Issue 131, May 2008 of Widescreen Review:• “2008 International CES Part II: Video” By Mike Marks

• “2008 International CES Video Technology Trends” By Alen Koebel

• “Epson PowerLite™ Pro Cinema 1080UB 3LCD Video Projector” By Bill Cushman

• “Sony STR-DA5300ES A/V Receiver” By John Kotches

• “Panamax M5400-PM Power Conditioner” By Doug Blackburn

• “One HD Optical Disc Format...Be Careful For What You Wish” By Joe Kane

• “Where Has All The Knowledge Gone?” By Noel Lee

• “THX® Video Calibration Training & Certification” By Doug Blackburn

• “Walter Lassally’s Classic Film: A Taste Of Honey” By Bob Fisher

• Plus the new department “Connecting Dots...” By Amir Majidimehr, “Your Letters,”“One Installer's Opinion” and over 40 Blu-ray Disc, HD DVD, and DVD picture andsound quality reviews and more...

Spring is here and even with the state of the economy in such turmoil, things are moving forward in Home Theatre Land. Thequestion I pose to you is, “Does history repeat itself?” This month’s archived article is an interview from Issue 26, December1997, with Martin Greenwald, President and CEO—at the time—of Image Entertainment. (According to the company’s Website, 25 years after founding Image, Martin decided that it was time to “hang up my cleats,” and David Borshell took over asPresident on April 1, 2008.) While some of Martin’s prognostications did come true (“...in the year 2003 I will be looking at HighDefinition Television...”), many did not (“I think DVD is a niche business that has the potential to be a little bit larger thanLaserDisc.”) The topics broached have many parallels with today’s times, as Blu-ray Disc™ attempts to overtake DVD (and tryreplacing “Divx” in the article with “digital downloads” for another interesting parallel). What do you think? Are we seeing thebirth of a new format emerge in a similar light or is this new ground? Send an e-mail to danny@widescreenreview with yourvision of the future. We’re all interested to hear what you have to say.

2 Recent News

3 New Equipment: Coming Soon To A Retailer Near YouBy Tricia Spears

5 The Studio Scoop: Rumors, Reports, & RamblingsBy Stacey Pendry

8 The Business Of DVDBy Gary Reber

WELCOME!

NOW AVAILABLEON NEWSSTANDS

ATTRACTIONS

Gary ReberEditor-In-Chief, Widescreen Review

WIDESCREEN REVIEW NEWSLETTER 23 1 APRIL 2008 - www.WidescreenReview.com

April 2008 • Volume 3, Issue 23 • The Official FREE Newsletter Of Widescreen Review Magazine

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Recent News

Industry View

Here are some of the recent headlines that have made it to the News section of WidescreenReview.com,which is now updated daily, as our Web staff finds worthy home theatre-related stories and press releases. VisitWidescreenReview.com throughout the day to find out what’s going on in the world of Home Theatre.

Blockbuster Bids On CircuitCity (Video Business)

“Blockbuster said early today that it made an offer for at least $6 ashare for Circuit City in February and that the No. 2 electronics retailerhadn’t fulfilled a request for due diligence necessary to make the bid“definitive.’...”

HDTV To Reach 44 MillionHomes By End Of 2008—Report (CNN Money)

“High-definition television will be seen in 44 million homes aroundthe world by the end of 2008, a research firm says, with HD homes ris-ing to nearly 180 million by 2012.

According to a new forecast from London-based Informa Telecoms& Media, about 4 percent of worldwide households will actively watchHD programming by the end of this year, up from 2 percent at the endof 2007...”

Disney says Pixar films willbe released in 3-D (Today’sZaman)

“The Walt Disney Co. said its Pixar animation studio is committingto 3-D and will release all of its movies in the format beginning with "Up"next year.

Chief Creative Officer John Lasseter made the announcement inNew York at a presentation of Disney's upcoming lineup of animatedmovies through 2012...”

DTS-HD Master Audio™ NowAvailable For PlayStation®3Computer EntertainmentSystemDTS, Inc., a digital audio technology company dedicated to deliver-ing the ultimate entertainment experience, has announced that itsDTS-HD Master Audio™ technology is now available for thePlayStation®3 (PS3™) computer entertainment system. DTS-HD MasterAudio is capable of delivering audio that is bit-for-bit identical to thestudio master at super high variable bit rates (up to 24.5 Mbps onBlu-ray™ Discs)...”

CEA Standards CommitteeMakes Smart AntennasSmarter

“The Consumer Electronics Association’s (CEA)® AntennasCommittee announced revisions to CEA-774-A, TV Receiving AntennaPerformance Presentation and Measurement. This standard definesmethods for testing antennas used to receive free over-the-air TV sig-nals. This update adds testing of “smart antenna,” for antennas that,when used with compatible TV receivers, automatically steer them-selves for optimum reception...”

Philips Takes Decisive StepsTo Improve Profitability Of ItsTelevision Business

“Royal Philips Electronics and Funai Electric Co Ltd of Japan todayannounced their intention to enter into a brand licensing agreementunder which Funai will assume responsibility for the sourcing, distribu-tion, marketing, and sales of all Philips’ consumer television activitiesin the United States and Canada. The five-year minimum agreementtakes effect September 1, 2008 and stipulates Philips will receive roy-alty payments in exchange for Funai’s right to exclusively use thePhilips and Magnavox brand names for its consumer television offer-ings in North America during this period...”

