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Will DVD Live Up to All the Hype?

Electronics: Others before it (wanna buy a laserdisc?) have struggled. Proponents say things will be different this time.


When the first batch of DVD movie software arrives in stores Tuesday, it will do so amid a prodigious wave of hype touting it as the ultimate home entertainment format--a shimmering CD-style disc that will make your VCR about as au courant as a Victrola.

The 5-inch digital versatile disc can hold a full-length movie on a single side. It has far superior picture and sound quality than a VCR, and any part of the disc can be accessed instantly, eliminating that tedious rewind process.

Sound familiar? Similar accolades were tossed around in 1978, when the laserdisc first hit the market. It, too, was supposed to be the next big thing. But even though the laserdisc business was expected to grow into a $6-billion industry, it has never enjoyed more than niche status, with about 2.5 million machines now in use in the United States.

There are a number of reasons behind the laserdisc's lackluster performance, ranging from its expense to the fact that it doesn't record. And although DVD doesn't share all of the laserdisc's liabilities, fears are mounting among proponents of the new format that it could suffer a similarly grim fate in the market.

The biggest threat is lukewarm support among the movie studios--a major factor in the poor performance of the laserdisc. Price is also an obstacle: The first DVD players will cost $600 to $1,000. And DVD machines won't be able to record, at least not for a few years, which could be a big turnoff for the many consumers who use their VCRs to tape TV shows.

Proponents maintain that DVD has a much better chance for acceptance because the CD format is now so familiar to consumers, and because the quality improvement over now-ubiquitous VCRs is so substantial.

"There's far more support for DVD from the software and hardware community and from retail that didn't exist for laser," said Paul Culberg, executive vice president of Columbia TriStar Home Video, which expects to release 20 DVD titles this year.

Still, when Warner Home Video and its affiliated labels (MGM/UA, New Line and Warner Reprise) this month roll out about 40 titles to seven markets, including Los Angeles and San Francisco, they will do so alone. (Warner is part-owned by Toshiba Corp., the lead developer of the DVD technology.)

Columbia TriStar--which is wholly owned by a hardware manufacturer, Sony Corp.--will release its first four titles in April, and PolyGram Video, majority owned by hardware maker Philips Electronics, has about a dozen titles due out later this spring. Universal Studios Home Video--whose parent company is 20% owned by Japanese hardware giant Matsushita--says it is committed to the format but has no current product plans.

Notably absent from DVD's launch, though, are 20th Century Fox, Paramount and Walt Disney Co.--and the latter is the juggernaut of the home video industry. Disney is the one studio that industry experts believe could make DVD a mass-market item because of its hugely popular children's titles, which tend to be bought rather than rented. (Studios hope that by pricing DVD movies in the $20 range they'll encourage retail sales over rentals.)

The studios not yet on board will determine whether DVD dethrones VHS as the home movie-watching standard or merely becomes the high-end heir to laserdisc, conceded Warren Lieberfarb, president of Warner Home Video and one of the prime movers behind DVD.

"DVD will go the way of laserdisc if there isn't enough support from the studios," Lieberfarb said. This would be "a lost material opportunity at precisely the time that Hollywood is searching for means to improve its underlying growth and level of profitability."

Another veteran laserdisc executive gives the DVD market six months to sink or swim: "Unless the studios support the product within 180 days of the launch, DVD is going to be another fabulous technology that doesn't make it and will be relegated to a niche business."

The executive, who spoke on the condition that he not be identified, expressed more confidence in the acceptance of DVD-ROM, the computer-peripheral version of the technology. DVD-ROM will allow multiple disc CD-ROM titles to fit on a single disc--and computer users have a proven appetite for the latest and greatest technology.

Studios that have not joined the DVD camp are hedging for a number of reasons, including fear of piracy.

Although copy-protection agreements have been negotiated, not all are convinced that they're hacker-proof, and studios dread the possibility that counterfeiters might be able to produce perfect digital copies (as opposed to degraded, analog VCR copies).

Furthermore, studio executives fear DVD will cannibalize their healthy VHS business. Some believe the consumer electronics manufacturers are trying to foist an unwanted product on an indifferent public.

Despite these concerns, most consumer electronics veterans are confident DVD won't suffer laser's fate, in part because the market as a whole is very different today.

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