Audiovisual Device--The Next Wave in Home Electronics? : Technology: Dubbed CD-I, it combines the interaction of video games with the picture clarity of videotapes and the sound of a compact disc.


Bored with video games? Seen all the latest videos? Your compact discs collecting dust? Not to worry. The creators of CDs are working on the next wave in home entertainment: an audiovisual device that combines the interaction of video games, the visual quality of videotapes and the sound of a compact disc.

Called Compact Disc Interactive (or CD-I), the product being developed by Sony Corp. and N. V. Philips is so unlike any other home electronic product offered to consumers that the two companies have had difficulty even describing what it does. The machine, which resembles a CD player and plays existing CDs as well as the new CD-I software, connects to any television and allows viewers to use a remote control device and joystick to randomly journey through--and sometimes alter the sequence, color, sound or context of--video presentations that explore everything from golf games to exhibits at the Smithsonian Institution.

Based on so-called multimedia technology, a professional version of the product is already being sold to industrial users such as French car maker Renault, which employs CD-I to help train its mechanics. But next year, Philips, Sony and a dozen other big Japanese consumer electronics companies say they will enter the potentially more lucrative mass market and sell a $1,000 consumer version.


“This is the next major revolution in home entertainment,” said Gordon Stulburg, chairman of American Media Interactive, the Los Angeles-based subsidiary of Philips that is overseeing the development of CD-I. “It’s a single . . . user-friendly machine that, in addition to playing a standard CD, will do a whole lot of other things when hooked up to your TV.”

The new product, which aims to compete with the hugely successful videocassette recorder, comes at a critical time for Philips. The Dutch conglomerate in the past five years has closed more than 75 factories and cut its work force by more than 40,000. Although Philips is a major computer manufacturer, its CD-I product will face a crowded field that has already attracted some of the biggest names in entertainment and electronics, including International Business Machines Corp., Intel Corp., Microsoft Corp., Apple Computer Co., Time Warner Inc. and a host of others.

“It’s going to be very difficult to capture the part of the market they are going after,” said Stan Cornyn, president of Warner New Media, a unit of Time Warner that is developing multimedia software for a variety of companies. “The CD had no competitors. All they had to do was lift the music off the LP and put it on CD. What has to happen with . . . this technology is you start from zero and invent the content that will go on the discs. Then you have to persuade a consumer that it’s something he really needs in his home.”

The product that American Media has been quietly developing is a computer-controlled audiovisual system, which, like competitors’ devices, is loosely based on multimedia technology.

A multimedia computer is one that has the capability to process various types of media such as text, graphics, animation, video and audio at the same time. The systems permit enormous flexibility in how video and sound information can be edited, manipulated and displayed and thus, say some observers, provides a richer viewing experience than watching ordinary TV or simple computer graphics.

American Media has several disc programs under development including a video golf game that features a motion-picture quality 18-hole course, user-selectable golf clubs and a color commentator who describes shots made by the player. Also in the works are discs based on the TV show “Sesame Street” as well as a video tour of 200 Smithsonian Institution exhibits, including one featuring a special sonic effect that imitates an airplane breaking the sound barrier.

Not since 1984, when Apple popularized easy-to-use graphics with its Macintosh computer, has there been such a big leap forward in computer user-friendliness or such excitement in the computer and entertainment fields about the potential commercial applications of a new technology, experts say.

“Multimedia has profound implications; it will alter the very fundamentals of our business,” said Peter B. Blakeney, who heads IBM’s multimedia division. “Multimedia will change the world in the 1990s as personal computing did in the 1980s,” Apple Chairman John Sculley has declared.

There are now more than 300,000 computers equipped with CD drives and about 2,500 commercial CD titles, according to Nick Arnett, president of Multimedia Computing, an industry publishing and consulting firm.

Multimedia retail sales are forecast to rise to $13.6 billion by 1994 from $3.7 billion this year, with consumer products representing about 25% of the 1994 total, according to Information Workstation Group in Alexandria, Va.

But with at least 10 major companies promoting several different multimedia systems, confusion and incompatibility problems may thwart quick consumer and U.S. industry acceptance.

Eventually, experts expect the multimedia market will settle into three broad applications: low-priced systems offering interactive video games; a medium-priced system such as CD-I, marketed as a fancy VCR for families, and expensive computer-based systems allowing broader creative control over the presentation of information for business and education.

“There’s lots of excitement about” the technology, said Elizabeth Daley, chairwoman of USC’s film and television production program. But she cautioned that “for a generation that grew up with the printed page, I think the learning curve (for multimedia) will be long.”

Philips thought the evolution to multimedia would be fairly easy back in 1986 when it teamed up with Sony in an important European-Japanese partnership. But in October, 1988, Intel Corp. acquired a technology from General Electric Co. that stole CD-I’s thunder.

The technology, called Digital Video Interactive, features full-motion video and can electronically compress video images to produce animated scenes. Philips and Sony had forecast that such technology would not be available until the 1990s.

Already four years behind schedule, the prospects for CD-I seemed to dim further at the 1989 Microsoft CD-ROM conference when IBM endorsed Intel’s technology, while Philips remained mum about its plans.

The company is now more upbeat and predicts CD-I will sell 40,000 units next year and eventually achieve the 20% penetration of U.S. homes now held by CD players.

“The key to our approach is that, instead of getting consumers to buy a whole bunch of different types of black boxes for their home, we will be promoting only one multifunction box--CD-I,” said Emiel N. Petrone, a former Polygram executive who is American Media’ senior vice president for sales.

Although more than 60 firms, including Time-Life, Rand McNally and the Smithsonian are developing multimedia programs for CD-I, their efforts are being slowed by the technical hurdles of combining audio, still images, text and full motion video into the new format.

A relatively sophisticated computer game can cost $250,000 to produce. But the average multimedia presentation costs upwards of $400,000 and takes months to produce, said David Riordan, vice president of product development at Cinemaware Corp., a Westlake Village company that makes multimedia presentations for NEC, Walt Disney Co. and American Media.

Yet a great deal will be riding on the initial CD-I discs turned out by American Media, and consumers could be turned off by presentations that are too complex or boring, experts say.

“People really get into this product and they get hooked fast,” said Riordan, who has watched consumer focus groups sample the CD-I product. “But they have to see it first. That’s the key.”