DVD MAKERS LOOK TO FUTURE INDUSTRY FOCUSES ON VIDEO PIRACY.

Byline: Greg Hernandez Staff Writer

WEST HOLLYWOOD - Determined to avoid some of the missteps made by the music industry in recent years, leaders in the DVD industry said Wednesday they must find ways to keep their growth alive past the peak of the current DVD format - with a single-format, higher-definition product and copyright protections of their content.

``If we don't do it right, we'll be regretting four, five years from now that we didn't do it right,'' Disney Home Video President Bob Chapek said at the second annual Home Entertainment Summit, held in the Wyndham Bel Age Hotel.

The two-day conference drew heads of home entertainment divisions of most of the movie studios, major retailers and other industry players. It was held at a time when DVDs are set to hit 50 million U.S. households and will likely account for 70 percent of the industry's retail revenue this year.

A key force behind the growth is the fact the average DVD household buys about 15 DVD titles per year, more than double the level of VHS purchases. Also, a majority of DVD consumers have shown they are buying more DVDs now than when they first bought their players.

``The surprising thing is the number of DVDs purchased per household,'' Chapek said later in an interview. ``The number has remained very stable even as we move into mass market. It's a very robust market with the same consumption dynamic as with film buffs.''

According to research presented by the DVD Entertainment Group, an industry trade association, also driving the growth is the fact 29 percent of households now have at least two DVD players, the second ones in bedrooms. In addition, 69 percent of households with game systems have watched DVDs on their game consoles and 59 percent of homes with DVD-enabled computers have watched a movie on them.

But many executives openly voiced their continued concerns about online video piracy after seeing the hit taken by the slumping music industry because of online music piracy.

``Protecting our material is of the utmost importance,'' Chapek said. ``How do you make the video situation different from the music industry?''

While the rapid growth of DVD sales was celebrated during the conference - more than 60 million U.S. homes are projected to have DVD players by the end of 2003 - the question of how to keep industry's momentum going dominated the proceedings. Most who attended the conference agreed high-definition DVD, known as HD-DVD, is the key.

``We are the belle of the ball right now when it comes to entertainment globally,'' Columbia TriStar Home Entertainment President Benjamin Feingold said during a lunchtime speech. ``We think high definition is going to be revolutionary, not evolutionary, and this will keep the growth rates higher for longer. We have to make HD-DVD the thing.''

HD-DVD is high-resolution video and audio that represents a clear quality improvement over the standard DVD. But there are several different types of specifications floating around that leave the industry without a unified format in which to move into its next era.

``We have to have a good HD product to keep double-digit growth,'' Feingold said. ``Studios must move quickly. Delaying the product will open the door for alternative delivery forms of HD content to gain a foothold.''

DVD industry pioneer Warren Leiberfarb, former president of Warner Home Video, also urged quick action and warned his colleagues not to be complacent.

To illustrate his point, Leiberfarb told the story of a frog who was placed in boiling water and saved his life by quickly jumping out of it. But when the frog was placed in cold water that was gradually warmed to a boil the frog died, because it believed the water was fine.

``I believe the water is so close to boiling and so close to eroding your business, just like it eroded the music business,'' Leiberfarb said. ``The frog analogy is here.''

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com