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WIDESCREEN REVIEW NEWSLETTER 23 2 APRIL 2008 - www.WidescreenReview.com

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Tricia SpearsThe new flagship Palladium™ P-39Ffloorstanding loudspeakers fromKlipsch® are a 3.5-way, Tapered Arraydesign and feature a new, proprietaryhorn-loaded tweeter assembly, aninverted dome midrange, and threehigh-output woofers. Housed in theirown acoustically tuned, sealed enclo-sures, the P-39F’s midrange employs a4.5-inch inverted aluminum diaphragmdriver powered by three high-tempera-ture neodymium magnets, allowingthem to operate from 500 Hz to 3 kHz.The P-39F’s three low-frequency driversemploy 9-inch hybrid cone woofers.Every P-39F comes as a “matching” leftand right loudspeaker pair, and they areavailable now for $15,000 a pair.

The $10,999.99 65-inchLC-65SE94U, $4,199.9952-inch LC-52SE94U,and $3,199.99 46-inchLC-46SE94U are part ofSharp’s new “SpecialEdition” Full 1080pAQUOS SE94 LCD televi-sion line. Offering Sharp’sadvanced version of true 16:9 1080p resolution Advanced SuperView Panel, the SE94 series features AQUOS Net capability—aservice that gives customers instant access to customized Web-based content and real-time customer support. The “Cornerstone”slim-line design combines a new textured finish with corneraccents and detachable bottom loudspeakers. With a dynamiccontrast ratio of 27,000:1, 120 Hz frame-rate conversion, and an“industry-leading” 4 ms response time, the SE94 series includes anumber of 1080p-compatible inputs, including three HDMI and twocomponent video inputs.

Klipsch® 800 KLIPSCH www.klipsch.com

Premier Mounts has introduced its Victory Mounts family of flatpanel television mountingsolutions in a price rangefrom $30 to $150.Included in the line is theUniversal Flat Mount,which consists of twomodels and is ideal formounting displays foreye-level viewing lessthan 1-inch from the wall.The XUF-2637 holds tele-visions from 26 inches to42 inches, and the XUF-3760 holds 37-inch to 63-inch TVs. The twoUniversal Tilt Mount models—XUT-2637 for 26-inch to 42-inch TVs,and XUT-3760 for 37-inch to 63-inch TVs—are designed for mount-ing displays above eye-level, three inches from the wall. The mounthas a maximum tilt range of 15 degrees up or down. The LCDSwingout Arm is designed for up to 30-inch displays. Allowing con-sumers to pull displays up to 10 inches away from the wall andretract to less than four inches in depth, the mount has a maximumtilt range of 20 degrees and can be swung left or right 180 degrees.The LCD Tilt Mount has a maximum tilt range of 20 degrees up ordown and holds 13-inch to 30-inch LCD panels. Holding displaysless than four inches from the wall, the mount is a great solution formany difficult display placements. And the LCD Flat Wall Mount isdesigned to fit LCD displays up to 30 inches. The space-savingdesign holds the display two inches from the wall and comes in aneasy snap-in design with a built-in cable-management system. All ofthe mounts in the Victory line are easy to use and install with no spe-cial skills or tools required.

Premier Mounts XUF-2637

Premier Mounts 800 368 9700 www.premiermounts.com

Coming Soon…To A Retailer Near You

NEW Equipment

Samsung Electronics www.samsung.com

Samsung Electronics’Series 4 plasmaHDTVs are the first 3-D-ready, flat panelHDTVs on the market.Using an advancedsoftware algorithm toelimate dither noiseand false countourlines to reproduceclear images, theSeries 4 is availablein 42-inch (PN42A450P)and 50-inch sizes (PN50A450P). The Series 5 full 1080p HDTVscome equipped with three HDMI 1.3 inputs and a USB 2.0 port,making it a true plug-and-play set. The Series 5 is available in 50-inch (PN50A550P) and 58-inch (PN58A550P) sizes. Both the Series4 and the Series 5 televisions come in a lustrous, piano-black exteri-or and feature the FilterBright™ anti-glare technology.

The new Monster™ ScreenClean™ anti-microbial cleaning cloths areenhanced with AEGIS Micro Shield Technology to polish screensand control potentially harmful bacteria. Capable of cleaning anydisplay screen surface of dust, fingerprints, and dirt, screens are leftthroughly clean and streak-free. The three new ScreenClean prod-ucts come in travel-sized bottles. And to keep things not only clean,but also green, the new portable products are packaged in fullyrecyclable packaging and are available for $9.95 each.

Samsung Series 4 Plasma

Klipsch Palladium P-39F

Sharp Electronics www.sharpusa.com

Sharp LC65SE94U

Monster™ 415 840 2000 www.monstercable.com

WIDESCREEN REVIEW NEWSLETTER 23 3 APRIL 2008 - www.WidescreenReview.com

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Runco has added theVX-22i to its VideoXtreme™ line of 1080pDLP™ projectors. Thevideo con-troller/processor hasbeen combined intothe projector, andRunco’s acclaimedDHD controller withHDMI connectivity hasbeen integrated intothe projector chassis.With a native resolu-tion of 1920 x 1080 and the utilization of three 16:9 SuperOnyx™

DMDs™ and Runco’s award-winning Vivix II™ video processing, theVX-22i utilizes the same footprint and versatile feature set as thebest-selling VX-22d. The 1080p three-chip VX-22i DLP projector hasbeen engineered with Imaging Science Foundation calibration andcan be bought for $39,995. The projector is also available withRunco’s award-winning CineWide™ and CineWide with AutoScope™

technology and the company’s most advanced McKinley anamor-phic optics for $54,995. This option reproduces 2.35:1CinemaScope™ movies with unparalleled accuracy and full verticalscreen image height, eliminating black bars.

