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Thursday, October 10, 2002
 DVD business subscribing to cable
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Message Text: Want to see the latest DVD special editions for $3.99 instead of $39? Just turn to pay-per-view channels on DirecTV or even cable networks like HBO, Cinemax and Encore. First-time DVD releases are showing up nearly simultaneously on cable, as are special edition features that have come to define the format.

In perhaps the most extreme example, the highly touted special extended edition of "The Lord of the Rings: Fellowship of the Ring," which director Peter Jackson (news) and New Line have been promoting as having been produced especially for DVD, will apparently be special to DVD for only 19 days.

The 3-1/2-hour version of "The Lord of the Rings: The Fellowship of the Ring," featuring restored scenes and newly produced effects and scoring, will reach video stores Nov. 12 -- and then DirecTV less than three weeks later, on Dec. 1.

That's an unprecedented window between video and PPV, especially for a special edition produced and marketed expressly for DVD.

Bottom line: The movie being sold in various configurations next month for suggested retail prices ranging from $40-$80 can be viewed on digital satellite television days later for $3.99.

Until a couple weeks ago, when New Line Home Video executives pushed for a delay, the title was going to debut on DirecTV even earlier -- Nov. 25 -- in time for the Thanksgiving holiday weekend. (New Line's TV unit in New York sets the PPV and cable release schedules.)

Of course, PPV customers won't see any of the hours of original extra features on the elaborate four-disc DVD set.

Just last month, DirecTV offered about an hour of the mostly unoriginal extras that were included on the first DVD version of "The Lord of the Rings" for an extra $1 on top of the usual $3.99 PPV fee only 30 days after that DVD release.

In addition to the music video and some behind-the-scenes programs that ran on cable last year, those extras included the first extensive 10-minute sneak peek at the upcoming theatrical sequel, "The Lord of the Rings: The Two Towers," which Jackson hosted.

New Line said the inclusion of the sneak peek in the PPV program package was "erroneously provided" to DirecTV. It ran all month in September until New Line execs asked DirecTV to pull that piece from the package the last week of the month.

The studio says none of the extras from the Nov. 12 DVD edition will be made available to PPV. They say that those extras and the DVD packaging designed to appeal to collectors will be enough to ensure that fans who want to see the movie more than once will buy the DVD.

And even though Jackson's much-requested 1994 cult pic "Heavenly Creatures" was just released by Disney's Buena Vista on DVD for the first time late last month, it began running just a few days later on HBO and Cinemax, where it is scheduled for at least 20 showings, with little, if anything, that can be found on the DVD that can't be seen on the version playing on HBO and Cinemax for no cost beyond the monthly service fee.

The Don Knotts (news) comedy "The Incredible Mr. Limpet" showed up earlier this month as a new Warner DVD release simultaneous with showings on the Encore premium cable channel.

Meanwhile, in an ongoing effort to boost PPV purchases, DirecTV will also be offering DVD-type extras as a bonus on upcoming PPV movies such as MGM's box office bomb "Windtalkers."

While studios say that a simultaneous run of an older title on cable as it is being released on DVD helps raise awareness of the title and sparks DVD and VHS sales, the new trend in which studios provide DVD extras to cable and PPV networks simultaneously or soon after the DVD release could be a risky strategy.

While New Line execs say the PPV market is not big enough to cannibalize video sales, it would seem that the potential downside of a possible impact on tens of millions of dollars in DVD sales is not offset by hopes of an upside from incremental PPV revenue that would only be a tiny percentage of that.
 
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