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Company Town : Home Segue Home : Equipment Makers for Hollywood Test the Consumer Market

May 16, 1995|KAREN KAPLAN | SPECIAL TO THE TIMES

David Yett's T-shirt reads, "Avid: From Home to Hollywood," and he wears it proudly. As product manager for VideoShop, a home video-editing system made by Avid Technologies, it states his mission.

Traditionally, Avid Technology's focus has been on its Media Composer family of products--digital-editing systems for the professional film and video markets. But like many other companies that provide the entertainment community with goods ranging from stock footage to camera platforms, the Tewksbury, Mass., firm sees potential in the consumer market.

"There are mental economies of scale," Yett said of Avid's entry into the market for low-end editing systems. "We have an understanding of the ins and outs of all the technology to design a tool that's useful for regular people editing video."

VideoShop is designed to run on a personal computer, like a word processor for videotape. With a list price of $395, it is aimed at people who want to soup up their home video operations and semi-professionals who tape weddings and bar mitzvahs.

Over the last few years, Avid and others have experimented with creating consumer-oriented versions of their professional products. Analysts say the expansion can be a smart way for companies to extend their markets.

But although these companies have found some demand for their services among the ranks of serious hobbyists, they acknowledge that the payoff is still a ways off.

Jan Ross, president and co-founder of Energy Productions, a Studio City-based stock footage company, said it could take five years for the mass market to embrace the five- to 20-second snippets her company is making available to the general public.

Last August, Energy Productions made more than 100 of its sequences--of everything from moving sports cars to sunsets--available through the CompuServe commercial on-line service. The company has also released a pair of $50 CD-ROMs containing short scenes that consumers can edit into home videos or non-commercial desktop multimedia productions.

Nearly all of Energy Productions' multimillion-dollar annual revenue still comes from its traditional business of licensing stock footage for movies, television programs and commercials, Ross said. But she expects that to change.

"Definitely in the next five years, this is going to have great growth potential for our company," she said. "Consumers are going to find it usable as they become more computer-savvy and people start creating their own movies and home productions."

Edgar Bierdeman, an analyst with Dakin Securities Corp. in San Francisco, said it is relatively easy for companies to adapt professional technology to the consumer market because "the consumer product is a subset in terms of features, functionality and price."

Charles Finnie, a general partner at Volpe, Welty & Co. in San Francisco, said there are strategic benefits to having a presence in the consumer end of a business.

"You want to defend against low-end products creeping up and getting more powerful and eroding your franchise at the high end," he said.

But moving into the consumer market is not easy, Bierdeman warned.

"It requires companies to use a different distribution philosophy, a different price point and a different marketing-advertising approach," he said. Those are subtleties that technology companies in particular often fail to take into account, he said.

Ronald Lenney can attest to that. His company, Cinema Products, marketed a consumer-size version of its popular Steadicam, a camera-stabilizing device widely used for filming motion pictures and TV shows. A Steadicam can cost up to $50,000.

The $500 Steadicam JR is a much smaller version, weighing 10 times less, but it relies on the same physical principles to allow users to shoot home videos with minimal jerkiness.

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But that's where the similarities between the professional and consumer versions end, said Lenney, who is president of the company.

"What we understand in retrospect is that the same engineering design techniques for professional Steadicams were not really applicable to the consumer Steadicam," he said. "The same physics and theory apply, but the design criteria are substantially different."

Los Angeles-based Cinema Products learned that while the bulky professional Steadicam sold well to the industry, consumers were far more interested in products with sleek designs.

The company has sold about 20,000 of its Steadicam JR models since 1989, but sales have slipped in recent years because Cinema Products did not respond to fast-changing consumer preferences or create an even smaller version that would be compatible with palm-sized camcorders, Lenney said. Additionally, the company underestimated the marketing costs associated with launching a consumer product, he said.

Now the entire Steadicam line is being redesigned, which should result in new products next year.

"It's still a market that interests us, and we feel that the company could have very substantial growth from the consumer products," Lenney said.

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