Three perspectives on DVD.

The first digital video disc, or DVD, players were introduced to consumers in the spring of 1997. Sales of the players have failed to meet the most optimistic projections, in part because the accompanying software titles are being released slowly. Video Age interviewed top executives from the three industries involved - hardware manufacturing, software distribution and video retail to find out how they think DVD will fare this year. From the enthusiastic to the cautious, here they are.

THE HARDWARE MANUFACTURER

Emiel Patrone, executive vp of the Philips DVD Entertainment Group and chairman of the DVD Video Group

Q: Is this going to be the year for DVD?

A: Well, I think each year coming up is going to be a very big year for DVD. I think '97 was an enormous year for DVD, where 350,000 players were sold. I think in '98 we're going to see an upsurge in that number by at least 750,000 to a million, and I think that number will double again going forward. So I think this is something that you should look at and compare with the launch of VIIS and the launch of CD. Respectively, those two numbers were: for VHS, 100,000 the first year, and CD, 50,000 the first year. So you see that DVD has been embraced by the consumer at a far quicker [rate] than the others have been. It gives us the vision to see this being potentially a very successful product.

Q: What is Philips going to be doing this year to support an all-out DVD rollout?

A: Well, Philips happens to be promoting its brand image throughout all of its digital products. Philips is introducing their DVX-8000, which is a multimedia DVD digital setup whereby you [can] switch from TV to computer to audio/video setup; [it] is an extraordinary product that's being heavily advertised, as are ... the DVD 400 and the DVD 420. The DVD 420, which is positioned as a sort of high-end player, has very, very consumer-friendly features like the video CD capability, digital zoom and universal remote with jog shuttle, which absolutely makes you go frame by frame. It's got dual gold-plated stereo audio outputs, dynamic range control and a remote locator and a headphone jack with volume control. That's going to [have] a suggested price of $649. That's out rolling now, as we speak.

When you look at the matrix of prices across the board on all the big consumer electronics companies, from Sony to Toshiba to Matsushita to others, you'll see that they have positioned the players from a standpoint of feature-driven rather than price-driven. But what should give retailers and consumers more confidence in the product category is that the ... price spread goes all the way from $399 up to $800, depending on features and brand. That's another clear indication that the hardware community is embracing DVD video as a potential product category.

Q: What do you personally think the DVD format's chances are of catching on, or of taking over from videocassettes?

A: Well, I'm a very big believer in digital disc technology, but I'm very prejudiced because I introduced the CD in the olden days, about 10 years ago. You can parallel it with the DVD video: people went from vinyl to CD. I feel the same thing's going to happen when people look at the additional added value that they get from DVD video: the ease of uses, the high resolution, the audio, all those consumer-friendly attributes. I think that it's definitely going to be a very, very successful format.

It will definitely cannibalize the VCR, but it won't happen overnight. It's going to happen over maybe a few years, but it will definitely have an effect on that, just as the audio compact disc had on the stereo player.

I think they definitely will coexist; there's no question about that. I don't think you're going to see people throwing VCRs out the window and basically embracing DVD. I think you'll keep your VCR. But I think if you really want to enjoy home theater and high resolution pictures you'll go with DVD video.

THE STUDIO DISTRIBUTOR

Paul Culberg, executive vp of Columbia TriStar Home Video

Q: Is this going to be the year for DVD?

A: I happen to think it made a mark this first year [1997]. [Sales] are greater in velocity than the launch of VCR in the first year; they are greater in velocity than the launch of audio CD in its first year. I think that this is probably the most successful new combo software/hardware launch in the history of the business. The number of units that have been sold and the commitments to product - despite the holdouts - have been quite remarkable. I mean, I am now in excess of 140,000 units on Air Force One. That's quite remarkable.

Q: What is Columbia TriStar going to be doing this year to support an all-out DVD rollout?

A: We'll release 100 titles. We've gone a long way towards accommodating day and date with tape. And we certainly have proven, between us and Warner Bros. and everybody else who's in it, the quality of authoring and the ability to manufacture product. I mean, think about all of the elements of the technology that are in place to deliver this much goods to the marketplace. This has been a remarkable effort, despite the holdouts, who I think are leaving money on the table.

