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Panel: Retailers Key to DVD-Audio Success

3 Apr, 2003 By: Kurt Indvik

Key players in DVD-Audio called for labels to push more product into the pipeline, told retailers to get behind the product with creative merchandising and predicted the format could eventually force down the price of CDs.

In an Orlando, Fla., hotel ballroom bristling with towers of speakers set up for surround sound, music label executives presented attendees at the recent NARM convention with a big taste of DVD-Audio.

Presenters from Warner Strategic Marketing, EMI, DTS Entertainment and Silverline Records played samples of new releases and existing DVD-Audio from The Beach Boys, Linkin Park, Queen and Aaron Neville. Outside the ballroom, a Hummer and Cadillac were parked in the lobby, each outfitted with DVD-Audio systems for attendees to check out. The point of the presentation, coordinated in part by the DVD Entertainment Group, was to encourage retailers to push the format forward.

The Whys and Hows of DVD-Audio
The key to DVD-Audio's attraction is the 5.1 surround sound element, presenters said. Consumers have so far bought some 30 million surround sound systems in the United States, primarily to re-create the moviegoing experience.

“The film industry has done all the work for us,” said David Dorn, SVP of sales and marketing at Warner Strategic Marketing.

Presenters estimated that more than 44 percent of all DVD players sold by 2004 will be DVD-Audio enabled. There are approximately 1.2 million DVD-Audio players in the market now.

To capitalize on this, presenters said, labels must ratchet up the release of DVD-Audio titles, including day-and-date releases with artists' new CD offerings, as well as explore their catalog for new projects.

“DVD-Audio offers the best opportunity in years for labels to revisit their catalogs,” Dorn said. Retailers have to support the platform with more floor space and help educate the consumer with effective merchandising, creating the surround sound experience with listening booths, he said.

“All the elements are there,” said Ted Cohen, EMI's VP of digital development and distribution, noting the existence of some 50 different DVD-Audio player models. “It comes down to education of the consumer … it's going to take the power of the retailer, big and small, to educate the consumer.”

“It's all about providing something that the customer can't get anywhere else,” said Mike Carden, president of Eagle Records, outside near the DVD-Audio display. Eagle has been an early proponent of music DVD in general. “But it's not a theatrical product, it's still music, and it has to be marketed and sold like music,” he said.

Carden's company has been very active, through its Eagle Vision division, in bringing to market a variety of DVDs, most notably its “Classic Album Series” of such talent as Elton John, Fleetwood Mac and others that helps to show the behind-the-scenes experience, even some re-creation, of the making of great albums.

Carden sees a growing blur between music and video, and believes retailers should be looking to cross-market DVDs with CDs and present an artist's full range of projects together.

“You have to look at [music DVD] like their newest music product. You're certainly seeing more and more artists approach DVD like that,” he said.

Many Retailers Already on Board
Jeff Dean, president of Silverline Records, estimated that 165 retailers carry DVD-Audio, representing about 1,500 outlets, about 25 percent of total U.S. music stores.

One of the biggest, Best Buy, is giving DVD-Audio 12 feet of space in many of its stores, said Joe Pagano, SVP of music/trend merchandising. Tower Records stocks DVD-Audio, but also supports the super-audio CD (SACD), said George Scarlett, VP and director of product management.

The competition between these two formats is cause for concern, said some panelists and audience members. SACD proponents claim it delivers a better sound product (though also less in terms of graphics and video). The challenge for SACD is that, while an SACD disc can play on a CD player, one needs a SACD player to get the enhanced high-resolution audio. DVD-Audio proponents say the majority of consumers rate surround sound and extra content about their favorite artists as the two most important things they are looking for in new music formats, with high-resolution sound a distant third. DVD-Audio discs can play on current DVD players and deliver surround sound, though not the high-resolution audio.

Though there is one player on the market now capable of playing both DVD-Audio and SACD discs, industry experts are skeptical that these so-called “dream machines” will solve the format battle. “If history is any indication, it shows that only one [format] will survive,” Scarlett said.

Still Room for CDs
With four channels of audio, additional channels for 5.1 and higher resolution audio, plus space for video, pictures and other features, DVD may become the music industry's answer to the declining consumer perception of the value of CD, industry experts agreed during several panel discussions held during the convention.

“Our guess is that the CD will be the $10 product and DVD-Audio will be the $18 product,” said Don VanCleave, president of CIMS, a marketing consortium of independent retailers, speaking on a panel about DVD.

Because DVD-Audio has encryption technology that, for the present, keeps it from being copied, means that piracy, online and physical, will not be a factor.

That places the product squarely back in retailers' hands, EMI's Cohen said.

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