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STUDIOQUEST DVDHL:Par, Fox, Disney, U skipping March 24 bow

Why are some studios not DVD players?

Shock jock Howard Stern, who has been hyping the Toshiba player for brand-new compact disc homevideo product on his drivetime radio show for weeks, might get a shocking answer if he asked that question.

He might learn that studio politics and a short-term, bottom-line view from some executive suites appears to be sidetracking Hollywood on new technology in the same way the studios missed out on TV, cable, and even the VCR.

Paramount Pictures — currently distributing Stern’s “Private Parts” theatrically — will not be releasing his hit pic on DVD in the foreseeable future, even though Panasonic is making an Oscar-night TV push for its players, and several Hollywood studios begin the major launch of DVD titles the same day, March 24.

Paramount is not the lone holdout on the DVD issue. Twentieth Century Fox also is on the sidelines, along with homevideo heavyweight Disney. Most puzzling to many is Universal, which is 20% owned by DVD hardware-maker Matsushita.

Meanwhile, DVD titles have been announced by Sony, Polygram and Warner Bros., along with the other brands they handle on the homevideo side, such as Columbia TriStar, MGM and New Line.

So what’s the story with the holdouts?

“There are a couple of studios looking for more compelling reasons to enter the market,” says one hardware industry source.

Show them the money

That could be in the form of royalty payments from the consumer electronics industry to the studios for title releases, a subsidy for antipiracy encoding, or basically something just short of a bribe, some sources say.

The practice is not unknown. In the past, studios have been encouraged to support new formats such as laserdisc with lucrative licensing arrangements.

“That was never the intention with DVD,” says one industry source, “but there are developments lately that made some studios believe they could be asked to introduce products based on incentives.”

Other sources say one Hollywood studio in particular is seeking financial remuneration for developing DVD content.

That studio, sources say, has studied the business model used by Philips Media to launch its erstwhile vidgame platform, CD-i. In that case, Philips needed content to jumpstart hardware sales, so it inked a deal with that studio, making it worth the studio’s while to get involved with CD-i.But Panasonic DVD product manager Jodi Sally says she’s unaware of studios asking for incentives to launch DVD. “They have not requested anything like that from us,” she tells Daily Variety.

Commitment anxiety

Sally also says she doesn’t know why Panasonic sister company Universal hasn’t committed to a launch date, despite the fact that a DVD compression lab (now owned by Matsushita) has been up and running on the lot for a year.

One longtime industry exec surmises that if Matsushita is hungry enough for software, it may be more inclined to give financial enticements to Universal.

Others sources say that in the wake of the management changeover at Universal, DVD has become an unloved stepchild. Present management does not want to be reminded of former studio chief Sid Sheinberg’s backing of the new format, despite photos from a Jan. 24, 1995, press conference showing Sheinberg on the same stage as WB topper Terry Semel, Time Warner chairman Gerald Levin and Matsushita America president Richard Kraft, all announcing a unified front for DVD.

Twentieth Century Fox studio chief Bill Mechanic says Fox just isn’t ready yet, and that others have jumped into DVD too fast.

“There are a number of issues that we are concerned about,” he says. He jokingly suggests that any questions on Fox’s DVD policy be referred to Warren Lieberfarb.

Lieberfarb, president of Warner Bros. Home Video, is not amused.

The voice of DVD

Time Warner, in tandem with Toshiba, has spearheaded DVD from its inception, and Lieberfarb has stood as the format’s most passionate and vociferous champion on the motion picture studio side. But with the other studios failing to join in, even he is sounding the alarm.

“We will not stay at it indefinitely and economically damage our company because our competitors are not in the category,” he said at the recent National Assn. of Record Merchants confab in Orlando, Fla.

When asked about the issues that are keeping them from DVD, studio holdouts rattle off the same reasons.

“Copyright protection is a big issue for us,” Mechanic says. But when it’s pointed out that videocassettes are copied all the time, he says, “Yeah, but that’s not a digital master.”

Still, Fox releases more than a few movies on laserdisc, a format that many bootleggers are using to digitally master pirated versions of feature films overseas.

But most people who have been involved with DVD’s development are convinced that any remaining questions about its viability will be worked out in the market.

“There’s really nothing more to say about it,” says a studio exec who has been involved with the DVD launch for more than two years. “After some sales figures come in, we can all regroup and get an idea of how the product is really doing.”

A matter of time

Others agree that it’s just a matter of time before the holdout studios jump in. “Don’t believe for one minute that Disney doesn’t have any interest in rental or sell-through potential for DVD. But they have nothing to gauge it by until the launch,” says a source.

But complicating the issue, he suggests, are marketing questions that go beyond the viability of DVD technology.

“There are lots of things going on at one time relating to cross-promotions and other marketing projects tied to DVD. But the bottom line for the studios — with DVD or any other new technology — is the money. As soon as they see they can make money, they’ll jump in.”

Almost to a person, those who have been active behind the scenes are confident that DVD is a superior home entertainment delivery system. Major disc manufacturer Technicolor agrees: They are announcing their commitment to DVD the week of March 17.

“Nobody’s holding out for nasty reasons — they’re just taking their time to get it right,” contends one studio exec. “There’s nothing going on in the background with people who don’t like the format. Everybody agrees on that.”

Walking the line

Privately, Lieberfarb warns of disaster. If the full range of Hollywood’s movies are not supplied on DVD, consumers may let the format go the way of CD-i.

“The consumer electronics industry will eventually pass and go on to PC applications for DVD,” he says.

Silicon Valley is hungry to adopt the new disc. “DVD is extremely important to the computer industry,” says Intel’s top DVD exec, Ron Whittier, citing the industry’s “increased demands for capacity.”

In fact, entertainment software developers say Intel has been offering them financial incentives for working with the chip-maker to create DVD titles for PC. Silicon Valley’s eagerness to jump in on DVD may steal the momentum from Hollywood.

The studios risk losing their prime moment of leverage with the computer industry to settle underlying digital copyright protection issues, before the family PC and direct satellite systems combine to form the ultimate video pirating machine.

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