MCA DiscoVision

Cash Box
January 10, 1981

Videodisc Units Selling Well In Spite Of Software Ills
by Richard Gold

NEW YORK Videodisc players proved to be a success at retail during the Christmas selling season. Dealers carrying the Pioneer and Magnavox laser-technology videodisc systems reported that sales matched or exceeded their expectations, and they indicated that consumer interest in the new product is growing steadily. However, most of the retailers interviewed by Cash Box were critical of recurring quality control and supply problems with the laser-read videodisc software. Pointing to 50% defective disc rates in some cases, as well as serious gaps in software availability, the retailers noted that consumer demand for the players could be undermined if these problems are not solved swiftly.

The dealers were generally enthusiastic about the initial consumer reaction to the videodisc players. "I think that sales are probably a little better than we expected," said John Furolong, divisional merchandise manager for the Brooklyn-based Abraham & Straus department store chain. Although company policy prevented him from disclosing sales figures for the videodisc units, Furlong said those 11 of the store's 12 outlets carrying videodisc hardware are "re-ordering constantly."

Paul Cruise, video consultant for the nine-story Crazy Eddie chain here, said his company "sold out" of videodisc players. Dennis Miranda, a supervisor at the five store Stereo Magic chain in Rockland County, N.Y., said, "I have a very hard time keeping the videodisc players in stock." Buddy Corn, the owner of Bryce Audio in Manhattan, said videodisc player sales "seem to be taking off a little more than I anticipated." Corn added that he sold "between 30 and 50" of the Pioneer Laserdisc systems.

Defectives Problem
Although the retailers reported very few consumer complaints about hardware performance, they said crucial defects continue to plague the videodiscs, which are manufactured by Discovision Assoc., a joint venture between MCA and IBM in Carson, Calif.

"The software is just not up to par yet," said Miranda, who reported a "tremendously high return rate" of 50% on the videodiscs. "There are a lot of problems with the software," said Cruise, who noted that the most frequent customer complaints involved poor picture quality or mispackaged product. Dave Froelich, manager of J&R MusicWorld in Manhattan, said, "very poor quality control and unavailability of videodiscs" had been a major problem at his store.

Larry Coulter, operations manager and video buyer for Father's & Sun's, a key sub distributor based in Indianapolis and the first non-hardware dealer to enter the videodisc business (Cash Box, Cct. 18), said there were "two different types" of defective videodiscs. According to Coulter, whose company formed an alliance with the Hi-Fi Buys audio chain in order to get a videodisc software franchise, customers are "living with" discs that produce a "scratchy, fuzzy picture." Coulter added, however, that those discs bedeviled by a "frame-stop" fault that prevents the disc from playing beyond the defective point, "are the ones that people won't keep."

Like most of the dealers interviewed. Coulter said videodisc quality problems were exacerbated by an unrealiable backup supply situation. "MCA Distributing was just not prepared, but I don't blame them entirely," Coulter said. "Pioneer's initial hardware rollout was supposed to be more gradual." Most observers agreed that Pioneer, in its rush to beat the RCA Selectavision videodisc (which is due late in March) to the nationwide market, failed to anticipate that its software-supply allies would be overburdened by the initial demand for discs.

Fill Problems Multiply
"I've only got 50 of the 75 discs I've been trying to order," said Coulter. According to Miranda, "most of our videodisc customers have already bought everything available in the way of movies, and they're waiting for more." Furlong said that A&S has been "getting a regular supply of videodiscs, but the consumers' appetite for more and more films is voracious." Cruise noted that Crazy Eddie "wanted 90 movies and got only 30."

These comments on software supply are at odds with the views of Bud O'Shea, vice president of marketing for MCA Discovision, the chief programming arm for laser optical software. O'Shea recently told Cash Box that he was confident that the company's catalog of 65-75 feature films and an additional 50 titles of children'sand instructional programming would be sufficient for the initial hardware rollout.

Bill Mount, vice president of programming for Discovision Assoc., stood by a recent statement in which he said, "This is a high-technology product. There have been some technical, production and system problems that have arisen, and we are solving them as they come up." Mount also quoted a recent comment by MCA Discovision president James N. Fiedler to the Reuters news agency, "We have been experiencing a 10% defective rate, but the problem is not a serious one." Fiedler also said that most of the discs reported as defectives were manufactured between one and two years ago. Mount stressed that Discovision's videodisc plant is "operating at full capacity."

Bright Future Ahead
In spite of the very real problems snagging the videodiscs, the dealers felt that the software quality and distribution defects would be worked out in the near future. They see the videodisc players as a mainstay of what they believe will be a booming videophile market in the '80s. "The videodisc players have a higher turnover than any product that's been introduced in my memory," said Miranda, who cautioned that the software problems "must be worked out soon" to protect the integrity of the videodisc concept.

Significantly, most of the retailers felt that both videodiscs and video cassettes will be able to co-exist and flourish during the decade. "Most of the people who bought videodisc players, already have video cassette recorders they just wanted to be the first on their block with the new machine," said Cruise.

Furlong said that many customers were attracted by the lower cost of videodiscs ($25) compared to video cassettes ($50 and up). He added that his customers seemed to prefer the higher-priced Pioneer Laserdisc player ($750) to the Magnavox Magnavision System ($700), because of the Pioneer unit's optional remote-control feature.

Nevertheless, the market for video cassette recorders is well established and should continue to grow apace with the "home entertainment" boom predicted by industry analysts for the energy-pinched '80s. "Videocassette recorders are outselling the videodisc players right now," said Corn, "but videophiles will buy both." According to Furlong, "There's no question that VCRs are the bigger sellers now. People are more familiar with them, and there's the important difference that you can record with cassettes." The amount of available software is also an important factor favoring video cassette players. "The video cassette business has also suffered from supply problems, but there are thousands of titles available," Coulter noted.

'Mammoth Undertaking'
The proliferation of home entertainment video products will pose new problems for retailers in 1981. In addition to the projected March rollout of the RCA videodisc players, a third, incompatible "VHD" (video high density) videodisc system has been promised by the Matsushita Electric Co. for late in the year.

"The retailer is really up against it with all these new systems," Furlong said. "The inventory for all the videodiscs and tapes is going to be a mammoth undertaking."

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