AFTER A YEAR OF DELAYS, DVD TO SPIN INTO STORES IN SPRING

DAN ALAIMO

LAS VEGAS -- Digital video discs will finally reach retail shelves this spring.

After almost a year of delays, as companies wrangled over copy-protection issues, marketing plans for hardware and software introductions were unveiled at the Winter Consumer Electronics Show here Jan. 9 to 12.

DVD is heralded as the next major advance in packaged entertainment, allowing movies and other content to be played from a 5-inch disc. Some proponents expect DVD to replace the videocassette, but other industry watchers caution that if this happens, it won't be for many years.

The new technology also will change the market for music compact discs, video games and computer CD-ROMs. Futurists have predicted that DVD could eventually result in a convergence of these various home entertainment formats, as well as a convergence of television sets and home computers.

"There will be a powerful packaged media format beyond VHS in this business," said Benjamin S. Feingold, president of Columbia TriStar Home Video, Culver City, Calif. "It won't all be satellite-delivered television."

For supermarkets in the video business, "it will be a real opportunity to bring in movies in a very compact format that can be impulse-purchased by consumers as they shop," he said.

Supermarkets with strong, dedicated video programs will immediately take advantage of the promotional opportunity of renting the hardware and software when it reaches the market in March and April, said industry observers.

Other chains will wait until DVD attains a greater market penetration over the next two to three years. For example, Sony predicts that 500,000 hardware units will sell in the United States during 1997, with the number rising to 10 million by the year 2000, depending on consumer acceptance and hardware price points. Initial hardware pricing will range from base models at $500 to units with a wide array of features for $1,000 to $1,700.

At the WCES, four major studios announced about 75 DVD movies will be launched this spring. Other studios are expected to follow shortly with similar announcements, while some may wait until the format achieves more of a critical mass. The initial DVD movies will be at sell-through price points, somewhere between current VHS hits ($20 to $25) and laserdiscs ($35 to $45), said Feingold. None of the studios announced specific pricing, which is expected to be revealed when they solicit orders from retailers beginning in about a month.

DVD movies priced for the rental market will be considered as the market develops, he said. "In the beginning, there will not be enough of an installed base for a significant inventory of rental titles. But there are certain titles that have more significant prospects for rental than for sell-through. It's only axiomatic that they would be brought into the rental marketplace," said Feingold.

The studios announcing the most titles were those with the closest ties to the hardware development: Sony-owned Columbia TriStar and Warner Home Video, Burbank, Calif., which has been working closely with Toshiba. Columbia will release more than 20 DVD movies and Warner more than 25.

The two other studios announcing DVD titles at the WCES have close ties to Warner: New Line Home Video, Los Angeles, with six titles, is owned by Warner, and MGM/UA Home Entertainment, Santa Monica, Calif., with 10 titles, has a distribution deal with Warner. New Line and MGM apparently made last-minute decisions to issue statements, as officials of the two companies told SN two days before the WCES that they would not be making DVD announcements at the show.

In prepared statements, top executives expressed their optimism for DVD. "We are confident that consumers will be impressed by DVD's superior quality and features," said Warren Lieberfarb, president of Warner Home Video.

"We anticipate significant support for this new format and will deliver the studio's finest films to the DVD consumer," said Richard Cohen, president of MGM Home Entertainment and MGM Consumer Products. "We are delighted to support the launch of this new medium," said Stephen Einhorn, president and chief operating officer of New Line Home Video.

"We are committed to the format in a significant way," Columbia TriStar's Feingold told SN. "We ultimately intend to bring as many titles to the market as it will absorb." Since DVD titles will initially be released at sell-through pricing, this will mean a further expansion of the sell-through market, he said.

"We think video is a great category for supermarkets, short-, medium- and long-term. We are in the video age. Movies are common currency for many people in terms of shared experience. So we think they have a significant place in the supermarket. The margin is good and it can serve both from a rental and a sell-through perspective, in addition to driving in customers and making revenues for the stores," said Feingold.