Self-destructing DVDs (!)

Films/DVD Asylum

Movies from comedy to drama to your favorite Hollyweird Star.

DVD's Meant for Buying but Not for Keeping
NYT July 21, 2003
By ERIC A. TAUB
LOS ANGELES, July 20 - Video rental stores want customers
to return their movies, they just do not want them to do so
too quickly.
When tapes and DVD's are returned after the due date, late
fees often double the cost of a rental - highly annoying to
consumers while providing no additional revenue to the
studios that make the movies.
To help consumers avoid those fees, while trying to develop
new revenue, the Walt Disney Company's home video division
plans to test market a new type of DVD that will be priced
about the same as a rental but never needs to be returned -
because it stops working after a fixed period of time.
It is an experiment that will be closely watched in
Hollywood, where the home video market last year
represented nearly 59 percent of the film industry's $17.38
billion in North American revenue, according to Adams Media
Research. Late fees are a lucrative source of additional
income for Blockbuster Inc., which is a unit of Viacom
Inc., and its competitors. Typically, the late fees account
for more than 10 percent of the gross rental revenue at
most outlets, according to the Video Software Dealers
Association.
But, those extra fees do little or nothing to bolster the
bottom lines of the film studios, which usually make most
of their rental revenue from the initial sale of VHS and
DVD copies to retail outlets. The test, by Disney's Buena
Vista Home Entertainment could be a way to change that.
Set to roll out in September with eight titles in four
markets, Disney's new EZ-D DVD self-destructs 48 hours
after the purchaser opens the special airtight package. The
disc is composed of a Lexan resin co-polymer developed by
GE Plastics. The General Electric Company owns a minority
stake in Flexplay Technologies, the company that owns the
underlying process and has licensed it to Disney.
Once the product is exposed to the elements, a chemical
clock starts ticking, turning the disc black and making it
unreadable by a DVD player's laser after the designated
time has elapsed. Until that happens, the disc can be
played as often as desired. Employing a chemical rather
than software process to disable the disc is meant to
ensure that the process will work with any DVD player. And
like any standard DVD, the discs can have software
copyright protection that would deter a user from copying
them onto the hard drive of a computer or onto a blank DVD
that would not self-destruct.
Disney hopes that the purchase price of $5 to $7 will be
close enough to the cost of a typical DVD rental that many
customers will consider it an easy impulse buy.
Disney will be the first studio to license EZ-D from
Flexplay. Among the other video leaders, the home-video
divisions of Paramount, Sony and Warner Brothers declined
to comment on their possible interest in the technology.
Convenience will attract consumers to the concept, the
chief executive of Flexplay, Alan Blaustein, said. "With
EZ-D, we are taking late fees and the video return process
out of the equation."
A limited-play DVD service has been tried before - in 1998
- and it failed. But, EZ-D proponents argue that this time
will be different. The DVD is now more popular and widely
understood. That lends support to EZ-D discs because they
will play on a standard DVD machine. To make them readily
accessible, Disney plans on selling them in nontraditional
outlets not usually associated with video sales or rentals,
like convenience stores and gas stations. By sidestepping
video rental outlets, Disney will be able to eliminate the
middleman and keep a higher percentage of each disc's
revenue.
At the same time, Disney wants to make sure that its EZ-D
sales do not reduce rental profits. So the EZ-D titles will
not be available until six weeks after the film is first
released in standard video rental stores. To further
differentiate the two products, the self-destructing
versions will contain the movie but not any of the
additional features that helped make the DVD format so
popular, like missing scenes and director's commentaries.
There is nothing magical about the 48-hour life span of the
disc. The manufacturing process can be adjusted so that the
disc will expire anywhere from 8 to 60 hours after opening
the wrapper. And enterprising consumers may find that they
can extend the life even further. Staff members of New
Scientist, a British publication, were able to slow down
the chemical process and keep an opened EZ-D disc in a
playable state for at least 96 hours by placing it in a
sealed container and storing it in the refrigerator.
While experts say that the technology is intriguing, it
remains an open question whether a self-destructing DVD
will interest consumers who normally expect that any
purchase of a physical object is theirs to use forever.
The first hurdle could be educating consumers. Take Netflix
Inc., a successful Internet company that offers $20 monthly
subscriptions that allow consumers to rent as many DVD's as
they want for as long as they want but are not allowed to
keep more than three at any time. Executives at the
company, which has 1.2 million subscribers, say that just
explaining to potential customers how the business works
has been a struggle.
"Our biggest expenditure is getting people to understand
our system of a fixed-fee subscription rental without late
charges," said Ted Sarandos, Netflix's vice president for
content and acquisition. "The studios underestimate how
difficult it is to change consumer behavior."
Blockbuster is not threatened by the introduction of
EZ-D's. "We don't see it going anywhere," said Karen
Raskopf, the company's senior vice president for corporate
communications. "Customers can now buy a used DVD from us
that plays forever and costs just a few dollars more than
an EZ-D."
As a response to consumer antipathy toward late fees,
Blockbuster is testing a Netflix-like subscription service,
called the Freedom Pass, in 700 stores.
Last month, Wal-Mart Stores Inc. also started an online DVD
rental service to compete with Netflix.
Adi Kishore, an analyst with The Yankee Group, agrees that
the disposable DVD concept faces a rough road toward
acceptance. "When people think about getting a movie," Mr.
Kishore said, "they think about going to Blockbuster, not
7-Eleven. And the overall mechanics of getting an EZ-D
title are not that much easier than going to Blockbuster."
He argues that the idea may create a big splash initially,
but that it may not last. "People will snap this up once,"
he said. "It will be a great novelty product."
It is also unknown if consumers will find a 48-hour viewing
period sufficient. Those who typically watch a film over
several days, catching a few scenes here and there, will be
out of luck with EZ-D. Even if people intellectually
understand the concept, said Thomas Wolzien, senior media
analyst for Sanford C. Bernstein & Co. in New York, "when
your ability to play it disappears after 48 hours, you are
going to feel as if someone robbed you."
But Mr. Blaustein of Flexplay argues that the 48-hour
period will not be a serious impediment. According to
company research, he said, "well over 90 percent of DVD
viewers watch an entire film in one sitting."
If the EZ-D disc is a success, its detractors say, expect
to see an environmental mess, as millions of now useless
discs clog the landfills with nonbiodegradable polymers. To
counter these concerns, Flexplay has agreed to a
partnership with a national recycler to collect used discs.