Q: Do you think the DVD format is going to affect the videocassette business?

A: Not for a while. Eventually I believe it will roll out and function much as audio CD did. But I think it'll be years -- I won't tell you how many, because I'm not Karnak. But it'll be years before there is a significant enough penetration to warrant no longer delivering tape.

Q: What do you personally think the DVD format's chances are of reaching that goal?

A: I think the chances are very, very good. I think the acceptance has been remarkable. I haven't met anybody or heard any research from anybody who thinks that it's a low quality format. Everybody who has seen it sees the difference; they're able to differentiate between tape and DVD, both in visual and in sound. So I believe it is a more than viable format.

I'll give you a personal experience. I'm on a lot of people's mailing lists, and I get a lot of DVDs. And I was home recently for a long period of time (I had a surgery), and as I got well, I went down to organize the DVDs ... and pull the duplicate tape off the shelf. What I put onto two shelves on DVD took up eight boxes of tape. So as a storage facility, as a convenience in the home, it is phenomenal. It takes up less space and it's easy to organize. The graphics ... are really as good as, if not better than, the cardboard that exists on videocassettes; it is really a much more attractive collection in the home. And I think people are going to respond to that, especially in the size issue. It becomes more collectible if you can have more of them in the house without eating up your shelf space. I'm really sold on the format. I think it's great.

THE VIDEO RETAILER

Mark Wattles, chairman and CEO of Hollywood Video

Q: Is this going to be the year for DVD?

A: I don't know, but I believe that it will certainly grow rapidly this year. It'll grow more this year than last year, but I don't know how much.

Q: What is Hollywood Video going to be doing this year to support an all-out DVD rollout?

A: Well, what we do with DVD will be dependent upon the consumers' purchasing of machines. You know, we're primarily in the rental business, and in order for us to have a market to rent to they [need to have the] machines.

Q: How many DVD titles does the average Hollywood Video store stock right now?

A: None. You don't want to make an investment on something that you can't receive a return on. There needs to be a demand for it. We won't be the ones that will create demand. I think it will be a combination of the manufacturers and the retailers - we're not talking rental retailers, we're talking hardware retailers.

Q: Do you think the DVD format is going to affect the videocassette business?

A: I hope so, because it's a better format. I think it will affect our business positively. I think any time you can improve the format.... The one that I liked, laser disc, was a little cumbersome to handle as a retailer, but the format was certainly better. Digital video disc has everything laser disc had, plus plus plus. So I think digital video disc would be helpful to the industry.

Q: What do you personally think the DVD format's chances are of reaching that goal, of becoming the format?

A: Well, some digital format will replace VHS some day. Predicting the likelihood that DVD is that format is very hard to do. based upon what we know today, DVD has the greatest chance of being the successful format.

I have a DVD player in my home and I love it. It's great. It's particularly good sound. I think that DVD's success will be somewhat tied to the consumer's move towards home entertainment systems and the continued growth in that side of the business, because that's where you really get the benefit out of DVD. When you have a home theater, when you have your TV connected to your sound system, then you really get the benefit from DVD. And more and more consumers are moving in that direction. I think as consumers continue to replace their home media centers, DVD should be their first choice.

Prices of some DVD Player Currently on the market

MANUFACTURER             MODEL            SUGGESTED RETAIL PRICE

JVC                   XV-1000BK                  $899

PANASONIC             DVD-A300                   $649
                      DVD-A100                   $499

PHILIPS               DVD-420AT                  $649
                      DVD-400AT                  $549

PIONEER               DVL-90                    $1,750
                      DVL-700                   $1,200
                      DV-500                     $750

SAMSUNG               DVD905                     $749

SONY                  DVD-S7000                  $999
                      DVD-S3000                  $599

THOMPSON              PS8600P                    $649
                      RC5500P                    $599
                      RC5200P                    $499

TOSHIBA               SD-3107                    $799
                      SD-2107                    $599