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Burn, Baby, Burn!

8 Jul, 2006 By: Thomas K. Arnold

Studio executives are optimistic that soon, physical on-demand DVD services — which create DVDs complete with packaging, only when ordered by a customer — will help relieve the retail shelf-space crunch that continues to decline.

The leader in the DVD-burning game is CustomFlix, which Amazon.com acquired in July 2005. CustomFlix provides burn-on-demand DVD publishing services to filmmakers and content owners, from manufacturing to delivery, in return for a percentage of the revenue. Several TV and cable networks have signed up, as has HDNet, which is working with CustomFlix to digitize hundreds of titles.

But the real prize, according to studio executives, would be in-store DVD-burning kiosks such as the ones Wal-Mart, Target and other big retailers are reportedly evaluating.

“I think manufacturing on demand is one of the holy grails of this business,” said Warner Home Video president Ron Sanders. “We're getting further pressure to reduce shelf space at retail, and yet the amount of titles we have in distribution is growing exponentially.”

According to the latest figures from The DVD Release Report, suppliers are on track to hit the 60,000-title mark by the end of 2006. That figure includes all DVDs released since 1997, net of discontinued titles.

“The need to satisfy consumers on library product that's not being stocked is huge, so the concept is fantastic,” Sanders said. “There are technical challenges and some significant barriers, but we're getting closer to solving these challenges. And if we can, it would open up some really great positives.

Tom O'Malley, GM of Vivendi Visual Entertainment, agrees.

“We believe that these kiosks can coexist with all points of DVD sales,” he said.

“We believe these consumer buying opportunities can only lift retail sales.”

The concept appears simple: Consumers could buy any movie they want by browsing on a computer connected to the Internet. Once a consumer requested a title, the movie would be downloaded while the consumer waits, and then either burned to a DVD or downloaded directly to a mobile device, such as an Apple iPod or a Sony PSP.

Retailers see these kiosks as a hedge against consumers downloading movies at home. The technology is there, but concerns over piracy and licensing issues have made content-holders reluctant to turn on the green light, at least for now.

Sources say the first DVD-burning kiosks could appear in stores as early as 2007, around the same time consumers will be able to burn movies they downloaded over the Internet, from such services as Movielink and CinemaNow, on DVDs playable on their set-top machines.

On the music side, CD-burning kiosks exist, but they've had a spotty track record.

Critics say they're not nearly as convenient as downloading songs from the iTunes Music Store or other online services, since they still require a trip to a retail store and a wait.

Just recently, Starbucks scrapped a highly publicized test of CD-burning kiosks in its coffee houses. After two years of testing the machines at 15 stores in Seattle and 30 in Austin, Texas, Starbucks yanked them out of all but five locations in each city and has canceled plans to expand the program nationwide.

Stories such as this make Sony Pictures Home Entertainment president Benjamin Feingold a little less cheery about the prospect of DVD-burning kiosks than some of his studio counterparts.

“We have not seen that model work yet on the music side in any significant volume,” he said.

“Any new business we welcome. But from the music perspective, it appears downloading at home is more attractive to the consumer.”

Still, Feingold added, “it may be easier from a movie perspective because you just have to download one movie instead of a bunch of songs.”

The “real issue,” he added, “is solving the piracy issues.”

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