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On Demand Key to DVD Biz, Panel Says

18 Jul, 2007 By: Erik Gruenwedel

LAS VEGAS — Sustaining market share via on-demand DVDs could be a boom for mainstream retailers and consumers, a panel of manufacturing on demand [MOD] executives said yesterday at the Home Media Expo 2007.

The panel said offering consumers the option to burn DVDs through centralized services or kiosks located at previous niche players such as pharmacies, grocery stores and gas stations would help support the long tail of the business.

“No new format has ever been successful if it doesn't offer more on an existing format,” said Tim Hogan, VP of digital distribution platforms with Sonic Solutions.

He said a sizable percentage of available movies, television programming and documentaries has not been released on DVD, underscored by the fact that 89% of rental revenue is generated by new releases.

Hogan cited data from Adams Media Research that shows on-demand revenue would reach about $100 million this year, about $750 million in 2008, $1.5 billion in 2009 and $2.5 billion in 2010.

Todd Rosenbaum, CEO of Polar Frog Digital, a kiosk-based DVD-burning service, said mainstream consumers need easier alternatives to downloading content on confusing gadgets.

“We need a large scale deployment to help define MOD,” Rosenbaum said.

He said his kiosks, which hold more than 2,000 digital files, could burn a DVD in four to six minutes.

Kiosk locations include military bases, airports, home improvement stores and adult novelty retailers.

“Why shouldn't retailers that haven't had much success selling DVDs get another opportunity?” Rosenbaum said. “Now, there is a way to satisfy that retailer.”

Blair Zykan, managing director with Allied Vaughn, said centralizing the MOD process, including ordering, production and fulfillment, allows retailers to make a profit on niche titles with limited production.

Larry Smith, VP, content acquisitions with CustomFlix, said centralizing MOD gives the Amazon.com unit more control of the content while giving the consumer more title choices.

“There are no inventory issues for retailers, which is the appeal of MOD,” Smith said.

Al Welch, owner of Video Village in Rockwell, Texas, said he was intrigued about download-to-own kiosks as a means for the independent retailer to stay involved in the digital evolution.

“I would rather be on the bleeding edge than on the bloody trail,” Welch said.

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