Yamaha has introduced its latest line of Home-Theater-in-a-Box(HTIB) systems, providing consumers with the ability to play backcontent from Sirius and XM Satellite Radio, as well as iPods®,Bluetooth enabled phones, computers, and PDAs with optionalYamaha direct-connect accessories. All of the HTIBs featureSCENE modes to instantly access any entertainment source andsurround sound experience at the touch of a button via a set of fourcustomizable SCENE buttons on the front panel of the receivers. Italso includes a Compressed Music Enhancer that improves thesound quality of compressed music from any audio source. All sys-tems feature an HDMI interface with two inputs and one output andYamaha’s advanced CINEMA DSP, which provides a choice ofeight realistic-sounding surround programs. The top-of-the-lineYHT-790 ($850) with a high-gloss piano finish complements flatpanel LCD or plasma monitors with its five “flat-design” loudspeak-ers and a slim subwoofer. The YHT-690 ($650) features a DVDplayer that enables HDMI 1080i/720p upscaling and high-definitionJPEG picture playback at their native resolution via HDMI 1080i or720p video signals. These two models feature the company’s pro-prietary Yamaha Parametric Room Acoustic Optimizer (YPAO) tech-nology and Optimizer Microphone that simplifies the home theatreset up process by automatically assessing and adjusting to roomacoustics via a parametric equalizer. The YHT-590 also features thesame “flat-design” loudspeakers and slim subwoofer as the YHT-790 and is available for $550, and Yamaha’s YHT-390 sells for$400.

The new Spire™hybrid electrostat-ic floorstanding loudspeakersfrom MartinLogan® will be avail-able in May 2008 for $8,500 apair. Each Spire includes aPoweredForce 10-inch aluminumcone woofer and 200-watt high-resolution amplifier for usablebass extension down to 29 Hz. Asimple turn of a 35 Hz equaliza-tion knob allows precision low-endcalibration to optimize loudspeak-er/room integration. Housed in aradical, ultra-rigid, extruded alu-minum and composite AirFrame™,Spire’s CLS™ (Curvilinear LineSource) XStat™ transducer buildsupon the legacy of MartinLogan’selectrostatic heritage withadvanced Vacuum Bonding andMicroPerf stat panels, providinghigh levels of efficiency and preci-sion. Featuring an advanced pro-prietary Vojtko™ crossover topolo-gy derived from the company’s

flagship Summit™ loudspeaker, MartinLogan electronic specialistshand build each Spire crossover. The Spire loudspeakers are avail-able in Black Ash, Dark Cherry, Natural Cherry, Maple, Birds EyeMaple, Wenge, and Rotary Cut Bubinga, as well as additional finish-es through the MartinLogan Custom Shop(http://configurator.martinlogan.com).

MartinLogan Spire

Martin Logan® 785 749 0133 www.martinlogan.com

Runco VX-22i

NEW Equipment

Runco 800 237 8626 www.runco.com

Yamaha Electronics 714 522 9105 www.yamaha.com/hometheater

Paradigm® Electronics is pleased tointroduce their DSP SeriesSubwoofers. The proprietary DigitalSignal Processing design employssophisticated mathematical algo-rithms to “shape” frequencyresponse. The forward-firing driverwith a CAP™ (Carbon/Aramid-FiberPolypropylene) cone combines highstiffness and low mass with excellentinternal damping properties. Computer optimized ceramic/ferritemagnet structures reduce inductive distortion, and the advancedsuspension design promotes extended cone excursion. Computer-optimized heatsinks and the proprietary AVS™ (Airflow VentilationSystem) aid in increased power handling and further reduces distor-tion. The high-velocity, low-noise dual-port design incorporates criti-cally flared openings to reduce turbulence distortion, and the front-ported design accommodates installation flexibility. The 10-inchDSP-3100 has 600 watts dynamic peak and 200 watts RMS powerhandling, the 12-inch DSP-3200 has 900 watts synamic peak and300 watts RMS, and the 14-inch DSP-3400 offers 900 watts dynamicpeak and 300 watts RMS. All models are available in Cherry,Rosenut, and Black Ash.

Paradigm® Electronics 905 696 2842 www.paradigm.com

Paradigm DSP-3100

Yamaha YHT-790

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Universal

Sacha Baron Cohen is up to hisold tricks again. The Borat starhas signed a deal withUniversal for his next proj-ect, in which he will playthe lead character,Bruno—a gay Austrianjournalist.

The studio,which paid a reported$42 million for therights, is eyeing anOctober release. It maybe no coincidence that a

suspicious news reportabout a film crew running

amok in the Wichita, Kansasairport surfaced just after the

deal was brokered.The local newspapers and the

Associated Press seemed fooled bythe escapade, soberly reporting acamera crew, which had permissionto film in the terminal based upon aEuropean man visiting, began danc-

ing about in tight shorts, kissing, and fight-ing in the lobby.

Sounds familiar. On the run up to Borat,newspapers reported a Kazakh journalistmangling the national anthem so badly hewas booed out of a Virginia Rodeo, which ofcourse, turned out to be one of the funnierscenes in Borat.

So far, courts have dismissed the manylawsuits brought against Baron Cohen bynaïve Americans who were featured in thepranks in Borat. Universal is banking thatthe same will hold true for Bruno.

George Clooney and The Writer’s GuildOf America have parted ways, sort of.Clooney has gone “Financial Core” over acredits dispute for the Universal release,Leatherheads. Going Fi-core means he isstill technically a member of the WGA buthas very limited rights within the guild. Fi-core members still pay dues and are cov-ered by health and pension plans but arenot able to cast their votes on WGA matters.

