NEW YORK (Variety) - Will "Titanic" help DVD sink or swim? That's the question supporters of the digital videodisc format are asking after Paramount finally signed up to release pics on DVD beginning late this year. Although Paramount said nothing about specific titles or release dates, the news raised hopes among DVD supporters that "Titanic" would be coming out on DVD -- which would give a huge boost to the fledgling format. But as welcome as the Paramount news may be, the uncertainty still surrounding "Titanic" highlights just how much is at stake this year for DVD, and just how deep the ambivalence still runs within the studios about taking the digital plunge.

Retailers who have promoted DVD aggressively report brisk sales of both the players and the discs. But nationally, the format is running well behind its proponents' most optimistic forecasts. And with the exception of Warner and Columbia, the "support" the format has drawn from the other studios remains tentative. Only Warner Bros., Columbia and MGM routinely issue new releases on DVD and video simultaneously (though Paramount says it will also). But fear of digital piracy has so far kept Disney, Universal and DreamWorks from issuing new releases on DVD until 30 days or more after the VHS release. The same policy plagued the 12-inch laserdisc format, which never grew much beyond a technophile niche business. The library of titles released so far on DVD has also been a disappointment.

Disney, for instance, has given no indication that any of its animated classics will be available anytime soon, leaving a big hole in a format that was designed to encourage consumer purchases, not just rentals. Similarly, Steven Spielberg has blocked the release of titles released by his Amblin production company, both for fear of piracy and a feeling that it's not up to Amblin to build the DVD business. James Cameron is known to have had similar concerns regarding "Titanic," and it's not at all certain at this point that the title will be among Paramount's DVD releases this year.

If "Titanic" comes out on VHS but not DVD, however, it could permanently scar the format in the eyes of consumers. More confusing still is the test-market launch this month of the Divx system, seen by some as a sort of evil twin of DVD. Divx uses a digital encryption system to allow a studio to control how many times a disc can be played. Divx hopes to offer "rental" discs for about $5, which would be pre-coded for only a handful of plays. If consumers want to order more plays, a modem built into Divx players can contact headquarters, which sends back a code "unlocking" the disc and billing the consumer's credit card. If consumers don't want more plays they can simply throw away the discs. Plus, Divx-encoded discs will not play in ordinary DVD machines.

Significantly, the extra layer of encryption involved in Divx also provides additional protection against illegal copying, which has encouraged even those copyright holders leery of DVD -- such as Spielberg and Disney -- to make their movies available on Divx (they were also encouraged by substantial upfront payments from Divx). Paramount has also licensed titles to Divx, raising the possibility that "Titanic" could come out on Divx but not on so-called "open" DVD, which would almost certainly confuse consumers. In all, Divx has licensed films from Disney, Universal, DreamWorks, MGM, Fox and Paramount. Columbia and Warner remain adamantly opposed to the system.

But the biggest hurdle DVD may face is the threat some executives believe it poses to the profitability of the video rental market. From its inception, DVD has been promoted as a low-price, "sell-through" format. Warner, a co-developer of the system, even took pains at the time of the launch to discourage retailers from renting the discs. Warner's attitude toward rentals has changed since then. The studio has even begun making subsidized DVD players available to video stores in some markets so they can rent the discs and players together. But the pricing strategy has stayed the same, and that makes executives at other studios very uncomfortable. Encouraging rentals is one way for the format to gain some visibility with consumers. But it also encourages retailers to substitute low-priced discs for high-priced cassettes, a policy with obvious drawbacks. Landing Paramount was a big step for DVD. If "Titanic" comes out this year it will be an even bigger step. But there's still a long road ahead.

Reuters/Variety

{-e-}

-- Dan Draghici (ddraghic@sprint.ca), May 04, 1998

Answers

This came up about a week ago on Ziff-Davis' PC Week website. The Divix format (which is majority-owned by retailer Circuit City) will allow you to purchase a Divix-format disk and play it ***ONCE***. Each additional play will cost you extra bucks (or pounds, lire, etc.). I think it's a ridiculous idea that I doubt the buying public will ever accept after 20 years of home video, with the number of viewings limited only by the longevity of the tape. The studios latching onto this idea are only out to gouge more money from the viewing public.

If Fox and Paramount bypass a DVD version of Titanic in favor Divix, it'll sink like the ship, only ***much*** faster.

Cheers!

-- Kip Henry (kip-henry@ouhsc.edu), May 04, 1998.

There is no "if" Titanic comes out on video! It's coming out on video in SEPTEMBER AND will be on both VHS and DVD! Price at Blockbuster Video: 24.99 for VHS, 29.99 for DVD! I work at Blockbuster and we've presold over 200 copies in two days! Reserve your copy at your local Blockbuster store! SEPTEMBER ITS OUT ON VHS AND DVD!!!!!!!!!!!!!!!

-- Eduardo (westsidefamily@hotmail.com), May 16, 1998.