The History of DVD: The Disc That Changed Home Entertainment27 Mar, 2017 By: Thomas K. Arnold
The seeds for DVD were planted in 1986 when Warner Home Video, under the direction of president Warren Lieberfarb, first advocated the development of a format to put movies on a five-inch optical disc, similar to the CD that had taken the music industry by storm just a few years earlier.
As the years progressed, Lieberfarb’s drive to develop a video disc for the distribution of movies began to intensify. After more than a decade of steady, and significant, growth, the home video industry — centered on the rental VHS videocassette — had begun to flatten with maturity. The novelty of renting movies was fast wearing off.
Lieberfarb envisioned a whole new model, with video discs riding the coattails of the CD explosion and turning consumers from renters into buyers, with much higher profit margins for the studios. He charged his organization with achieving this vision in an attractive, convenient, collectible form that — unlike the high-cost, cumbersome existing laserdisc system — could be easily and inexpensively replicated.
The DVD project — code-named TAZ after Warner’s whirling Tasmanian Devil cartoon character — plunged Warner Home Video into a new world of advanced technology. Lieberfarb and his team, working closely with Toshiba Corp., soon became conversant with such complex issues as thin-disc physics, digital element preparation, authoring and related manufacturing issues.
Beyond developing these new technological skills, Warner Home Video had to negotiate the specifications of the DVD system with the very different corporate cultures of the CE and IT industries, as well as the unique business cultures of its Asian and European partners. Within the Warner Home Video organization, a “Manhattan Project” spirit developed, as more members of management were brought in to apply their special expertise to TAZ — encouraged by the new format’s potential.
Then, in 1992, Sony and Philips announced their own intent to develop a high-capacity CD.
Development work at Warner accelerated. The Warner-Toshiba consortium in June 1994 officially announced the development of a five-inch Super Density (SD) disc, which could hold an entire movie.
Three months later, in September, Sony and Philips announced their own specifications for a high-capacity CD, called the Multimedia Compact Disc (MMCD).
Fears of a format war bubbled through the industry as 1994 turned into 1995. But with the disruptive battle between VHS and Betamax still fresh in the industry’s minds, the rival disc consortiums — Warner and Toshiba on one side, Sony and Philips on the other — began working on a compromise.
A final compromise was announced in December 1995, with both sides agreeing to support something called the DVD, which initially stood for “Digital Versatile Disc,” a moniker that over time evolved to Digital Video Disc.
After that, things happened fast. In November 1996, the first DVD players went on sale in Japan, with the first movies arriving in the land of the rising sun a month later. In March 1997, an initial batch of DVDs from Warner and MGM arrived in a seven-city U.S. test. Titles in that first box of 20-some movies included Twister, Bonnie & Clyde and The Mask, all packaged in the cardboard “snapcase” that Lieberfarb is said to have preferred.
In May 1997, the first music video titles were released on DVD, including Eric Clapton: Unplugged.
In July 1997, what was then MCA/Universal Home Video said it would support the nascent format. In August 1997 Warner went national with DVD, putting discs in nearly every major American home entertainment retail chain, including Best Buy, Musicland and Tower Records. And in September, Walt Disney Studios announced its support for DVD as well.
But just as it appeared that DVD was beginning to gain some momentum, along came Divx, a pay-per-play variant championed by the chief of Circuit City, one of the country’s major consumer electronics retailers. Several studios immediately lined up behind it, including 20th Century Fox, which had yet to come to the DVD table.
But Divx died a surprisingly swift death, done in by a failure of consumer electronics manufacturers — who were focusing on making more, better and cheaper DVD players — to support it. The playing field now obstacle-free, DVD’s popularity began to accelerate. In February 1998, Air Force One became the first DVD to ship more than 100,000 units. In April, Paramount announced its support, followed in August by 20th Century Fox and, in September, by DreamWorks, the last major-studio holdouts.
The percentage of people who switched from renting to buying movies kept rising, surpassing even Lieberfarb’s initial projections. In November 1998, the 1 millionth DVD player was shipped to retail; in December, it was reported that DVD players were now in 1.4 million U.S. homes, and that these households had snapped up a whopping 23 million discs that year alone. Computer makers announced shipments of 6 million PCs with DVD drives.
Among other milestones of the DVD format:
• In August 1999, Titanic became the first DVD to ship 1 million units.
• In October 2000, Sony’s highly anticipated new PlayStation 2 video game console came to market with DVD playback.