Stacey Pendry

April’s DVD Giveaway:The 11th HourBe sure to enter our contest for

Leonardo DiCaprio’s documentary onglobal warming—the deadline for submis-sions is April 25. Just click the cover toenter.

Congratulations to all of our I AmLegend March DVD contest winners.

Disney/Miramax

Two years after the $7.4 billion mergerbetween Disney and Pixar, a detailed peekinto the animated releases scheduled overthe next four years was announced byJohn Lasseter, Chief Creative Officer forthe studios, in a conference in New Yorkthis week.

The lineup includes a Pixar releaseevery summer for the next four years, anda Disney release during the holiday sea-son every year, sans 2011, when Pixar willrelease two titles, and Disney will take ahiatus.

All the announced titles will be releasedin digital 3-D except for Disney’s 2009offering, titled The Princess And The Frog.

Also announced by Larry The Cable Guy,was the 3-D sequel to Pixar’s Cars, which isset to be released the summer of 2012.

Disney has picked up the rights to writerJared Stern’s script entitled Self-Guided formid- to high-six figures. Stern previouslyworked as a scribe on Disney animation stu-dio’s Toy Story 3.

The story centers on a man who is trans-ported back to his high school as a guid-ance counselor to give advice to hisyounger self.

Bruce Willis is set to star in Disney’supcoming sci-fi thriller, The Surrogates,based on the graphic novel by RobertVenditti and Brett Weldele. Radha Mitchelland Rosamund Pike have signed on to staropposite Willis.

The story is set in the near future, wherehumans live in isolation and interact vicari-ously through surrogate robots, who are bet-ter looking versions of themselves.

Jonathan Mostow is directing, with thescreenplay being written by Michael Ferrisand John Brancato. Filming is due to startthis April on location in Boston.

Miramax has acquired the rights to theredo of the Giuseppe Tornatore film Stannotutti bene, which will be entitled Everybody’sFine.

Kirk Jones, who wrote the original, is setto direct the remake. Hollywood heavy-hit-ters Robert De Niro, Drew Barrymore, andKate Beckinsale have signed on to star inthe flick.

De Niro will play a widower who realizesthat his deceased wife was the only con-nection he had to their children. In anattempt to re-connect with his now grownchildren, he takes each on a road trip, dis-covering there is a lot to be learned abouttheir less-than-perfect lives.

Filming is set to begin later this month inConnecticut.

I Want ToKnow

The Studio ScoopRumors, Reports, & Ramblings

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Hot Fuzz Director Edgar Wright, signing himto make two more films that are to be dis-tributed by Universal.

The first project slated is Baby Driver, anunconventional spin on the action/crimegenre, set in the U.S. in which Wright willboth direct and pen the script.

The second film is entitled The World’sEnd, which will reunite Wright with his co-writing partner and Shaun Of The Dead andHot Fuzz star, Simon Pegg. Pegg is also setto star in the film. The duo said this projectwould complete a trilogy of homages totheir favorite film genres.

Pegg is currently starring in DavidSchwimmer’s directorial debut, Run FatboyRun and in the upcoming Paramount filmStar Trek, as the ship’s doctor, Scotty.

20th Century Fox

Mel Gibson’s attorneys have asked thecourts to seal the financial records for ThePassion Of The Christ, in a bid to keep thefilm’s box office receipts from the public’sprying eyes in the wake of a lawsuit filed byBenedict Fitzgerald, who shared screenwriting

credits with Gibson on the film.Fitzgerald claimed in his lawsuit that

Gibson mislead him into accepting a pit-tance for writing the script by representingthe film’s budget to fall between $4 million to$7 million. Fitzgerald maintains that heagreed to “a salary substantially less thanwhat he would have taken had he knownthe true budget of the film.” The lawsuitclaims fraud, breach of contract, and unjustenrichment, and Fitzgerald is seeking undis-closed damages.

Gibson’s legal team is trying to dismisssome of Fitzgerald’s claims, including fraud,which would allow Fitzgerald to seek puni-tive damages if the claim is proven.

Candice Bergen has signed to star along-side Kate Hudson and Anne Hathaway in theupcoming Fox romantic comedy Bride Wars.

The plot revolves around two best friends,Hathaway and Hudson, who become pittedagainst one another when their weddingdates clash. Both friends are left to competefor wedding guests and venues. Candicewill play the role of Marion St. Claire, queenof the wedding planners.

Once one elects to go Fi-cor, the decision isfinal and irreversible.

WGA decided in a 2-1 credit arbitrationthat only Writers Duncan Brantley and RickReilly deserved screen credit forLeatherheads, excluding Clooney.

Brantley and Reilly originally penned thescript nearly 17 years ago, where it lan-guished in the studio’s vaults. Clooney got agreen light for the decades-old project afterhe personally gave the script a major over-haul, turning it from a drama into a screw-ball comedy. Clooney contends that hewrote all but two of the film’s scenes.

“When your own union doesn’t back whatyou’ve done, the only honorable thing to dois not to participate.” Clooney stressed hemade no attempt to exclude Brantley andReilly from first-position writing credits.

George says he would have quit the guildaltogether, but that would have preventedhim from participating on any and all WGA-covered productions.

Working Title partners Tim Bevan andEric Fellner have once again extended theirrelationship with Shaun Of The Dead and

I Want To Know The Studio Scoop

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Although Paramount execs contend theywill retain legal rights to dozens ofDreamWorks development titles, even ifSteven does make a move away from thestudio, others suggest that Spielberg couldmake it difficult to see the unfinished proj-ects brought to fruition.

