVD players to be sold in the next year."
Warner Home Video (WHV) Senior Vp Thomas Lesinski was only panelist to come out strongly against Divx , reciting his studio's party line that "we think Divx is a loser for video retailers and for the studios alike. We think it's a flawed financial model. I think it's pretty clear today that margins on regular DVD and VHS are better than Divx , your profit per transaction is higher on DVD and VHS. We believe that PPV already offers the same product Paul is talking about at a lower price today. What we're deeply concerned about is the confusion Divx is causing today." He said Divx really is "at war with the video rental store -- they're calling their campaign 'The point of no return.' This to me is a direct attack on your livelihood. I think he wants to put you out of business as much as Kenneth Starr is trying to put Bill Clinton out of business." |
