Dvd-rom Gives New Format Entree Into Computer-user Market

LOS ANGELES-Basic DVD is still scrambling to gain a foothold in the mainstream market. But the format is already evolving into something of a line extension-discs geared toward computer users.
DVD-ROM is the latest development in digital technology that enables consumers to pop programs into a DVD player or a computer. These hybrids have all the features common to DVDs, plus Web links, games, and Internet programming inherent in PCs.
Only a handful of DVD-ROM titles have been released. However, the millions of computers equipped with DVD-ROM drives are convincing some suppliers to add features.
"It's becoming important because the market for DVD-ROM is significantly larger than DVD players," says Jeff Stabenau, president of Crush Digital Media. "The ratio of sales is 6-to-1 [DVD-ROM-equipped computers vs. DVD players]-10-to-1 if you're optimistic-and suppliers could increase the overall DVD sales with practically no effort."
Based in New York, Crush has developed DVD-ROM music singles for Rykodisc and Palm Pictures and full-length DVD-ROMs for Central Park Media and New Video. Stabenau says that DVD-ROM appeals to suppliers because its broad applications are relatively easy to produce and use.
"For music labels, a DVD-ROM allows them to link to an artist site and tour information that extends beyond the basic product of a music video," he adds. "And then, of course, there's the E-commerce element."
Movie suppliers can create online events with directors and actors. One of the more ambitious was developed for MGM Home Entertainment's DVD-ROM release of "Ronin," which shipped 250,000 units in February.
When consumers purchased the disc, they were alerted to an online chat March 14 with director John Frankenheimer, who discussed the making of the movie. Users who logged on could download action sequences, storyboards of the "Ronin" car chases, and behind-the-scenes footage analyzed by Frankenheimer.
Everything was archived to allow consumers who missed the March 14 session to download the information later. According to MGM DVD marketing manager Dave Miller, "A PC element can add value to a disc because if you don't have a making-of documentary to include on the standard DVD, but have some great behind-the-scenes footage, the director or actors can walk you through it with an Internet link."
Online "Ronin" was a first for DVD-ROM, and Miller admits that MGM was "sweating it out" to see if it would actually work. All went off without a hitch, Miller says, and for future releases MGM was able to solicit feedback from consumers who participated.
"What we're trying to do is create a unique experience and brainstorm for more entertaining product," he says. "The event isn't used just to drive traffic to our Web site or to sell more product online."
While MGM has released only one DVD-ROM title, New Line Home Video will have 10 in the marketplace by the end of the year. Last November, New Line tested the waters with the release of "Lost In Space," which included Internet links, a game, and other computer-rich material.
Director of sell-through marketing Donald Evans says New Line was able to track usage and discovered that 20% of all purchasers used the disc in their computers. "It's hard to say if we got an additional 20% in sales because of the ROM feature, but I don't think as many people would have bought it without the ROM feature," he maintains.
New Line has also released "Blade," "Rush Hour," and "Pleasantville" on DVD-ROM. It plans to include "Blast From The Past," currently in theaters.
These DVD-ROMs contain a "script to screen" feature that allows users to view the script, print it out, or play the scene. In addition, New Line works closely with its online division to develop new content for the studio's Web site when the DVD-ROM is released.
Making all the Web links, video streaming, and other ROM elements work is the job of Mountain View, Calif.-based InterActual Technologies, which has developed software for the New Line releases and "You've Got Mail," due this month from Warner Home Video.
President/CEO Todd Collart says a DVD-ROM can be cost-effective and produced quickly. InterActual licenses its software package to suppliers, provides technical support, tracks usage, manages content, and constructs the Internet link and playback capability.
"Taking "Lost In Space' as an example, New Line made back the license fee they paid us in one day," says Collart. "Our fee is a fraction of percentage of the overall cost of developing the disc."
Collart says "Lost In Space" was developed with a three-week lead time. In other instances, content has been created in a matter of days or hours. There's an additional benefit: Putting text material on a Web site cuts down on the time-consuming and expensive process of authoring endless pages of biographical and production information that appear on a standard DVD.
Collart says the ROM feature increases disc repeatability, which enhances sell-through potential. "We're tracking that DVD-ROM users are logging in on at least three separate occasions, so it's helping create an online audience."
Of course, the online audience isn't the primary sales target. "We're clearly in favor of traditional players because the home entertainment experience is through the TV," Collart says, "but there are a lot of great things you can do on DVD-ROM."
Creating DVD and DVD-ROM content is a balancing act. "We don't want to punish DVD consumers, but we also want to exploit computer use," says New Line's Evans. "We see that we can use our movies as a vehicle to sell computers."
That's the strategy DVD4U.com is using to distribute its DVD-ROM magazine, The VOB. The free disc is being bundled with computer add-on gear in an attempt to increase the selection of entertainment available to PC users. Since its launch in December, DVD4U.com has signed on more than 35,000 subscribers.
"A lot of suppliers say we have a great product but that the computer is not their market," says DVD4U.com VP of marketing Matthew Richter. "They want the ability to offer more information, and that's our market."
The quantity of DVD-ROMs pales in comparison to the number of conventional discs, but industry observers expect offerings to explode in the next year.
"DVD-ROM spices up the sex appeal for the early adopters, and in 2000 it will really get cooking," says John Walker, VP of sales and marketing for Crest National, which authors and replicates DVDs.
"There's an issue of reaching out and grabbing the customer," Walker notes, "and if you can have Internet access, you can get an E-mail address and sell more product to them."