Paramount believes they still have a shotat retaining the iconic director, as they feelthey have more than addressed the issuesof money and respect that had reportedlyleft Spielberg unhappy with the studio.

It is emphasized by all the companieswho have interests in a Spielberg deal thathe has not even thought in earnest about adeparture from Paramount, as he is current-ly involved in postproduction on IndianaJones And The Kingdom Of The CrystalSkull, which is scheduled to be released onMay 22.

MGM

MGM dug deep into their pockets to pur-chase the rights to the 1979 Robert Ludlumnovel, Matarese Circle, for a reported $3million. This is the first major deal brokeredsince Mary Parent took over as head of thestudio’s worldwide motion picture group.Parent was formerly vice chairman atUniversal during the production of the JasonBourne franchise.

Another seven-figures are to be paid toscribes Michael Brandt and Derek Haas,who collaborated on the script for 3:10 To

Yuma. It is reported by Haas and Brandt’sWMA reps that the duo were asking $2.5million for the writing job, but other sourcesclaim only $1.25 million will be paid to thescreenwriters. The writing pair’s leverage forbumping up the studio’s offer was greatlydiminished when ICM, who representsLudlum’s estate, quickly signed the dealwith MGM, prior to having the writer’s dealsworked out.

Valkyrie, starring Tom Cruise, has suf-fered another release setback. The UnitedArtist production was set to open onOctober 3rd but has been pushed furtherback and will reportedly now be releasedon February 13, 2009.

This is the second delay in releasing theWWII action/drama, which was originallydue to hit the theatres June 27th. Thenewest date will knock the film out of thetime window for awards-season considera-tion, but will slot into a more lucrative timeslot for higher box office receipts, during thelong President’s Day weekend. Other con-tenders for the extended holiday weekend’sshare of takings are Disney’s ConfessionsOf A Shopaholic, New Line’s Friday The13th, and Sony’s Pink Panther 2.

Sony

Sony has firmed up its release schedulefor early 2009, changing a number of datesfor some key big-screen offerings.

The animated feature Cloudy With AChance Of Meatballs has been moved fromits announced opening date of March 27,2008 to a yet-to-be-determined future 2009date. The March scheduled release wouldhave pitted Meatballs against theDreamWorks 3-D toon, Monsters vs. Aliens.Pink Panther 2 moved from a February 12

opening date, back one week to the 6th, thesame timeframe Pink Panther originallydebuted.

Several opening dateswere announced for upcom-ing releases: a KatherineHeigl/ Gerard Butler romanticcomedy tentatively entitledThe Ugly Truth is set to openon April 4 and Underworld 3is set for a January 23release. The Screen Gemsflick Not Easily Broken willbegin its theatrical run onJanuary 9.

Screen Gems, a sub-sidiary of Columbia Tri-Star, isset to develop an updatedurban remake of Jane

Austen’s Emma. The hip-hop musical re-imagining of the classic novel will likely bere-dubbed as Emme, with Chris Bender andJ.C. Spink producing via their Benderspinkbanner.

Screen Gems has scored box-office goldwith such teen-friendly genre films as StompThe Yard and the classic You Got Served,with upcoming releases in the same threadto include Prom Night, Lakeview Terrace,and Obsessed. WSR

I Want To Know

Hudson is set to produce, along withKaren McCullah and Alan Riche. Shootingbegins this month in Boston.

Alvin And The Chipmunks leapt off retail-er’s shelves when the computer animated/live action flick became available on DVDand Blu-ray™ on April 1st.

Fox sold 2.6 million copies in a singleday, distinguishing the title as the fastest-selling DVD of the year. The ‘Munks out-paced box office gold such as I Am Legendand Enchanted—not bad for a gang of 50-year-old rodents.

Fox has thrown all but the kitchen sink into promote the release by supporting it witha “Get Munk’d” mall tour. The stage show isaveraging around 2,500 fans for each con-cert.

Fox has purchased the rights for AlanMcElroy’s action thriller, Man And Wife for areported mid-six figures.

The international espionage flick centerson a professional hit man, who is forced topretend he is an ordinary husband, and thewife who learns to love him.

McElroys’ credits include thrillers,Resident Evil and Spawn.

Paramount

Beginning on May 1st, Steven Spielberghas the opportunity to bargain with otherstudios about taking his services away from

Paramount and making his creative homeelsewhere.

The ramifications of a team-Spielbergdefection to a rival studio are massive, tosay the least. Both DreamWorks ChiefStacey Snider and Chairman David Geffenwould be free to seek deals outside ofParamount under a “key man” clause intheir current contracts. Another 100 or soemployees would not be free to depart thestudio but would no longer be consideredpart of the DreamWorks team.

The Studio Scoop

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O n S c r e e n

Martin Greenwald is the Chairman andCEOof ImageEntertainment Inc., the lead-ing LaserDisc distributor of titles fromBuena Vista Picture Distribution, FoxVideo,Hollywood Pictures, Orion Home Video,Touchstone Pictures, TheWalt DisneyCom-pany,WarnerHomeVideo,TheVoyagerCom-panyandImageEntertainment.Mr.Greenwaldis at the forefront of the LaserDisc and

DVD optical discplatforms. He found-ed Image Enter-tainment in 1975. Editorand Publisher GaryReber visited with Mr.Greenwald during the

Video Software Dealers Association (VSDA)Convention inLasVegas to discuss the stateand future course of the DVD, Divx, andLaserDisc platforms.

