U.S., Japanese Cooperation Abounds at Exhibit : Film, Music, Electronics Firms Team Up to Market New Video Compact Discs

In a highly unusual spirit of cooperation, U.S. music publishers and Japanese consumer electronics companies have joined forces to help market a new technology.

The product is “CD-V”, a new generation of compact discs that combines music with video.

Here at the summer Consumer Electronics Show, more than 30 music producers, film companies and electronics manufacturers are combining their marketing muscle in a big, splashy booth where the technology is being exhibited for the first time.

The joint effort, conceived at an April meeting in Universal City, is designed to convince distributors and retailers at the four-day industry show that consumers investing in high-priced CD-V players won’t be left high and dry without something to play on them.

“This is the way it has to work if this thing is going to fly,” said Alan Perper, director of product marketing for Warner/Elektra/Atlantic, a Burbank music company.

Whether CD-V takes off after its scheduled introduction in late September or early October depends on how many music and video buffs will be willing to plunk down $800 or more for a CD-V player (to be wired between a television and an audio system) and $7 to $20 for discs, even for the promise of crystal-clear sound and pictures.

The new machines will use lasers to play 5-, 8- or 12-inch CD-Vs (with playing time ranging from five minutes to two hours) as well as regular compact discs and laser discs.

Laser discs are where the movie companies come in. In the early 1980s, laser discs were nearly wiped out as videocassettes became the preferred technology for viewing movies on home television sets. Movie companies hope that CD-Vs can open a new market for their films because laser discs may appeal to consumers who want better pictures and sound. Laser discs’ lower prices and superior quality also may reinforce a trend toward collecting movies, some industry officials say.

“This is a shot at a new lease on life for videodiscs,” said Warren N. Lieberfarb, president of Warner Home Video. With audio-only CD players in just over 4 million homes, he added, this offers consumers a new option.

At first, though, the technology is likely to appeal most to the “I-want-my-MTV” teen crowd. The most common 5-inch CD-Vs will be those offering five minutes of rock video with an additional 20 minutes of music without pictures. Retailers, however, question how many parents will be willing to supply the big-ticket hardware.

Bruce Market, national sales manager for video at Yamaha Electronics U.S.A. in Buena Park, Calif., acknowledged that strong sales of the company’s CD-V players next fall will “be a function of how quickly the price drops.” And lower prices would not appear to be in the offing, he noted, given forecasts that the yen will remain strong against the dollar--a development that can make Japanese products more expensive in this country. “That will definitely have a deleterious effect on pricing,” he said.

Since January, he noted, most of the major consumer electronics makers have boosted prices 5% to 15% on many items.

Despite the uncertain climate, at least one major retailer of audio and video software said he can see CD-V growth “exploding like nobody’s business.”

With sales of VCRs flattening out, the industry needs a new product to get behind, said Russ Solomon, president of the Tower Records chain. “We’re all going to be out there promoting the whole idea,” he said.

Digital Countdown

Cooperation between Japanese and American firms on marketing CD-V technology is not at all apparent elsewhere. Digital audio tape, which offers higher quality than standard analog tape recordings, is still mired in a political battle in Washington, where Japanese manufacturers are dueling with American music publishers.

U.S. record companies have strongly opposed the technology, fearing piracy of copyrighted material. Legislation to force hardware makers to install anti-copying devices rests in committees in both the House and Senate, and Japanese companies say they are reluctant to ship DAT machines until the controversy is resolved.

“We’re targeting DAT for U.S. introduction in mid to late 1988,” said Juan Collada of Sharp Electronics, the U.S. marketing arm of Sharp. The Japanese firm “very recently” started selling the machines in Japan at $1,595, a price that Collada acknowledged is prohibitive for all but the audiophile.

The DAT format has at least made some progress since the winter trade show in Las Vegas, where interested observers had to prowl hotel suites and backrooms for demonstrations. Here in Chicago, a number of manufacturers gave it prime display in their booths.

The early word going around the Consumer Electronics Show was that Japanese executives were meeting informally to see whether two or three companies are willing to break the self-imposed DAT ban. In fact, one company, Marantz, appeared to take the lead Sunday, announcing DAT deliveries for early fall at a retail price of $1,300.

Wozniak’s New Toy

Steve Wozniak, the whiz-kid co-founder of Apple Computer, offered the first public glimpse of CORE, his latest brainchild, in a tiny room decorated with cardboard cutouts.

CORE, which stands for controller of remote electronics, is a single device that allows consumers to fully operate all their home entertainment equipment by remote control as long as the equipment is all in one room. VCRs can even be programmed to record programs months in advance. CORE still has a few bugs, Wozniak said, but he expects delivery “probably in July.”

“The reason for technological advances in our home is only if they make our lives easier,” said Wozniak, who added that the idea for the product came from “sitting down in a living room with too many remote controls.”

CORE comes with a 40-page user manual. But Wozniak says users of his gizmo--a product of a his Los Gatos start-up company called CL 9 (as in Cloud 9)--won’t be daunted because, initially, most will be “techies.”

Edward Bennett, a Bell & Howell engineer who attended the demonstration “just as a fan,” considers the $199 price to be a bargain. “I’ve waited to buy a unified remote; I knew this would be the best.”

Wozniak found the engineering for the device to be more difficult than for the Apple keyboard he invented in a garage. “There are three man-years of software in here,” he said, noting that development costs have topped $1 million.

After the demonstration, Wozniak couldn’t resist “our first little prank” and set off with a CL 9 engineer to try out their product on some of the gadgets in the show. At the first stop, they decided to go back to the drawing board. CORE couldn’t connect with the signal on a Toshiba machine.

Pitch for Super-VHS

Hoping to ease profit erosion in videocassette recorders, JVC showed off its so-called super-VHS technology, which affords greatly enhanced resolution on the television screen.

“I’ve never seen a better picture; people who want quality will buy it,” said Randy Evans, who operates a video service company in Coal City, Ill.

Quality costs, though. JVC, which created the format and is licensing it to five other companies, plans to sell the decks starting in late July for about $1,200. Other companies’ models may be somewhat higher, although still below the $1,500 price tag of machines being sold now in Japan. Super-VHS recorders will cost about 20% to 30% more than today’s full-featured VCRs.

JVC and Sharp, a licensee, also plan to market S-VHS camcorders by the fall, at $1,500 or so.

Until the prices come down, these gadgets will clearly be earmarked for the affluent moms and dads who want to capture every blade of grass on the Little League diamond in perfect detail.

“It’s for the special-type videophile at first,” acknowledged Fred Aclander, a marketing manager for Sharp Electronics. “Then prices will come down.”