Even if the discs are not recycled, single-use disposable
DVD's will result in net energy savings, according to a
study conducted by Jonathan Koomey, staff scientist at
Lawrence Berkeley National Laboratory. "The solid waste
impacts may be more than completely offset by the gasoline
saved from avoided trips to the video store. Gasoline
savings could be 7.5 to 20 times larger than the increase
in solid waste," Mr. Koomey said in an e-mail message.
Mr. Blaustein of Flexplay sees a wide range of other
applications for its time-limited DVD technology. Screening
cassettes of new films, review copies of CD's, or expensive
technical catalogs would all be less likely to be pirated
if they stopped working shortly after use.
Based on recent comments made by Michael D. Eisner,
Disney's chairman and chief executive, those other markets
may prove to be important revenue sources for Flexplay.
Speaking at a Sanford C. Bernstein conference last month in
New York, Mr. Eisner indicated that he expected the EZ-D
test to be short-lived.
"I think it probably won't work," he said. "I think it's
going to boomerang on us, but it's a test."
Those backing the Flexplay effort say that Mr. Eisner is
being too pessimistic and that consumers will fall in love
with the EZ-D idea once they are see it.
"You want to go on vacation or something, you buy five of
these and throw them in the trunk," said Robert Wright, the
chairman of G.E.'s NBC unit.

http://www.nytimes.com/2003/07/21/technology/21FLEX.html (Open in New Window)

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Topic - Self-destructing DVDs (!) - clarkjohnsen 08:30:53 07/22/03 (0)

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