The conversation provides insights intothe positioning of the Laser Disc platformrelated to developing optical disc technolo-gies, and the future of DVD and LaserDiscas the engines driving home theatre equip-ment and entertainment.

Gary Reber, Widescreen Review:Marty, I want to get your viewpoint onthe state of the LaserDisc business andthe impact that DVD is having. What areyour thoughts?

Mr. Martin Greenwald: The state of theLaserDisc business is, to a great degree,a direct result of the DVD business. Ourfeeling is that the retail environment isfilling a large pipeline, or at least an ade-quate pipeline for DVD product, so we'reseeing a lot of initial purchases. The realissues become, what products are sell-ing through and at what rate. If webelieve that there have been about100,000 DVD players sold to retailersand about 60,000 sold to consumers,then there are 40,000 machines sittingon shelves. My guess is, each consumerwho purchased a player has probablypurchased ten discs, which is about600,000 units actually sold. The spacethat retailers are giving up in order toaccommodate DVD has been LaserDiscspace. I don't think that they've taken acut at their video tape business yet. Theysee LaserDisc as much more expend-

The Business Of

G A R Y R E B E R

MART I N

GRE ENWA LD

able. I don't think they are prepared tobegin to pull the plug on videotapes. Ithink to that degree LaserDisc has suf-fered. What we are seeing is that retailersare under-ordering LaserDisc productbecause of the limited shelf space theyare dedicating to the format. They are there-fore reordering product at a much quickerpace. To further expand on that, the mailorder and Internet customers that we haveare doing extremely well. Their business isactually up. It's real easy to find producton the Internet and in mail order. If weassume that retailers are defining this mar-ket, the business looks like it’s down. Ifwe assume the consumers are definingthe business, then it is probably flat.

WSR Reber: On the figures that seemto be contradictory, Video Business reportsabout every two weeks on Video Scan sell-through numbers for DVD. Sales to datehave been basically somewhere betweennine to ten thousand units per week. Thattranslates total unit sales of all DVD titlesto 125,000 total DVD units sold to consum-

ers. Using a factor of ten per DVD player,we're talking about 12,000 to 15,000 ma-chines consumers have purchased. Whatis your assessment of these numbers?

Greenwald: I think that the data is prob-ably not great data. Whether it's my dataor their data, I don't think that there is amechanism in place to track this in anykind of sophisticated way. If Video Businessis correct, and Video Scan is correct, andwe assume that consumers own five unitsper machine—(which I think is at the lowend of reality) that would equate to about25,000 players. I would have to assumethat it has to be more than that. If the num-ber were 25,000 players in the four monthssince launch sold to consumers, then thisis an unmitigated failure and somebodyshould say that and bail as quickly aspossible.

I don't think that number is accurate.My sense is that there have been about50,000 to 60,000 machines purchased,which is still a very thought provokingnumber when you consider that the earlyadopters are the ones that are going torun out and buy a player. If the number iscorrect, you're then looking at about twoand a half percent of the LaserDisc pop-ulation. This is not a number defining thepotential of the early adopter. If it wereonly LaserDisc people who were the earlyadopters, two and a half percent is reallynot a statistic to brag about.

The issue is going to be how muchsoftware is available this fall. Software hasto be available to sell hardware, it isn'thardware that sells software. When youlook at that and recognize that some ofthe studios may not be in by the end ofthis year and the effect is a drop hardwaresales, my sense is there will not be a 1998.Retailers cannot afford to hold on to thisformat. I don't believe the hardware man-ufacturers are willing to let retailers ridewithout making them pay for that hard-ware. If that happens, we’ll see the sameexperience that happened in Tokyo. DVDstarted as a house on fire, there was limitedsoftware available and today it’s difficultto find DVD in Tokyo. Whether that's good,bad or indifferent, my understanding isthat once retailers lose their excitement or

Martin W. GreenwaldPresident/CEO Image Entertainment, Inc.

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infatuation with a piece of hardware, theygenerally don't come back to it.

Gary, as you know, sitting and waitingin the wings is digital videotape, whichshould be coming out by the end of thisyear. Digital videotape has a very com-pelling story to tell. It's recordable, it's dig-ital, you can record programming off yoursatellite, and it's backward compatible;it will play your entire library of videotapes.And, the very fact that it's videotape, givesit a much, much larger constituency.Obviously, I believe optical is great. DVDis really great and I think that the abilityto have movies on DVD and ultimately withDTS encoded sound on DVD is reallyterrific. We have a tendency to psycheeach other out because we're inter-mar-ried in our business; writers, software peo-ple, hardware people and studios. Weall have a tendency to think we are thedemographic for the rest of the world.We're not. We have created the perceptionof a demand that retailers have boughtinto, but have we created demand thatconsumers will buy? We need to forgetabout “ordered up” market research, it’sbullshit . It's skewed. I have rarely seenresearch done on a topic of this sensi-tivity with a great deal of credibility.

WSR Reber: Speaking of advertising,in the Los Angeles Times, initially atlaunch there were eight page, four page,two page supplements by the majorslike Circuit City, Best Buy, etc. But sincelaunch the ads trickled down to todaywhen there's virtually nothing on DVDbeing advertised in the Los AngelesMetropolitan area that I'm aware of. Ifthere is, it's a single item, one playerplug. Not even is software advertised toany extent. That's having a serious impactand that's an issue I want you to address.

