VIDEO INDUSTRY STEPS UP MARKETING OF DVD FOR HOLIDAYS

DAN ALAIMO

Marketing for DVD is shifting into high gear for the holiday selling season, with specialty stores taking the lead.

The industry last month announced the shipment of the 1 millionth DVD player into the market and a major cross promotion between hardware retailers and rental retailers.

"The fourth quarter of 1998 will be a dynamic period of growth for the DVD video industry, as widespread mass-market availability of players and titles at affordable prices is expected to prompt strong holiday and post-holiday sales," said Paul Culberg, executive vice president of Columbia TriStar Home Video, Culver City, Calif. Culberg also serves as president of the DVD Video Group, Los Angeles.

Meanwhile, Circuit City, Richmond, Va., has been supporting Divx, the limited-play variant of DVD, with increased print and television advertising in the fourth quarter. The company also announced last month that it has added another hardware retailer to its roster -- nine-store Dow Stereo/Video, San Diego -- and a high-end $599 player from the Proscan brand of Thomson Consumer Electronics, Indianapolis. There are now 215 movies available on Divx, and Circuit City expects the number to grow by 50 titles a month.

Divx, based in Richmond, Va., is short for Digital Video Express, a company owned by Circuit City and Los Angeles law firm Ziffren, Brittenham, Branca & Fischer. Consumers buy movies on Divx discs for $4.49 and have 48 hours to view them in a special player that costs about $100 more than a standard DVD machine, but which also will play standard DVDs. Additional viewing time may be purchased for about $3, or more for decoding that will allow permanent ownership of the software.

The Divx format has the support of most of the studios, but not Warner Home Video, Burbank, Calif., and Columbia TriStar, which have invested heavily in "open" DVD. All studios are now releasing at least some product for open DVD, including DreamWorks SKG, Glendale, Calif., the last major studio to sign up this fall.

Prices on the least-expensive open-DVD players dropped below $300 over Labor Day weekend. "With players available in mass-market merchants starting for less than $300, the DVD video revolution is reaching a brand-new audience around the country," said Culberg.

Since DVD's introduction at retail in spring 1997, sales of DVD players have outpaced sales of VCRs by a 10-to-one margin and have surpassed sales of compact disc players by four to one, said Culberg. The DVD Video Group is predicting that more than 10 million DVD software discs will be sold to consumers by year-end, with 623 million units sold by 2006. More than 2,000 titles will be on the market by the end of 1998, Culberg added. "In addition, many studios are beginning to offer lower price points to help drive consumer traffic," he said.

Eight companies have joined in a campaign running from mid-November through the end of December to promote DVD rentals and sales of hardware and software. Rental retailers Hollywood Entertainment, Portland, Ore., and West Coast Entertainment, Philadelphia, are involved, along with electronics chains Best Buy, Minneapolis; The Good Guys!, Hayward, Calif.; and Nobody Beats the Wiz, Carteret, N.J. Hardware manufacturer Toshiba America, New York, and two studios, Warner and New Line Home Video, Los Angeles, have also signed on.

Consumers who buy a specified DVD player from the electronics retailers receive five free Warner and New Line DVD discs, plus a coupon book for 13 free DVD rentals at Hollywood or West Coast. In addition, the DVD video group is running a national contest, "Experience the Making of a DVD Movie," offering a trip to Los Angeles to visit a movie set, a DVD authoring session and Sony Picture Studios.

"From a technical standpoint, DVD significantly improves the home movie experience," said Jeff Yapp, president and chief operating officer of Hollywood Entertainment. "Holiday shoppers can now buy DVD players for as low as $299 and receive free movies from Warner and New Line, and free DVD rentals," said Joe Pagano, vice president of music and movies for Best Buy.

"We are totally committed to the DVD format and feel that DVD rental is key to the growth of the configuration," said George Meyer, vice president of music and movies for Nobody Beats the Wiz. "This promotion will help increase that penetration."

"DVD is one of the most successful new products in consumer electronics history," said Jim Cardwell, executive vice president for North America at Warner Home Video. "The fourth quarter is the prime selling period for consumer electronics, and these promotions position DVD players as the holiday gift for 1998."

Warner also has set a cross promotion with Microsoft Corp., Redmond, Wash., to emphasize that DVDs can be played on computers equipped with DVD-ROM drives. Customers purchasing Microsoft's Windows 98 software during November and December will receive a free Warner DVD movie from a selection of 10 titles.

Among the other DVD marketing efforts at retail:

Hastings Entertainment, Amarillo, Texas, has added DVD for rental and sale in 90% of its 125 stores and will rent DVD players.

West Coast Entertainment has rolled out DVD software chainwide for rental and sale.

Musicland Stores Corp., Minneapolis, has renewed and expanded an agreement with Sears, Roebuck & Co., Chicago, to promote DVD technology through Musicland's Suncoast Motion Picture Co. and Sam Goody stores.

On-line merchant DVD Express, Los Angeles, gave away one Toshiba DVD player a day in November.