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HIVE EXCLUSIVE: DVD Continues to Capture Movie Collectors and Casual Viewers With Its Creativity, Convenience and Cost

19 Oct, 2001 By: Thomas K. Arnold


Warren Lieberfarb, the president of Warner Home Video who is widely viewed as the “father” of DVD, had a rosy vision when the format was launched nearly five years ago.

Movie sales would soar, as the many advantages of the format turned more people than ever into collectors rather than casual viewers. Retailers could benefit by promoting DVD to their rental customers in the hope of getting them to buy as well as rent. DVD would thus become an incremental revenue generator instead of merely a replacement for VHS.

For awhile, it appeared Lieberfarb had it all wrong. A vibrant rental market developed for DVD and critics began piping “I told you so,” pointing to report after report that DVD was cannibalizing sales of higher-priced rental cassettes. A couple of studios even toyed with instituting windows for rental cassettes, only to be shut down by a wave of complaints from horrified retail sales giants like Best Buy.

Recent events, however, appear to have vindicated Lieberfarb. With the installed base of DVD players fast approaching critical mass of 25 million households — a target analyst Tom Adams of Adams Media Research says will be reached by year's end — consumers are buying movies in record numbers and increasingly, their format of choice is DVD. Studios are shipping nearly 5 million units each of such high-profile DVD releases as The Mummy Returns and Snow White and the Seven Dwarfs into the marketplace, and first-week selloffs are approaching 50%.

The boon, observers say, is coming from both movie collectors and from casual viewers drawn by DVD's convenience and relatively low price tag.

“For $15 or $20, DVD is something even families will want to buy, particularly now that 20% of DVD households have two or more players,” Lieberfarb says.

Mike Dunn, executive v.p. of 20th Century Fox Home Entertainment, says after years of talk about how the home entertainment pie is getting bigger, it finally is — thanks in large part to DVD. What's more, he says, “the size of the pieces is going to increase as well,” with excitement over DVD fueling spending in other sectors of home entertainment.DVD sales for the fourth quarter, estimated to clock in at $2 billion, are running 100% ahead of sales in the fourth quarter of 2000, Dunn notes, while VHS rental — the “bastard son” of home entertainment, in the words of one cynical retailer — will likely finish the quarter 12% ahead of last year.

Dunn points to two trends Fox internal research reveal: 1) DVD sales to consumers are continuing to spiral upward, despite the influx of mainstream buyers of under-$200 players who were initially expected to only rent; and 2) DVD is turning Americans into a nation of movie collectors, something VHS never quite could accomplish.

“The [sellthrough] VHS business was built on the back of Disney,” Dunn says. “It was baby fare for children, with an occasional adult movie thrown in that achieved respectable sales numbers. DVD changed that dynamic, turned that dynamic on its head. Five years ago your primary purchaser was a parent female; now, it's an 18-plus male.”

Accordingly, Dunn says, all the adult-oriented DVDs coming out this fourth quarter “are going to exceed [sales] expectations. The better the movie, the more special effects, the more action, the more added value, the higher your sales are going to be.”

John Thrasher, v.p. of video purchasing at Tower Records and Video, a 100-store audio-video combo chain based in West Sacramento, Calif., agrees. He says with the advent of DVD, movie buyers have become “more voracious” than ever before. He notes that the average selling price for a DVD, $20, is not that much of a bump up from the $15 or $16 people are accustomed to paying for a music CD, “and they get so much more, particularly with all the value-added materials” the studios are putting on DVDs.

David Lambert, a former video retailer, says he and his wife, Stephanie, are collectors at heart. They own more than 1,000 books, 400 CDs and nearly 600 video games (on 28 different console systems).

Back in the VHS-only days, Lambert says, he was never much of a movie collector. “I collected VHS in an amateur way,” he says. “I didn't realize I had even gotten up to 100, but half of those were Disney titles for my son, Stephen.”

With DVD, however, it's a whole other story. “We have collected more than 900 DVDs — enough to buy an extra car,” he says.

Unlike many DVD aficionados, Lambert isn't a widescreen diehard or a surround sound purist. “We don't even have a home theater system,” he says. “We have a 32-inch TV, and that's it.”

Lambert says he prefers to watch movies in their original aspect ratio (OAR) rather than “harsh pan-and-scans.” But what matters most of him, he says, “is collecting our favorite entertainment, so that we can do what we want, when we want to. We have it on hand, so we don't have to depend on a library or an online service or video-on-demand. It's ours, and it's not going anywhere as long as we are careful with it.”

That seems to be the prevailing line of thought among DVD collectors. They want a permanent, high-quality collection of films, something VHS could never quite offer them.

Lieberfarb says that's a compelling selling point — just as he always knew it would be. And yet without downplaying the importance of collectors in driving DVD sales, he says convenience is also a motivating factor, particularly since prices for even new hit DVDs have remained relatively low.

“The purchase decision provides families with a multiplicity of conveniences as to how they manage the use of their leisure time that other distribution systems don't provide,” Lieberfarb says. “With leisure time being perhaps the most precious commodity we have, any business model that enhances and or increases the enjoyment of these hours will be valued by consumers.

“Clearly, the option of owning, not renting, is proving that there is a vast underserved market that always wanted to have this choice,” Lieberfarb says. “The entertainment value of the movie will always be paramount” and added material is also a strong selling point.