Greenwald: DVD is wonderful for thestudios, and Warner is absolutely correct:it gives the studios an opportunity to rollover their catalog one more time. The prob-lem I have with DVD is that it's not revo-lutionary it's evolutionary. It's all part ofthe landscape containing lots of differentsoftware. DVD players represent anotherplayer in a store. It will take its place along-side videotape players and MiniDisc play-ers and LaserDisc players and afford con-sumers an opportunity to pick and choosewith the goal to customize their hometheatre environment. It doesn't mean thateveryone is going to get rid of everythingand buy a DVD player. If intelligent peopleattempt to promote this concept, they tryto promote self interest and it just doesn'twork that way.

Fortunately or unfortunately, videotapewill be the standard format for the next ten

years. The only thing that is going tochange the way people look at motionpictures will take place in the next cen-tury when we start seeing high definitionprogramming. That could be compellingenough to get people to mix technologywith their content. Everything else is liketrying to put 120 octane gasoline in an ‘87Dodge. High octane is terrific but theDodge will only run so fast. The Dodge isyour NTSC television and it will only run at525 lines. Period. You've got to change theengine in the Dodge and the engine in yourhome theatre set up, and it’s high definitiondigital television. It’s the promise of this newengine that could pull all other technology.

WSR Reber: At a board meeting withthe Optical Video Disc Association, I askedabout the state of the LaserDisc technol-ogy. Is it going to advance? Is it going tochallenge DVD and take itself to the nextlevel—the best that it can be—and theanswer was no. What that means to meis that there's going to be no furtherdevelopment on LaserDisc technologyas such, other than how it's embodied inthe DVD. How is that going to impactthe LaserDisc community?

Greenwald: Gary, I think the reasonthat you are not seeing any change is thatLaserDisc is an analog based technolo-gy. An analog format with digital sound.Because of this, the only advances youare going to see in LaserDisc is going tobe in sound not in video.

Our experience with the DTS® DigitalSurround rollout, probably twenty someodd titles, has been great. People are lov-ing DTS. It's non-compressed sound andI think that's where LaserDisc can change.I think that as soon as consumers sayokay, LaserDisc should change and makethe video portion digital, then all it willbe is a DVD, just a bigger DVD.

Gary, you and I both know that thegrowth in technology for the last 25 yearshas not been in video, it's been in audio.Audio is where all the changes havetaken place. I don't consider widescreena video change, it's another aspect ratio.High definition is a video change that hasnot yet arrived. We're still looking at thesame NTSC that we've been looking atsince World War II. I think most LaserDiscconsumers are driven by the sound qual-ity of a LaserDisc. When they enhancetheir system, they're enhancing their soundsystem…that's what's driving them.Ultimately that's what's going to drivethem on DVD as well. Is the picture betteron DVD than on LaserDisc? Arguablyeither one of them is better at any givenmoment for any given title. They are bothfar superior to videotape and yet video-

tape is the mountain that everyone is tryingto climb. There are too many videotapetitles out there. They're sold everywhere,from gasoline stations to drug stores. That’swhere it’s at and that's what the consumerswant. It's a struggle for us to get a piece ofthat business. Everyone agrees that Laser-Disc is a niche business, and I think DVDis a niche business that has the potentialto be a little bit larger than LaserDisc. Itmay in fact end up merely replacing theLaserDisc. When you look at DVD, it's aminiature LaserDisc. That's exactly what itis—a LaserDisc. So when people say...

WSR Reber:It's a component format.Greenwald: Exactly, but that's all it is.

It's a component format. It's the next stepup. It gets a little bit closer to digital tel-evision sets, which are cool, but it'sanother LaserDisc and may replace twomillion players with three million players,and that's only because of studio andhardware support—hype far greaterthan LaserDisc ever had.

WSR Reber: What that implies is thatWarner and its affiliated studios have tosee it through and there's no indicationthat they are going to see this thingthrough into 1998. Is there? Really, I mean,they can pull the plug at any point.

Greenwald: I don't think they'll pull theplug, because I don’t think that issuinga statement of defeat and surrender isindicated. Warner Brother and the otherstudios have a great need to change whatthe software looks like. It's how you refreshyour library. I would love to do that. I'd loveto resell the same content in a new pres-entation. I’m not so sure, though, that theconsumers want to go and buy a newpresentation. I don't believe that Warner'sgoing to throw the towel in. Warner has alot on the line in making DVD a success.And, Gary, we support them in their efforts.I think that DVD's going to be a busi-ness that will ultimately be incremental tothe current LaserDisc business. Althoughit really is laughable to say, at this stage inthe game, that this is an incremental busi-ness. Give me a break, DVD is 180 daysold, it's 60,000 machines and people aresaying it's incremental to videotape? We’llknow in a year or two if its incremental.We’re not going to know this year if its in-cremental because your not going to haveenough statistics to know. And, if the busi-ness is incremental, the studios will havean obligation to continue serving the soft-ware. This is where Image Entertainmentcomes in as a great provider of nichesoftware. It’s what we understand.

WSR Reber: So from Image’s point ofview, for the time being, the studios arekeeping this business to themselves with

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their own distribution. You're saying thatonce they realize that the best this isgoing to be is a niche they're going to havea third party administer that part of thebusiness just like they have a third partyadminister their LaserDisc business rightnow. So it basically comes back aroundto Image distributing the DVD titles toservice that niche market.

Greenwald: I think it is really impor-tant that they keep trying new technolo-gies. I think that ultimately there is going tobe a change and it's going to be slow. Itdoesn’t have anything to do with what thestudios do, it has to do with technology.

