Coming to a DVD Player Near You: The Interactive Movie

After handling the splashy special effects for hundreds of movies and television shows, Dan Krech and the artists at DKP Effects Inc. decided to step into the director’s seat.

Their animated movie, “Scourge of Worlds,” took $3 million and a mere seven months to make. It grabbed the attention of several major movie studios and nailed down a distribution deal from a unit of Warner Bros. The artists already are in talks to make a sequel.

And it’ll never hit the big screen.

Krech and his team in Toronto are part of a booming new market: Straight to DVD.

Drawn to the crisp images and theatrical sound of the silvery discs, consumers are buying DVD players faster than any other device in the history of consumer electronics. And with DVD players connected to televisions or computer monitors in 40 million U.S. homes, there is a huge demand for content to play on them.

The major studios are eager to tap into the DVD market, flooding it with all manner of films and TV series that draw from their extensive libraries. Though the strategy is the same as producing direct-to-video sequels to theatrical releases such as “The Lion King” and “Beethoven,” the economics are much better.

A blank DVD costs less than a dollar, compared with a few dollars for a blank videocassette, said Brad Hackley, a director of the Video Software Dealers Assn. Burning a movie onto a disc also is cheap. Yet DVDs routinely retail for $18 to $25, while movies on video normally sell for less than $15.

“DVDs are a cash cow for these guys,” said Scott Hettrick, editor in chief of the industry trade publication DVD Premieres.

Studios are releasing them by the thousands. Last year, 87% of the 5,600 video and DVD titles released never were screened in theaters, according to the Video Software Dealers Assn. And in the first three months of 2003, nearly half of the movies rented in the U.S. were checked out on DVD.

The result is that competition for DVD shelf space is intensifying, said Steve Beeks, president of Artisan Home Entertainment, an independent studio in Santa Monica that releases about 40 direct-to-video movies a year.

“A few years ago, you might have been able to get away with just putting the feature [film] on the disc,” Beeks said. “Today you can’t. Not even with a B or B-minus picture. You’ve got to do something on the disc that makes it stand out.” That’s a key reason Krech and his colleagues at DKP Effects made “Scourge of Worlds,” which is scheduled for release by early summer. The DVD format allows moviemakers to explore different techniques and push the boundaries of the traditionally passive experience.

Such projects take some cues from the adult-film industry, which has long pushed the boundaries of what technology can deliver.

For several years, triple-X shops such as VCA Pictures and Vivid Video in the San Fernando Valley have published interactive porn titles on DVD. They let viewers take on a more active role, allowing them to select the camera angle or watch a movie out of chronological order.

Mainstream storytellers are giving it a try now too. In the made-for-DVD film “ICanStillTellYourWifeBill.com,” viewers don’t simply hit the “play” button. Instead, director Tim Street presents them with a menu of choices as they explore the story’s political and romantic intrigue.

As the plot unfolds, viewers realize they are probing a now-dead Web site created by the jilted lover of a politician. Each choice reveals a piece of the puzzle, from files containing home videos of the lovers to surveillance tapes of the politician’s shenanigans.

Even something as simple as slipping in hidden bonus material -- a technique known as hiding “Easter eggs” -- boosts the DVD format’s appeal, said John Trickett, chief executive of Five.One Entertainment Group.

When the rock band Dishwalla released its album “Opaline” last year, it also put out a multimedia project on DVD. Scattered throughout the disc were extra tracks, interviews with the band members and surplus video clips. Some of the Easter eggs were fairly easy to find, Trickett said. Others were intentionally buried deep so that fans would have to explore the band’s Web site to gain hints for the DVD.

“Every time a tip was given, we’d see a bump in sales,” said Trickett, who declined to discuss financial details. “The only thing that explains it is that interactivity on the DVD.”

That’s exactly what the crew at DKP Effects is banking on.

Based on the “Dungeons and Dragons” franchise, “Scourge of Worlds” is set in a fantasy land of flashy magic and noble warriors: Long ago, when the lands were divided by strife, a race of sorcerers crafted the ultimate weapon, called the Aryx Orthian, or “scourge of worlds,” to destroy enemies and end all wars. Now, a dark evil has tricked a religious warrior into stealing the weapon -- and a trio of his friends are trying to stop him.

The movie has multiple breaks in the story’s narrative in which the player must make a decision. Fight or flee? Explore or stand firm? Each decision is registered with the press of a button on a DVD remote controller, which forces the story onto different paths that could include fights with aliens and debates over loyalty and friendship. The movie contains 900 possible story combinations and four different endings.

“There is no way we could have made this movie for tape,” said Krech, a visual effects supervisor at DKP Effects. “We may have been able to pick one path and one ending and put it out for the big screen. But we would have lost the soul of the movie.”

In essence, “Scourge of Worlds” is part movie, part animated video game.

“It is a hybrid, and that is a gamble,” said Jackie Lynnette, CEO of DKP Effects.

The bet is that consumers have become used to interacting with their televisions, thanks to video game systems such as Sony Corp.’s PlayStation 2 and Microsoft Corp.’s Xbox.

DKP officials acknowledge that the movie probably will attract a niche audience -- the more than 3 million people who enjoy the “Dungeons and Dragons” role-playing game.

But for Warner Music Group’s Rhino Home Video, the title taps into a clear need: Finding content that can be exploited on the DVD format.

“For us, VHS is dead,” said Marylou Bono, vice president of marketing of home video for Warner Strategic Marketing. “We made a conscious decision back in January to phase out VHS releases. The retailers are just not picking up a lot of videotape this past year.”