DISNEY JOINS DVD MARKET; COMPANY TO PUT TITLES ON DIGITAL VERSATILE DISCS.

Byline: Dave McNary / Daily News Staff Writer

Entertainment giant Walt Disney Co. gave a major boost Thursday to the fledgling digital versatile disc industry, promising it would start releasing titles on the highly touted format by Christmas.

Disney's decision could be a pivotal moment in transforming DVD from a niche product for movie buffs into the next major mainstream consumer electronics product on the scale of personal computers and compact disc players.

``This announcement is a real milepost for DVD,'' said Sanford Bernstein analyst Tom Wolzien. ``This doesn't guarantee DVD's success, but for DVD to be viable, Disney's endorsement was essential.''

The first DVD machines and discs began appearing in stores in March, backed by Warner Bros. and Sony Corp. The DVD's sound and picture quality are far above what has been available from conventional television and videocassette recorders but so are the prices. DVD machines typically range from $500 to $750 while discs usually sell for $25.

Initial sales have been solid, with DVD sales topping laserdiscs last week for the first time, according to the VideoScan tracking service. Other positive signs include Warner's recent launch of a nationwide campaign (previously, it had only sent DVDs to Los Angeles, Chicago, Dallas, New York, San Francisco and Seattle) and Universal's decision to back the format.

But the long-term outlook remained uncertain as Disney - with its massive library and powerful marketing expertise in the home video market - withheld its endorsement along with Paramount and 20th Century Fox.

``Having Disney constantly mentioned as not backing DVD was hurting hardware sales,'' said Tom Adams of Adams Media Research. ``This announcement will encourage consumers to take the plunge.''

Adams projects that about 400,000 DVD players will be sold this year and that disc sales will hit $70 million. By 2001, Adams projects those figures should be 10 million players and $2.8 billion in software, with movie studios taking in a whopping $1.9 billion of that in profit.

If DVD can meet those projections, it will have matched the expansion rate of CD players during the 1984-89 period, Adams noted. ``I'd say doing that would make DVD a major success,'' he added.

Burbank-based Disney, which plans to release four or five titles a month through the end of next year, said the key questions of quality and anti-piracy protection had been resolved to its satisfaction.

``We've carefully scrutinized the development of this new format at every turn, and we're impressed with the strides that have been made in both technology and security,'' Michael Johnson, president of Disney's home video arm, said in a statement. ``We believe the timing is right to now offer Disney's endorsement to this revolutionary format, which provides the highest quality, most advanced in-home entertainment experience.''

Disney, which did not disclose which titles it will release, has already started the ``authoring'' process to convert several movies to DVD. Its first releases will be live-action films rather than animated product, according to Tania Moloney, vice president of publicity and marketing.

Wolzien said he had expected Disney to back DVD eventually and was not surprised it had allowed Warner to be the first into the consumer marketplace. ``It's still not clear if this will catch on with the consumer, but there's not much downside for Disney to get involved at this point,'' he said.

Wolzien said initial response has been strong but too limited to tell if DVD will catch on. ``The real question is whether consumers are willing to buy 20 discs a year,'' he said.

For Warner, Disney's decision validates its strategy of pushing the new format aggressively. Warner-distributed films, which include titles from MGM, New Line and HBO, account for nearly 70 percent of DVD sales, according to VideoScan.

``Disney's entry into the DVD market ensures the success of the next generation of home video,'' said Warren Lieberfarb, president of Warner Home Video. ``We welcome them to the fold.''

Fox and Paramount still remain on the sidelines. ``DVD is an interesting technology but it's not quite there yet,'' said Steve Feldstein, a spokesman for Fox's video operations.

DVD COMING OF AGE

The basic single-sided digital versatile disc, or DVD, contains 4.7 billion bits of information, seven times the capacity of a CD.

DVDs produce 500 lines of resolution on a video screen, compared to 420 from a laserdisc and 240 from a standard videotape. Many DVD discs contain deleted scenes, director's commentary, multiple language tracks and the ability to skip to specific scenes.

About 185 titles have been released and another 230 are expected out by the end of the year.

The top DVD sellers so far are ``Twister,'' ``Eraser,'' ``Total Recall,'' ``Golden Eye'' and ``Stargate.''

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BOX: DVD COMING OF AGE (see text)

SOURCE: Daily News Wire Services