PRICING WILL BREAK WINDOWS, SAYS COLUMBIA VIDEO CEO

DAN ALAIMO

UNIVERSAL CITY, Calif. -- In a speech certain to fuel debate at all levels of the video industry, Benjamin Feingold, president and chief executive officer of Columbia TriStar Home Video, Culver City, Calif., envisioned an end to the current system of windows separating video from other outlets for movies, including theaters and video on demand.

Emphasizing that he was expressing a personal view, Feingold said that in the future world of digital delivery, price should be the principal differentiating factor among the distribution channels, with consumers paying more for the convenience of being able to watch a new movie in their home without making a trip to the theater or video retailer. He spoke at the DVD '99 conference of the International Recording Media Association here earlier this month.

Digital products and distribution of movies will lower costs for studios and further compress windows, he said. This has already happened with DVD versions of movies available at sell-through pricing released the same date as products priced for the rental market. But 12 to 15 years from now, the changes resulting from this "digital dream" will be even more drastic, Feingold said.

"Windows will shorten from theatrical to video rental, and also for international theatrical from domestic theatrical. Eventually, the sell-through business may be simultaneous with rental, leaving aside the different terms [of purchase] between the suppliers and the stores that will come into play. It's possible that video on demand will be day and date with VHS rental in this environment, as well as with sell-through as an alternative way to consume entertainment," Feingold said.

Different pricing structures will protect the existing levels of business and profitability for the various movie outlets. For example, "If you wanted to watch the movie in your home the same day that it is available at the video store, the pricing for in-home would be higher than at the rental store," he said.

"There is a time-value continuum that will go into play in the future. But there will be convenience and pricing and preference points of view about who decides to do what," Feingold said.

"The true digital dream from my point of view is when we can release a film day-and-date with the video stores from the rental side, and also in the home. The choices will be about how you want to consume it and how much you are willing to pay. It may be very expensive to watch 'Star Wars' in your home the first day, more than you have to pay at the video rental store, and more than you have to pay in the theaters," he said.

Feingold said he expects complaints from the various channels of movie distribution, such as video retail, theatrical exhibition and television broadcasters, for this line of thinking. "But I think there is plenty of room for everybody to remain in business and actually prosper because I expect the video business to grow rapidly over the next five to 10 years, continuously anchored by DVD," he said.

"We certainly will grow if we offer consumers value and if we offer them convenience. But if we offer them convenience, we don't always have to offer them value. More importantly, we have to offer choice, and obviously, we're in show business, so we have to offer excitement," he said.

For the shorter term, studios like Columbia TriStar are pushing DVD as a way to combat the threat of digital satellite and cable pay-per-view services, he said. "We really love the home-video business. We think it is a great business. We want to make sure that the home-video business evolves in a digital way," said Feingold.

So far, the digital pay-per-view services have not performed up to expectation, but they have performed significantly better than the analog services, he noted. Meanwhile, the Internet is having a positive effect on the packaged video business. "All of a sudden our catalogs are up and on-line, in addition to being in the bricks-and-mortar retailers. Also, some of our retailers are hybrid retailers, both on-line and bricks-and-mortar," he said.