Warner puts downloadable files on Harry Potter DVD

DVD FORUM: Order of the Phoenix to contain files for PC, portable device

By Susanne Ault -- Video Business, 10/9/2007

OCT. 9 | UNIVERSAL CITY, Calif.--Warner Home Video will include two downloadable digital files on its Dec. 11 DVD release of Harry Potter and the Order of the Phoenix.

The latest Potter installment will allow DVD buyers to download the film to a PC or a portable device, making Warner the first studio to announce that they are marrying physical media and downloads.

The studio earlier offered a download of Superman Returns to consumers who bought the DVD at Wal-Mart.

Jim Wuthrich, Warner senior VP of digital distribution, unveiled the development at Tuesday’s DVD Forum conference here, as he discussed the studio’s plans to meet what it sees as a growing consumer demand for digital content.

“You can buy the DVD and have the option of the digital copy,” said Wuthrich. “This future-proofs the format for consumers.”

Following his presentation, Wuthrich said another studio also is preparing to soon launch digital copies of a film tied to its DVD release.

Wuthrich and other DVD Forum participants cited the recent approval of CSS copyright protection for disc manufacturing-on-demand as proof that the future really is on its way. Major studios can be expected to license more of their libraries for such DVD burning now that they are assured they can manage their content, participants said.

Wuthrich estimated that consumer digital spending will total $300 million in 2007. In 2008, that will grow to $600 million, which includes $12 million in MOD spending. In 2009, $900 million total, including $81 million MOD; and in 2010, $1.55 billion, including $278 million MOD.

“CSS could add about 20% more to digital by 2010,” said Wuthrich.

Studios such as Warner are eager to institute MOD operations as a way to efficiently offer consumers thousands more film and TV library titles than are currently available. Wuthrich envisions the studio offering obscure content that has tiny fan bases, because the studio could limit production costs to exact consumer demand.

“Warner has 6,600 films, and over 75% have not yet been released,” Wuthrich said. “We have released 10% of the available TV episodes, where we have 45,000 left to go. There is significant market value left to be unlocked.”

Drug stores, which normally don’t have the traditional room for DVD sections, could become significant new film and TV retailers, conference participants said. MOD can be done through small automated machines, utilizing drug stores’ existing high-end photo equipment for any DVD art needs.

Wuthrich said the drug store channel will be among the first retailers to offer in-store MOD because of such existing equipment. Its customers are likely seeking ways to entertain themselves while waiting for prescriptions to be filled.

“People need to do something with their time there, and Walgreen’s only has three feet of linear space available for DVD,” said Wuthrich. “[MOD] fits naturally there.”

Warner management believes MOD costs for consumers will likely be equal to traditional retail DVD pricing. Burning is not as efficient as straightforward DVD pressing, but studios wind up saving with the reduction in retail inventory returns.

Jim Taylor, Sonic Solutions senior VP and general manager, reiterated the likely explosion in business opportunities, during a DVD Forum session.

“One retailer told me 30% of customers and another said 50% of customers will walk into their stores looking for titles and walk away empty-handed,” said Taylor. “With a retail kiosk, you can browse through thousands more titles.”

He estimated that MOD could conceivably represent 20% of overall DVD distribution within five years.

In addition to retail, MOD also can be offered directly to consumers' home PCs and eventually on Web-connected hardware such as high-definition players. People are already ordering MOD discs through Amazon.com’s CreateSpace (formerly known as CustomFlix), but the company’s selection is expected to rapidly expand due to CSS approval.

Taylor said it might be slower for consumers to dive into MOD at home, as computer DVD burners will need to be either replaced and/or upgraded with firmware to handle the new CSS requirements.