• In June 2001, holdout George Lucas announced that Star Wars: Episode 1 — The Phantom Menace would appear on DVD in October, the first “Star Wars” film to be available on the format.
• In October 2001, MCA/Universal announced first-week sales of more than 2 million units of The Mummy Returns. A few days later, Disney said the DVD debut of Snow White and the Seven Dwarfs was the first DVD title to sell a million copies in a single day. That kicked off a running sales-record battle, with the trade press inundated with press release after press release touring a new victory of one sort or another.
• In April 2002, DVD player shipments hit 30 million. Two months later, Netflix — the upstart rental organization that offered DVD rentals by mail — opened 10 distribution centers, paving the way for next-day delivery.
• In June 2002, the Motion Picture Association of America reported that DVD accounted for 40% of the studios’ total worldwide revenue.
• In August 2002 The New York Times dubbed DVD “the most successful home entertainment device in history … a true pop-culture phenomenon.”
• In September 2002 Disney’s Monsters, Inc. became the first major animated film to sell more copies on DVD (7 million) than VHS (4 million) its first week in stores.
• By December 2003, 50 million U.S. households had at least one DVD player.
• Netflix in October 2004 reported that TV DVD rentals were the fastest-growing component of its business, accounting for 12% of the company’s total revenue.
• Consumer spending on DVD purchases hit $15.5 billion in 2004, up 33% from the prior year.
• In April 2005 the DEG announced DVD shipments of more than 400 million units in the first quarter of the year, up 21% from the first quarter of 2004. VideoScan data showed sales to consumers rose 20.5% in the same period.
• In June 2005, Walt Disney Co. chief Robert Iger said studios should consider narrowing DVD and TV release windows, noting, “We can’t allow tradition to stand in the way of where the consumer can go or wants to go.”
The fall of 2005 would be remembered as the start of DVD’s decline — which some studios attributed to the high-definition TVs that had come on the market.
A quest for a high-def successor disc had begun several years earlier, again championed by two rival consortiums, one led by Warner and Toshiba and favoring a higher-capacity DVD known as HD DVD, and the other spearhead by Sony, with a blue-laser variant called Blu-ray Disc. Once again, the two sides attempted to unify standards, but this time they could not reach an agreement and in mid-2005, right around the time DVD growth began to slow, they announced there would be no compromise.
The subsequent launch, in June 2006, of Blu-ray Disc and HD DVD was followed by a format war every bit as bruising and destructive as critics had feared. Studios lined up on either side of the aisle, with some dipping toes in both formats — or supporting first one, then the other.
Consumers, rightfully, were confused. And that made them even less prone to re-buy their movie libraries — particularly since the picture quality of Blu-ray Disc compared to the picture quality of DVD was nowhere near as pronounced as the quality difference between DVD and VHS.
Adding to the slowdown in disc sales was the emergence of digital delivery options. Consumers had become accustomed to buying their music over the Internet — so why not movies? Then, in 2007, Netflix augmented its disc-by-mail business by offering its subscribers the chance to “stream” movies and TV shows over the Internet.
DVD very likely benefitted from the confusion. Sales and rentals of DVD in 2006 hit all-time highs, according to the DEG, with consumer spending on DVD purchases topping out at $16.6 billion, a slight gain over the previous year (when sales were $16.3 billion) but a gain, nonetheless.
The following year proved not so lucky. DVD sales in 2007 dropped slightly to $16 billion, and the following year to $14.5 billion. Blu-ray, particularly after vanquishing HD DVD in early 2008, slowly but surely began to catch on, posting impressive sales gains year after year. But those gains were not enough to compensate for the steady decline in DVD sales.
Combined DVD and Blu-ray Disc sales for 2016 came in at just $5.49 billion, according to DEG estimates — down 9.55% from $6.07 billion in 2015. That includes the early results for the newest optical disc successor, 4K Ultra HD Blu-ray, which industry observers expect could trigger a resurgence in disc sales as consumers seek content for new 4K UHD TVs with high dynamic range capabilities.
So while the importance of DVD specifically in today’s entertainment world is a fraction of what it once was, its legacy looms large. It could even be said that DVD was one of the gateways to the digital world in which we now live, just like CDs before them.
As Microsoft itself said in a tribute ad to Warren Lieberfarb in Home Media Magazine’s 10th anniversary of DVD issue back in April 2007, the DVD “changed the landscape of the home entertainment industry” and “helped usher in a new era of technology that changed the world.”