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Video Execs Discuss Disposable Discs, HD-DVD and Indie Issues

23 Jun, 2003 By: Jessica Wolf

A top rental chain EVP put studio executives on the spot about the self-destructing DVD during the presidents' panel at the DVD in 50 conference.

Bo Loyd, Movie Gallery's EVP of product management, asked home video presidents what kind of impact they thought the EZ-D disc would have on the market.

After a moment of silence, Buena Vista Home Entertainment president Bob Chapek, whose studio is testing the discs, piped up, “Well, I guess I'd better answer this one.”

He reiterated that the September launch of Buena Vista titles on Flexplay-technology discs -- which will effectively self-destruct two days after the seal is broken -- is only a trial, and called it a win-win-win situation for suppliers, rentailers and consumers. Chapek cited studio research indicating a market need.

“One of the things that the consumer doesn't like about the rental market, at least a certain component of consumers, is having to go back and return movies and having to pay late fees,” Chapek said. “To me, it comes down to a basic consumer need issue.

“Our research indicates that the people who are most interested are lapsed renters.”

He said rentailers should look at EZ-D as “a way to regain consumers they've lost, or never had.”

“The thing that we've got to be careful with is sellthrough cannibalization,” he said.

Other audience members questioned whether the majors are trying to convert everyone to buying.

“I haven't heard anyone sitting here saying that the rental business isn't important or thriving,” said Paramount Home Entertainment president Meagan Burrows. “One of the benefits of DVD is that the consumer can choose on the same day to rent or buy.”

Chapek added: “I think you'll see rental continue to increase as you see later adopters come to DVD. I think the rental business is something that has to be dealt with to a certain degree.”

The sellthrough DVD has certainly had positive impact on the studios' bottom line, the panel agreed.

“I'd like to thank the first 50 million customers, and especially the early adopters who kind of flipped the consumer dynamic from those early days when Chapek had 90 percent of the sellthrough market,” quipped Fox Home Entertainment president Mike Dunn.

The panel also discussed the importance of copy protection, advancement of new format technologies like HD-DVD, marketing strategies and pricing.

“Price erosion is the most immediate concern right now,” DreamWorks president Kelly Sooter said, adding that studios are driving it.

Each president expressed the need to create special DVD features that carry true value.

“We have always emphasized that added-value features was a key way of differentiating DVD,” said New Line Home Entertainment president Stephen Einhorn.

Developing added-value content that will appeal to consumers is also a concern for smaller suppliers in the video market, though identifying the right content is the first, most important step, said members from the independent issues panel.

“We have to go out there as hunter-gatherers and create our own luck, which can be very rewarding,” said Barry Gordon, Image Entertainment SVP of acquisitions.

GoodTimes Entertainment president Bill Sondheim said indie suppliers look for product and genres with built-in selling points that draw media. Hart Sharp Video president Joe Amodei said his fledgling company is on the lookout for quality independent product across genres -- titles that will translate to the sales and rental markets. “I don't believe you can exist if you just have rental titles,” he said.

Indies may work with less and hail successes the majors would call failures, but they also are unencumbered by corporate layers, allowing for more creativity, said Ron Schwartz, Lions Gate EVP of domestic home video. “This is not a small business; we're just small in relation to the big studios, but each of us here is running north of a $100 million business,” he said.

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