“But in the final analysis,” he says, “the overall buying motive vis-?-vis rental is, in my opinion, largely being affected by the convenience of owning and the price-value relationship associated with that.”

This is not to say that VHS sales are dead in the water. Movies Unlimited, a Philadelphia-based concern that sells videos through the mail, says total video sales for the fiscal year ended Sept. 30 are up more than 23% from the previous fiscal year.

But unlike most retailers whose business is up, president Jerry Frebowitz isn't pointing to DVD.Noting that DVD only represents 11% of his business, Frebowitz maintains consumer interest in VHS is at an all-time high. “Consumers are still buying and collecting VHS tapes,” he says. “Our VHS business is way up. DVD is a very small percentage of the business, for us.”

Frebowitz says he's concerned that publicity over DVD might prematurely kill VHS, with studios as well as smaller, independent producers abandoning the format despite continued consumer demand.

“I can't understand why the industry would want to do that,” he says. “Let's say a guy only sells public domain titles — well, public domain doesn't sell in DVD. Neither do classic movies.”

Entertainment companies, Frebowitz maintains, “gave 8-track a better chance than they're giving VHS, which has been good for them for so many years. I can't figure out why they would want to kill it.”

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One of the people quoted in the article felt his comments were misinterpreted. Here is his response:

"Your article, 'DVD Continues to Capture Movie Collectors and Casual Viewers With Its Creativity, Convenience and Cost,' published on October19th at your web site, took quotes and comments from me, and failed to properlyrepresent my opinion on the importance of widescreen on DVD.

In particular, your article stated rather bluntly, 'Unlike many DVDaficionados, Lambert isn't a widescreen diehard or a surround sound purist.' You went on to insinuate that I will buy full-frame DVDs ifthat's all that's available.

That's not true. To be blunt in my own turn, NO OAR = NO SALE.

As you know, 'OAR' stands for Original Aspect Ratio. I ONLY buy DVDs that show films as they were originally presented in theaters. It's OK to buy a 'full frame' version of Snow White, because the 4:3 image on DVD is how it was seen in the cinema upon release. For me, it's not okay to buy thecurrent DVD for, say, Grumpy Old Men, which was shown in widescreen intheaters (it's OAR was 1.85:1). My family and I love that film and its sequel dearly, but since the DVD is only available full-frame and non-OAR, we have boycotted it.

Recently Warner Bros. held a live online chat which four of their vice presidents attended, in which they were asked about the Grumpy Old Men and Vacation films, and other comedies they've never released on DVD in OAR.

One of them, unidentified, answered the question with another question: 'Not at this time. Is there a great demand for 1.85 flat comedies to be seen widescreen?'

Uh, yeah. There IS a great demand.

THIS attitude is from Warren Lieberfarb's company. Your article that misrepresented my feelings about OAR was right between comments from Mr. Lieberfarb, which had the gross impact of making it sound like I was OK with what they are doing with non-OAR releases. I am NOT OK with that.

In fact, I helped push the fight for a widescreen version of the WillyWonka 30th Anniversary DVD, not just with the 12,000-signature petition thatsucceeded in getting a Nov. 13 release on the boards, but also by literally telling people in stores not to buy the full-frame edition they were holding.

I called a person in Warner's marketing department multiple times to push for widescreen releases of Lord of the Rings (animated), Cats & Dogs, and the Shiloh movies...all of which resulted in success. Warner heard us. But the fact that they tried to get away with only non-OAR releases at all frankly angers many of us, myself included.

I suggest you write an article in the VERY near future that explores this issue in great detail. TV shows like 'E.R.,' 'Enterprise' and 'The Sopranos' all broadcast in widescreen, so why should films EVER come to DVD in a way that makes their original widescreen presentation in theaters unavailable?

Now, to clear up what you mis-interpreted in my quotes:

I said, quote: 'We don't have a home theater system. We have a 32" stereo TV...andthat's it. We'll get 5.1 after we get a widescreen set. We'll get the widescreen set when they come down just a hair more in price...perhapsaround tax refund time next spring. Actually, that's not what's important to us.'

What's 'not important to us' is the home theater equipment we view our OAR films on! I meant that the 32" TV is fine to watch OAR films with, eventhough the picture is smaller and there are 'black bars' on top and bottom, that would be significantly reduced or even eliminated with a widescreen TV.

Right now the equipment is secondary, buying movies in OAR is primary to me.

If you go back to the original comments I wrote, I also said, 'We will soon buy the home theater equipment necessary to see our OAR DVDs in all of their glory. And hear them right, too.'

As you can see by THAT statement, our DVDs are indeed OAR. The few that we've bought by mistake or were given as gifts hardly ever get watched.

I replace them as fast as OAR versions come out.

I am sincerely frightened that my words will be used against my cause. Often, studios justify releasing non-OAR films by quoting 'market research.'

Well, I just became a useful person to quote: a consumer who is a DVD collector and film-lover, but who 'isn't a widescreen diehard.' Uh, yeah.That's not right. I AM a widescreen diehard, and I want all the studios tounderstand this again, so I'll repeat it: NO OAR=NO SALE.

I always look forward to the release of an old film on DVD in OAR, so I can see what I've been missing all these years having only seened non-OAR releases on home video, and not having opportunities to find them in OAR in a local theater as a 'revival.' OAR is of supreme importance to me and my family.

Thank you for your attention to correcting this matter in a prompt and clearly visible fashion."

David M. Lambert
Memphis, TN


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