On a Silver Platter : Image Entertainment To Market Films On CD-ROMs

Martin Greenwald is not above gimmicks. The CEO of Image Entertainment Inc. says the company’s soon-to-be-released movies on CD-ROM may sell chiefly as novelty items--but that’s fine with him.

With more than 7 million computers in the country now equipped for CD-ROM, reaching even a fraction of that market could mean big sales. “Maybe it will be just one out of 10 who buy them, but I will be the big guy in that business,” Greenwald said.

CD-ROM, which stands for Compact Disc-Read Only Memory, are five-inch computer discs that look like audio compact discs. But CD-ROMs are played on computers, not stereos, and they contain images and sounds for interactive games or educational software programs.

Image Entertainment, which is controlled by billionaire John Kluge, for years has had only modest success in its licensing and distribution of movies on laser discs, 12-inch silver platters that transmit high-quality images on television screens.

Laser disc players never took off the way VCRs did. As a result, Image Entertainment laid off 17% of its work force last year. That cost-cutting helped the company report a record profit of $3.4 million on sales of $66.2 million for the fiscal year that ended March 31. A year prior, Image lost $17 million on sales of $60.4 million.

Unlike laser discs, Image is entering a CD-ROM market in which the required delivery systems are already widespread.

The number of personal computers equipped with CD-ROM drives in the United States is expected to reach more than 15 million by the end of the year, and CD-ROM drives are fast becoming a standard feature of personal computers, said Rich Bowers, executive director of the Optical Publishing Assn. in Columbus, Ohio. By contrast, Greenwald estimates the number of laser disc players in use to be 1.5 million.

But CD-ROM offers Image a way to expand while not straying far from the technology it knows best.

Like laser discs, Image’s CD-ROMs are thin silver platters read by lasers. Pop one of Image’s new CD-ROMs into your computer and action-packed flicks reel past in a postcard-sized square that fills a quarter of the screen. The picture is small, limited by current CD-ROM technology, and it’s jerkier than a VCR’s. But Image’s CD-ROMs have the advantage of providing instant freeze-frames and printouts, and they’re IBM and Macintosh compatible.

And the movies Image will be selling? “Exploitative titles,” Greenwald calls them, meaning movies packed with scenes of spurting blood, bursts of flame and, in all likelihood, sex and nudity.

Among the first titles scheduled to be released beginning in October are “Silence of the Lambs,” “Robocop,” “The Terminator” and “Nemesis.”

Image Entertainment is also a licensee of Playboy Home Video. Greenwald, a former distributor of pornographic movies, declined to say whether any Playboy movies are among the initial 24 titles on CD-ROM to be released. But he said such fare would be highly marketable in a computer format. “I don’t see putting ‘Terms of Endearment’ on CD-ROM,” he said.

Japanese animation films are also top candidates for CD-ROM distribution. “Thirteen- and 14-year-old kids, that’s really where it’s at,” Greenwald said.

Greenwald said the CD-ROM films will retail for between $14 and $20, far less than the $40 to $100 that many CD-ROM software programs now cost. Image can do this because much of the work required for selling laser discs--including editing, post-production work, licensing and distribution--is easily transferred to CD-ROM.

Image has spent about $12,000 per title to produce CD-ROM versions of movies, half what it would cost had Image not already been producing films on laser disc, Greenwald said. Its total investment in CD-ROM development is about $500,000.

That’s not to say Image plans to abandon laser discs, said Greenwald. The company has an estimated 35% market share in the laser-disc business, and has exclusive licensing agreements with Walt Disney’s Buena Vista Home Video, FoxVideo, Orion Home Video and others. Although their popularity has by no means matched videocassettes, laser discs have a following among film buffs, and their sales have grown steadily.

With his bold print shirts and his zebra-striped chairs, Greenwald seems an unlikely corporate executive, much less a techno-whiz leading a new wave of multimedia publishing. His office decor pits chrome and glass furniture against walls crowded with art. Photos of his daughter, age 13, jostle with prints of models in seductive poses.

Greenwald says it’s true that the films he’ll dish out to computer-addicted adolescents are not especially uplifting. “But it sells,” he said. “And my mission is to sell CD-ROM.”

Some, however, question the appeal of CD-ROM movies, which, unlike many games on CD-ROM, require users to simply watch, rather than interact, with their computers.

“Maybe I’m strange, but . . . I, for one, have never sat and watched a two-hour movie at a 14-inch distance from the screen,” said Gary Arlen, president of Arlen Communications Inc., a Bethesda, Md., multimedia research company. “Why would anyone buy the CD-ROM when they already have the videotape sitting on the shelf?” asked David Clevinger, assistant marketing manager of the monthly trade journal Multimedia Monitor.

Greenwald counters that consumers may choose to watch movies in snippets, rewinding to view favorite scenes. To make the CD-ROMs more appealing to collectors, Image plans to include movie trailers and screen savers--scenes from movies that roll by on the screen when the computer is turned off.

Whatever its merits, Image is adding a new dimension to the realm of software publishing by attempting to mass market full-length feature films on computers. The Voyager Co. of New York broke new ground in this area when it released the first Beatles movie, “A Hard Day’s Night,” on CD-ROM last year. But many of the CD-ROM films available now are pornographic ones, which have found a thriving underground market, said Bower of the Optical Publishing Assn.

Even analysts who doubt there’s much demand for “The Terminator” on CD-ROM say Image’s strategy could pay off. With the market for multimedia publishing still in its infancy, companies with an early start will have “a nice hedge against future competition,” said consultant Nick Arnett, of the Multimedia Computing Corp. in Campbell, Calif.

Trouble is, the ultimate form hardware and software will take in this emerging market is still anyone’s guess. Will they be discs for computers or discs for television? “It’s not clear really which format will be the format,” said Christopher Marlett, an analyst with Drake Capital Securities in Santa Monica.

Image Entertainment knows that all too well.

After years of trying to peddle laser discs to a nation enamored of VCRs, it’s no wonder Greenwald is leery of bold claims for the future of CD-ROM. He sticks to more limited pronouncements: “We aim to sell to that one in 10,” he said. “We’re Niche Industries Inc.”