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THE MORNING BUZZ: Keep DVD Value High or Risk Turning it Into a Commodity Business

24 Jan, 2002 By: Kurt Indvik

There has been some discussion running through the industry of late regarding the future of the special features and extras that now are part and parcel of most DVD releases. One scenario I have heard more than once is that we might start to see feature-laden versions street at sellthrough pricing and a "vanilla" editions following later at, perhaps, a lower price. Some suppliers may just eschew putting much, if any, significant effort into added features at all in the DVDs and increase their margins a bit. These scenarios are based on some questioning as to whether or not the development (at some cost) of these DVD features is a make-or-break factor in a customer's decision to purchase a DVD, or whether the purchase is driven mainly by the DVD's comparatively low price and higher quality picture and sound versus the VHS cassette.

Another concern is the assumption that as talent sees the booming success of DVD continue, their contracts will begin to reflect additional compensation for their appearance and participation in interviews, commentary and other extras that enhance the value of the DVD beyond the movie. This will, of course, add even more cost to the DVD.

So far, of course, there is no evidence of any of the above occurring, and I hope that does not change. Because, in effect, DVD is not just another platform, it is another art form and another form of entertainment that the packaged entertainment industry has the great opportunity to explore and develop. It's a way to build greater audience loyalty now as insurance against the day -- long though it may be from now -- when you can get everything you want from the comfort of your home and your fat media pipe.

At least publicly, a number of leading home video suppliers are saying they are mindful of the need to keep the value of DVD (perceived or otherwise) as high or higher than it is, and that means continuing with the value-added features and extras consumers have come to expect on their DVDs. As Robert Chapek, president of Buena Vista Home Entertainment, notes in a special roundtable in next week's Video Store Magazine, the industry must guard against the risk that consumers may come to see DVD as a commodity, instead of a high-value premium product.

That perception comes about by studios looking for ways to cut costs and add to their margins. In this same roundtable, John Thrasher, VP of video purchasing at Tower Records and Video, is concerned that the further consolidation on the entertainment supply side may cause a "sameness and blandness" of DVD production that will reduce the substance and value of the product. In short, the executives in this panel agreed that the industry must continue to push the envelope on developing even better DVD enhancements and content to build on the customer excitement and perceived value momentum the industry now has.

I for one am excited by the creative prospects of the DVD platform and hope it develops into its own art form and not slide into a commodity business.

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