DVD Is Poised to Steal the Consumer Electronics Show


For nearly a decade, the consumer electronics industry has been witnessing an incredible series of advances in digital audio and video technology--but has experienced mostly frustration when it came to converting those technologies into mass-market products.

But as the annual Consumer Electronics Show opens here today, many in the business are convinced that this long and paradoxical drought is finally at an end. Finally, with a product known as the digital videodisc, or DVD, consumer electronics manufacturers look well-positioned to reap the benefits of the long-touted “convergence” of computer technologies and traditional consumer electronics.

At back-to-back news conferences Thursday, the world’s leading electronics manufacturers unveiled their first DVD players. The devices can play standard music compact discs, new movie discs with up to 133 minutes of high-resolution video, and advanced computer CD-ROM discs with seven times the storage capacity of today’s CD-ROMs.


The machines still can’t record, so they won’t replace the VCR for some time. But analysts expect quick acceptance as the machines are introduced late this summer at prices as low as $499. Hundreds of feature-length films are also expected to be available on DVD late this year at about $20 each, a third the price of many new features on videotape.

“Not since the introduction of the VCR has there been an advancement of this magnitude in home entertainment,” said Steve Nickerson, Toshiba’s vice president for consumer products marketing.

That might be an overstatement. After all, there was the compact disc in 1982 and, later, the camcorder. More recently, consumer electronics vendors have had significant--if isolated--successes with video game systems and satellite TV receivers. Then, of course, there is the personal computer, which over the last few years has moved beyond its role as a business machine and become the consumer electronics product par excellence.

Most agree, moreover, that the DVD market will probably take years to develop. And it’s still possible that consumers will resent the arrival of yet another new technology that in many respects is only an incremental improvement over current offerings.

All that said, consumer electronics vendors are nothing short of ecstatic about DVD. The machines are coming sooner than expected--many observers thought a long standards war, resolved late last year, would delay introduction until 1997--and the pricing looks to be aggressive.

Working in DVD’s favor is the powerful thirst in the computer gaming industry for devices with ever greater memory capacity. (Many new games are now delivered on multiple CD-ROM discs.) The technology also promises a great boost for Hollywood studios, which will gain yet another market for their films. Movie makers aim to push DVD toward the retail market, as opposed to the rental business that grew up around VCRs.


Films stored on DVD are more likely to be purchased because they will be cheaper and take up less space than videotapes, said Tom Adams, head of Adams Media Research in Carmel Valley, Calif. Marketing worldwide will be easier too because DVD can include soundtracks in eight languages.

“This product is the first real signal of convergence” in the consumer electronics and computer fields, said Jan Oosterweld, head of Philips’ DVD effort, pointing out that the device could be used to watch feature films, play music CDs and be attached to computers for interactive multimedia programs.

There will be a few other signs of convergence at this year’s show. Compaq Computer and Fisher-Price on Thursday showed the first results of their joint venture, a $150 device that allows children to use a steering wheel and joystick, instead of a mouse, to navigate through multimedia games.

“Children and families are driving the computer-centered revolution, and they represent the brightest chapter in the convergence of consumer electronics and computing,” said Eckhard Pfeiffer, chief executive at Compaq.

The Internet, inevitably, will also have a prominent place in Las Vegas. ESPN founder Bill Rasmussen, for example, is launching Attitude Network, a company he says will develop programs for niche audiences to be delivered over cable, radio, print and online media “with the same intensity that ESPN puts forth in serving the sports enthusiast.” The company has already acquired Happy Puppy, a World Wide Web site popular among gamers, and will extend the franchise to other media.

There will also be the traditional improvements on old products. Matsushita has a camcorder you can set up in front of, say, a Christmas tree. It will turn itself on when something moves--a child opening a present--and turn itself off when the activity stops. And to prove the DVD won’t immediately supplant the hardy VCR, Matsushita is introducing a VCR that skips commercials during recording.


Prominently absent from the show this year, however, are the big video game makers, including Sega and Nintendo. It was the game companies that provided much of the sizzle in recent years, but sinking sales and the growing popularity of the Electronic Entertainment Exposition in Los Angeles prompted them to sit out CES this year.

But the DVD hype should more than make up for their absence. Toshiba, Thompson (which owns the GE and RCA consumer electronics brands), Sony and Pioneer all had DVD media announcements Thursday, and Philips and Matsushita said they would show prototypes of their DVD machines.

Thompson is among the most aggressive, with an entry-level machine scheduled to be available in late summer starting at just $499. The company says it will launch an aggressive worldwide marketing campaign this summer and has arranged to sell DVD movie titles along with its hardware.

Toshiba, which with Warner Bros. studio was one of the original boosters of the technology, has committed 100 engineers over the last two years to get its machine out the door. The company says it has developed critical component technology that gives its machines an edge in quality and reliability.

One feature of the Toshiba machine is a parental control system. By pushing “PG,” “R” or “NC-17,” for example, the player will show a version of the movie edited to that rating by the film’s producer.