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APAR's WORKING WEEKEND: Wake Me When the Future’s Here

2 Jun, 2001 By: Bruce Apar

The notion won’t win me any Nobels, but if you think about it there are at least three realities. Most like to live in the present, but there are those who prefer living in the past, and even some, like yours truly, who daydream about the future. It is part of my job anyhow and the future is infinitely more interesting than the present.

In home entertainment, the present and future are not coexisting peacefully these days. There is a clash of technology, of cultures, of economic models.

VHS, compared to the digital dynamite of DVD, is doomed to fade into a forgettable wallflower. Economically, VHS is at two extremes, with rental copies delivering fatter margins than DVD and budget units selling for a marginally profitable sub-$10. The analog anachronism-in-the-making is riddled with a set of distribution dynamics that would confound Albert Einstein. DVD is priced in the collectible range across the board. One low price, more or less.

The gathering perception is of a VHS culture that is middlebrow mundane, while the digital culture to which DVD belongs is upscale sleek.

That’s the present.

But what happens in the future, once DVD penetration has saturated the upscale households and moves into other strata of society? Will everyone value the extra features and pay for them? Will rental rule, or sale?

An industrywide tiered pricing system on DVDs is inevitable. In fact, it’s already in place. An increasing selection of DVDs is available shelf-priced at below $10, from major release catalog movies to special interest offerings. There also will be the premium-priced major motion pictures straight from the Bijou, at $30 to $40, comparable to CD boxed sets. They have higher perceived value and the higher cost covers the rental revenue that rights holders claim.

That’s the future.

Retail executive Fred Handsman, of Video U.S.A., told me this past week how he has noticed his son’s 16-year-old crowd buying DVDs "like they’re CDs." For that generation, DVDs are CDs, except with the requisite visual content. For each successive generation, visual displays are increasingly integral to everyday existence.

That’s the future.

At least 85% of homes in the United States do NOT own a DVD player or, presumably, any DVD software. VHS rentals this year, save for an arid April, have been notably strong.

That’s the present.

Arguably the hottest entertainment conglomerate right now is Vivendi, recent buyer of Universal Studios that seems to have a clearer vision than its sprawling competitors of how to successfully navigate the future of home enterainment. In rapid succession, it has acquired a global entertainment empire (Universal), the leading online music service (mp3), and now a major book publisher (Houghton Mifflin).

Plus, it has a distribution deal with the hottest creative shop, DreamWorks, whose Shrek looks to be a monstrous fourth-quarter video release. Then there’s Spielberg’s A.I. and Jurassic Park 3, plus Uni’s own Mummy 2. That’s not to mention DreamWorks’ Gladiator DVD handled by Uni and the comedy smash Meet the Parents.

That’s the present.

The future for Vivendi Universal, whose home entertainment chief Craig Kornblau was honored last Thursday in New York by the Vision Fund of America, is one of marrying the American organization’s endless content with the French parent’s vast telecommunications network.

There’ll be kids not yet 16 walking around with video display handhelds listening to and watching a favorite band playing on a coin-size DVD.

That’s the future. I can’t wait.

Comments? Contact Bruce directly at:bapar@advanstar.com

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