Hope and loathing

HDTV, DVD-Divx debate top Las Vegas show

LAS VEGAS — On opening day of this year’s Consumer Electronics Show, Sony Corp. of America chairman Howard Stringer called for cooperation in the “architecture” of high- definition television, and Warner Home Video Prexy Warren Lieberfarb defended DVD against Divx inroads.

“Digital technology will allow hundreds of new options. The newly diluted landscape will see as many failures as successes,” Stringer said Thursday in his keynote speech at CES. “We must cooperate. If we can settle on the architecture, the products will flow.”

“The storytellers must create high- quality interactive programming and more creative traditional programming to fully realize the potential of the digital age,” Stringer added.

Tension abounds

About 2,500 conventioneers politely applauded Stringer’s remarks. By contrast, the atmosphere was highly charged in a packed smaller lecture room where Lieberfarb and Circuit City Stores Chairman Richard Sharp debated the merits of DVD — which Warner has invested in heavily — and the cheaper, competing Divx video format, with which the 538-store electronics chain enjoys dominant market share.

Execs at Divx creator Digital Video Express said Thursday that retailers have sold 90,000 Divx-enhanced DVD players in the past three months, with 60,000 sold in December alone.

“It would obviously be more successful if we got together and got behind the entire category,” said Sharp, referring to some Hollywood studios holding back on providing Divx titles.

Lieberfarb shot back with his own statistics. “In the September-December period,” he said, “the story is really that sales were seven-to-one in favor of open DVD. Divx provides a (disposable) feature to those consumers who want to pay a considerable premium over the cost of renting a DVD at a traditional video store.”

Long live video rental

“It’s my view,” Lieberfarb argued, “that the bulk of the populace will continue to support the existing VHS rental store which will broaden their selection to include DVD.”

(In 1998, the first full year of DVD’s availability, DVD accounted for more than 10% of Warner Home Video’s total domestic gross sales.)

More than 90,000 people have poured into Las Vegas for this CES show, about the same as last year. The Consumer Electronics Manufacturers Association, the show’s sponsor, announced Thursday that total consumer electronic sales should reach $79 billion this year, a 5% jump over 1998 sales.

Meanwhile, at the Digital Hollywood conference down the Strip at the MGM Grand Hotel, speakers since Wednesday have been discussing the convergence of telecommunications, the Internet and the entertainment industry.

New technology

Microsoft product manager Alec Saunders said personal computers can be replaced by other technology now, and besides, “intelligent appliances are just better appliances.”

At a CES home networking seminar, IBM Group Marketing Manager Craig Merrigan said the home computer market will reach $1 billion within three years, but he added, “Most homes being built today are not ready for the technology.”

(Marc Graser in Los Angeles contributed to this report. )

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