If I am sitting here in the year 2003, I willbe looking at High Definition Television,and by the year 2015, I probably will belooking at Holographic Television. Thecomparison that video people use to setup the economic model for DVD is thatas people went from audio cassette toCompact Disc they will be going fromvideotape to video disc. This is flawed.Audio is different than video. Audio is a“techy” phenomena. People that are tech-nology driven are audio people. They arenot television people. Audio is portable,CD's are portable, video is not portable.Audio is listened to over and over and overand over again. If you're a fanatic you'llwatch a movie three times, but you won'ttake it in your car and you won't take it onyour boat and you won't watch it on anairplane. Once you've watched the movie,will you watch that movie again the nextday? You will, however, listen to an audiodisc the next day. CD’s are different thanvideo, than DVD. That's been a key part ofwhat was missing in the market researchthat was done for DVD. I believe the con-clusions of the studies were incorrect. That’smy opinion and I’m sure there are others.

WSR Reber: What impact do you seewith the Warner Group announcement forexpanding their DVD rollout nationally andalso on top of that the announcement hereat the show that Universal Home Video nowhas decided to support DVD and releasetitles as well, though on a limited basis?

Greenwald: You are going to get meinto trouble. First of all, I think that WarnerBrothers has to go national. It's time. Theissue to be addressed will be Warner’s100 percent sales return policy. It will beinteresting to see how aggressive thebuyers are that are out there, when theyknow that they can only return a portionof the 100 percent they buy. Warner ulti-mately had to make that decision. Youcouldn't open up the world and say “I'llship it to you and if you don't like it shipit all back to me.” It's going to be inter-esting to see how and if that decision

affects levels of sales. As far as Universalis concerned, it's good to see Universalcome into the business. It appears thatUniversal has gone into the businesswith fully windowed product. I believeall the products that they've announcedhave already gone from rental, to sellthrough, to discounted sell through. WhatUniversal is doing makes sense. Universalis feeling out the marketplace, seeing whothe buyers are and attempting to under-stand the dynamics of this new market.I applaud them. I think they are doing itright and that if this business is going tobe a business, it can't be just a newrelease business. Libraries are not newreleases. Universal has put one foot in thewater and, based upon the evidence theygather over the next year, they will be ableto change their marketing plan in line withthat evidence. If it works for them they willrelease new releases and if it doesn't workfor them they'll try another plan, butthey're taking a cautious approach andI think that if and when Paramount, Foxand Disney come in they will also take acautious approach.

WSR Reber: I was surprised to see thatUniversal is releasing in full screen ratherthan widescreen format for their initial DVDreleases. At least most of the titles seemto be oriented towards the full screenmass market display capability.

Greenwald: I believe that their busi-ness plan is based on the premise thatDVD is not necessarily a format to takeover LaserDisc. It's a format to ultimate-ly take over videotape and videotape ispan-and-scan. LaserDisc is widescreen.Do you really have a victory if it replacesLaserDisc? Do you spend 500,000,000dollars marketing a product to replaceLaserDisc? At that point, the name of thegame is Who Cares? You know the planis to replace videotape. Videotape is pan-and-scan and I would assume that's whatthey’re looking at. They haven't sharedtheir strategy with me. “If this thing is goingto replace videotape, then we're giving thepeople what they want, because video-tape people don't like widescreen.” Theydon't get it, they don't want it, they thinktheir television set is screwed up.

WSR Reber: Yet there's a clear mar-keting movement to introduce many titlesin a widescreen VHS format now?

Greenwald: This is indicative of amaturing videotape marketplace. I thinkthat the home video gurus are looking fornew opportunities in videotape. It’s whatwe've done in LaserDisc. We go backand re-master titles in widescreen orDolby Digital or DTS Digital Surround.There is the opportunity to do the same

in videotape. I think that's a great play.It’s the evolving look of videotape.Offering people an opportunity to choosewhatever they want to see. When digitalvideotape comes out, studios will releasedigital sound versions of their catalogueand they will do very well. They'll bereleasing digital videotape and they'll bereleasing DVD and they'll be releasingLaserDisc and they'll be releasing Godknows how many other different formats.The name of the game is to get the con-sumer to upgrade their programming. Andthat, Gary, is a very difficult task. The realconversion, the start of home entertain-ment all over again, will take place with areal change in technology. The revolution.

WSR Reber: What impact on the DVDrollout and consumer do you see for DigitalVideo Express or Divx as a non-compat-ible DVD format?

Greenwald: I’m okay with Divx. Firstly,detractors or supporters aside, it servesa purpose. The consumer will wait to rentDVD programming, and, although some-what complicated, Divx gives the con-sumer that opportunity. Secondly, fromthe studio’s perspective, Divx is as closeto pirate proof as a software gets. Andthat is very appealing. The question tobe finally answered will involve the con-sumer’s appetite for the product. Openarchitecture advocates feel that Divx isconfusing to the market place and hurtsthe rollout of DVD. That may be so, how-ever the consumer will ultimately decideif Divx should exist. If Divx is a hit, everystudio will be involved. Whatever the con-sumer decides, Image is a distributor witha very cost effective and efficient systemin place and we look forward to havingthe opportunity to sell Divx product whenit comes to market. And, I believe, deal-ers could carry both open architectureDVD and Divx.

Divx is by no means the Armageddonscenario for the 5-inch disc. At Imagewe are currently scheduled to releaseover 50 DVD titles per quarter and, whenappropriate, I will add Divx to our roster.Bottom line...Divx is here and it’s not goingaway. Either figure out how to work thisnew technology or suffocate with yourhead in the sand. Ultimately, the con-sumer will decide; they always do.

WSR Reber: Thank you Marty for aninsightful perspective into the world ofDVD. ��

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