Interactivity
Drives DVD Sales
By
Amy Doan, Forbes.com – May 24, 2000
Despite
some early jokes that DVD actually stood for "Disappointing, Very
Disappointing," the Digital Versatile Disc is the fastest-selling media
format of all time. It took just two years for shipments of DVD players to hit
a million units, compared with four years for compact disc players and 11 years
for VHS.
DVD
movie rentals and sales of DVD players are hot, but moviemakers are still
looking for selling points beyond sharper picture quality and purer sound.
They're scrambling to add nonfeature content, such as film-related games,
screenplay comparisons and Web events that build buzz and entice people to
purchase, rather than rent, those shiny little discs. Some extra material is
left off rental discs for that reason.
Behind
many of those extras are patents held by a San Jose, Calif., startup called InterActual
Technologies. The company has become the Kevin Bacon of the DVD
software business--you may not notice it, but it's everywhere.
About
90% of big-name studios, including Artisan Entertainment, Columbia
TriStar, MGM (nyse: MGM) and Warner Bros., use InterActual to create games,
screenplay and storyboard comparisons, and Web links for chat and e-commerce.
It's also the company behind the "PC Friendly" logo that pops up when
you watch a DVD on a computer.
For
example, if viewers insert the Tom Hanks/Meg Ryan flick You've
Got Mail into a computer PC Friendly can link them to an actively updated
Internet list of Hanks' film credits. Without PC Friendly, his filmography
comes to an abrupt end at the date when the DVD was produced.
"The
goal is to make a DVD more collectable," says InterActual Chief Executive Todd
Collart. "We work on the geeky stuff and the movie folks work on the
creative stuff."
That
geeky stuff includes InterActual's authoring software and a special DVD
playback engine that adds Internet browsing and commerce functions, both of
which it licenses on a per-movie basis. They're used by creative types in
studio DVD teams and, increasingly, at third-party DVD content companies like Canned
Interactive and Click Media, both of Santa Monica, Calif.
At
33, Collart is a veteran of hardware maker NEC (nasdaq: NIPNY) and Andersen Consulting. He's gathered 50
employees with an eclectic mix of backgrounds, from consumer electronics (Philips
(nyse: PHG)) to media (Playboy Entertainment and Circuit City's
(nyse: CC) blighted Divx program). The company won't disclose
revenue, but it has raised $5 million in financing from Macrovision
(nasdaq: MVSN), Panasonic and Warner Bros. since it was founded
in 1995. InterActual is generating enough in licensing fees that it hasn't
needed to raise any more since its founding, according to Collart.
InterActual's
biggest coup to date is Warner's film The Matrix, a piece of futuristic
eye-candy that has become a must-have in any respectable DVD library. It's by
far the best-selling DVD of all time, and some analysts have said that The
Matrix is the reason many people have made the leap to DVD from
videocassette.
In
November 1999, Warner Home Video and InterActual gave owners of The
Matrix the chance to watch the movie while simultaneously chatting online
with Andy and Larry Wachowski, the film's creators.
More
than 200,000 people joined in. A cue alerted their computers to start the movie
rolling at the same time. They watched and lobbed questions to the filmmakers
over the Internet. At one point the Wachowski brothers paused the movie (from
their hotel room in Chicago) and told viewers that a scene where a fruit stand
is destroyed was an homage to watermelon-smashing comedian Gallagher.
"This
is the best example to date of how the unique interactive features of DVD can
enhance the way people enjoy movies," says Mark Horak, vice
president of worldwide marketing for Warner Home Video.
It's
fun stuff, but is it enough to make people more likely to plunk down $20?
Apparently so.
"InterActual
has created a brilliant position for itself," says Tom Adams,
president of Adams Media Research in Carmel Valley, Calif. "These
features get more and more critical when you're looking at the mid- to
late-adopter types. They need something special to make the leap and toss out
their videocassette libraries."
|
By year's end, 10 million U.S. households will own DVD players. DVD player owners are buying an average of 22 DVD movies per year. |
A
quick look at a rack of DVDs shows how inconsistent the offerings are. While The
Sixth Sense and The Matrix offer relatively sophisticated bonus
features, other special DVD editions consist of little more than a theatrical
trailer slapped onto the disc. DVD sales have revitalized all the studios, but The
Walt Disney Co. (nyse: DIS) in particular has been slammed for not including enough
added content with the dozens of animated flicks it's converting to the format.
Adams
says he has revised projections for DVD adoption mostly because supplemental
content is giving people a reason to upgrade their movie collections faster
than expected. Adams expects that by the end of 2000, 10 million U.S.
households will own players, up from a previously expected 8 million. Owners of
DVD players buy an average of 22 DVD movies a year.
The
snazziness of extra DVD content will become even more important as DVD players
with Internet connections become standard, and as the link between the movie
and the Web becomes more seamless.
That's
why InterActual is launching a national branding campaign later this summer.
It's going to move beyond the PC Friendly logo and emphasize special features
for broadband households.
All
of this adds up to a very different way of watching movies--and making them.
Last
year, MGM held a live online event for the movie Ronin, during which
Director John Frankenheimer's audio commentary was streamed
simultaneously with a Web-controlled playback of the DVD. InterActual embedded
controls within the stream that "navigated" the DVD video, including
the playback of special hidden segments of the film that were not in the
theatrical release or visible using a standard DVD player.
When
Frankenheimer was shooting Ronin, he reportedly told the film editor to
be sure to save the negative cuts, so he could show the alternate ending. What
would Fellini think? .