DVD Format Taking an Increasingly Larger Bite Out of the Home Video Market

This summer you are going to be reminded, again and again, of why you were afraid of the water.

Universal Studios is blanketing lifeguard towers, beach cans and beach-bound buses on both coasts with enormous ads for “Jaws.” No, not “Jaws 5” but the original 1975 scream fest, now out on DVD.

The multimillion-dollar campaign includes an online promotion with Microsoft’s WindowsMedia.com, with Microsoft crafting a custom “skin” that will transform the Windows Media Player into a gaping shark’s mouth through which viewers can watch trailers and clips of “Jaws.” Already, TV spots are running on network and cable television and radio, with a second boost during the Discovery Channel’s “Shark Week” Aug. 13-20.

The massive show of support is, at least in part, for the benefit of director Steven Spielberg, who has been slow to embrace the new technology. In addition to “Jaws” he’s given Universal some of its biggest films, including “E.T.: The Extraterrestrial” and the “Jurassic Park” series. The studio wants to show him the DVD market has matured.

Universal is eager to ride the wave of this new format with all of Spielberg’s hits. At this point, similar campaigns planned for the DVD debuts of “Jurassic Park” and “The Lost World,” both of which are scheduled for release this fall.

“The market [for DVD] is here,” said Craig Kornblau, president of Universal Studios Home Video. “People who are buying DVD players now are the most hungry entertainment consumers, the most avid movie fans.”

Independent industry analyst Tom Adams estimates that the average DVD home last year bought 22 titles, versus six in the average VHS home. “A lot of that is clearly to replenish favorites in the libraries,” Adams said.

Columbia TriStar Home Video last year released “Ghostbusters” on DVD 15 years after the film’s theatrical debut and sold more than 400,000 units. “The new format gives us an opportunity to polish our gems and present them in a new context,” said Benjamin S. Feingold, president of Columbia TriStar.

New Line Home Video last September released all seven installments in the “Nightmare on Elm Street” series in a special DVD boxed set. A beefy marketing campaign targeting teens included a coupon offer in “Study Breaker” kits distributed on college campuses nationwide.

Despite a hefty price tag of $129, New Line sold more than 500,000 discs, said Matt Lasorda, senior vice president of marketing.

It’s not just teen flicks. Buena Vista Home Entertainment made a big media splash last fall when it said it would begin rolling out DVD versions of its animated classics. DVDs of “The Little Mermaid,” “Pinocchio” and others have since sold millions of copies.

“Our research shows the next 5 million entrants into the DVD category will be a near-perfect alignment with consumers of family-oriented product, which has always been our focus,” said Mitch Koch, general manager, North America for Walt Disney Co.’s video operations.

Amy Jo Donner, executive director of DVD Entertainment Group, predicted more big catalog promotions in the future: “The installed base of DVD players right now is approximately 7 million, and we expect to reach at least 12 million, and as high as 15 million, by the end of this year.”

Older films aren’t the only ones bringing in the big bucks when they come out on DVD. While fewer than 10% of U.S. households have a DVD player, contrasted with the more than 90% with a VCR, DVD sales of new films constitute a disproportionately large share of overall sales compared to the VHS versions.

“With ‘The Mummy,’ we did almost 20% of our volume on DVD,” Kornblau said. “And that was released back in September, when DVD wasn’t anywhere near as big as it is now.”

Indeed, the DVD versions of several films have tallied initial shipments of 1 million units or more, beginning last fall with Warner Home Video’s “The Matrix” and continuing with such other big hits as New Line Home Video’s “Austin Powers 2: The Spy Who Shagged Me,” DreamWorks Home Entertainment’s “Saving Private Ryan” and Buena Vista Home Entertainment’s “The Sixth Sense.”

“Within two years, we’re going to start seeing the DVD versions selling as many copies as the VHS versions, primarily in the action and thriller genres,” Feingold said. “With the lateral compatibility of DVD with PCs and laptops and portable DVD machines, it’s only a matter of time for DVD to take over the video category.”

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Thomas K. Arnold is editor in chief of Video Store Magazine.