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THE MORNING BUZZ: Studios' Planning Still Staying Ahead of Duplication Curve

5 Aug, 2002 By: Kurt Indvik

As the fourth quarter looms ever larger on the horizon, with promise of an even greater sellthrough bonanza this holiday season (especially for DVD), the issue of DVD replication and packaging capacity rears its nasty little head, as usual.

And while this has been a typical seasonal concern ever since DVDs were introduced five years ago, as the product enters the mass market, the issue becomes more critical.

The stakes are getting higher and the studios are continuing to ramp up not only the volume on new release hits, but on catalog as well. The goal is to drive DVD hit product into an ever-widening sphere of retail outlets with sellthrough pricing; and that requires mass-market-sized replication orders.

Adding to this challenge and opportunity is a public that continues its DVD buying apace even as DVD acceptance broadens into Middle America.

As you can see from the data on page 10 this week, compiled by our regular contributing DVD expert Ralph Tribbey, the buy rate of DVD software per DVD console appears to be holding fairly constant, at about 17 discs per year, even as penetration of DVD into U.S. households continues to climb toward what many expect will be about 40 percent by year's end.

The crux of the issue now, and for the future, revolves around the studios' ability to continue to forecast as accurately as possible, even earlier in the cycle of DVD planning and creation, both the number of titles and the amount of content and, therefore, number of discs required for any one release. Because of this, development of DVD materials begins earlier and earlier (even while the film is being made) so studios can plan their replication needs and make sure that completed DVDs arrive at plants in time to avoid traffic jams.

According to Video Store Magazine senior reporter Enrique Rivero's report this week, studios seem to have anticipated their needs early enough for this year's fourth quarter and gotten content lined up for the DVDs in time to ensure that no bottlenecks in duplication seem to be on the horizon. New Line execs, for example, said they pushed forward planning with duplicators for The Lord of the Rings, streeting this week, by three months over their normal time frame to ensure no problems or delays occurred.

The next challenge will be to see how the industry can improve the DVD packaging process, many aspects of which still must be done manually -- which boggles the mind when you consider the hundreds of millions of DVDs produced each year. If there is any jamming in the pipeline for the coming fourth quarter, some industry executives say it could well be in the packaging process.

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