-- WSJ: DVDs Are Making Biggest Hit With 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.
Computer users usually want the most-advanced technology, but in this case,
software 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 even 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.
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 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 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.
(END) DOW JONES NEWS 04-15-99
12:44 AM- - 12 44 AM EDT 04-15-99
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