Philips Aspires to Be Major Multimedia Player : Electronics: The pioneer developer of interactive CDs is trying to establish itself as the industry leader in products and technology.
Two years after Philips Electronics NV set it up to vault onto the information superhighway, Philips Media has built up a 300-title library and the potential to be a major multimedia player, President Scott Marden said.
Philips Media’s first mission, Marden said, is “to sell our products,” ranging from the European video game hit “Burn: Cycle” to the interactive CD version of “The Joy of Sex.” (It answers questions you put to it.)
A random sampling of titles shows their range. There’s “Rembrandt: His Art and the Music of His Era.” For those who prefer music from a later period, there’s “The Uptown Blues,” featuring B.B. King and Muddy Waters. Into sports and recreation? There’s “Tennis Our Way,” featuring the late Arthur Ashe and Sam Smith. If golf is more your speed, there’s “Golf My Way,” by Jack Nicklaus.
The New York-based unit also has businesses transmitting information. It’s Europe’s biggest private cable TV operator. Through investment in CellularVision, a U.S. start-up, it’s looking at transmitting TV over microwave systems in Brooklyn.
“The key will be the hardware where the software is invisible to the customer,” Marden, 40, told the Bloomberg Forum. “We’ll have superior delivery systems for moving a lot of product into the home.”
Philips, the century-old Dutch conglomerate, is the world’s 10th-largest semiconductor company and its product line runs the gamut from Norelco shavers to Magnavox TVs. Marden said he wants to run Philips Media on a different model.
As a provider of multimedia products and content, the goal is to be far more profitable than Philips Electronics, he said.
In 1990, Philips sold part of its stake in Polygram NV, the entertainment company whose artists range from Bon Jovi to Sir George Solti. Its movies include “Four Weddings and a Funeral.” Polygram has reported five consecutive years of profit.
“We are at an earlier stage,” the Bear, Stearns Cos. and Bankers Trust Co. alumnus said. “But at some point in the future, given market conditions and the profitability of the company,” a public offering “is definitely possible.”
Philips Electronics would “very seriously” explore a Philips Media IPO, especially if it could “unlock shareholder value” similar to the Polygram spinoff, Marden said.
Meanwhile, Marden steadfastly refused to divulge the 2-year-old division’s revenue and earnings performance. The unit is lumped amid the parent’s “other consumer products” segment, which accounted for about 20% of Philips Electronics’ 60.9 billion guilders (U.S. $33.7 billion) in 1994 revenue.
“I hope we can change our position on that,” Marden said.
Meanwhile, he said he built the unit’s “structure, strategy and direction around the model of what the media company of the year 2000 should look like,” working closely with Philips and Polygram, but also with other companies.
That has meant broadening the game and CD-ROM library so that the titles run on other platforms.
Philips, for example, helped pioneer the so-called CD-i (“i” for interactive) format on video CDs. But the concept has gotten off to a slow start.
That’s meant that “Burn: Cycle,” a best-selling CD-i title in Europe, hasn’t even been sold in North America yet. Philips Media will adapt it to CD-ROMs that come with millions of new personal computers, he said.
“The multimedia PC will be the dominant carrier in the home,” he said.
Another technical battle is to proliferate the digital videodisc, where standards for the market haven’t been established. Philips Media is allied with Sony Corp. advocating one format, while Time Warner Inc. and Toshiba Corp. have another.
Last month, Philips and Sony said most of the companies that build CD-ROM disk drives, including Acer Peripherals Inc., Ricoh Corp. and Alps Electric Co., will adhere to their standard.
However, Matsushita Electric Industrial Co., Samsung Electronics Co., Hitachi Ltd., Thomson SA and others have all backed the Time Warner-Toshiba format.
Several studios including Walt Disney and News Corp.’s 20th Century Fox unit haven’t announced their preferences yet. Both have huge libraries that could yield scores of new CD-ROM movies and games.
What happens if the Philips-Sony standard gets trampled?
“I can’t think that way about us getting creamed,” Marden said. “The key for us is creating great content.”
This week, at a huge electronic entertainment exposition in Los Angeles, scores of companies including Philips Media plan to boast their wares. All are waiting to see what standard consumers prefer, just as they adopted the VHS format for VCRs in the 1980s, instead of Sony’s Betamax.
Philips Media plans to introduce another 50 interactive titles by the fourth quarter, giving it one of the larger libraries in the industry, Marden said.
