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Posted Aug 1, 2002 Print Version     Page 1of 1

DVD hasn't quite replaced VHS in the home-rental arena where Blockbuster stakes its considerable claim. But thanks to the format's random access and programmability, DVD is making it much easier for the rental giant to exploit point-of-purchase video display as a revenue-enhancing profit center. Here's how Blockbuster made DVD work for POP.

August 2002|It's no secret that Blockbuster Inc. is deep into DVD. With more than 8,000 stores throughout the Americas, Europe, Asia, and Australia, the publicly-traded subsidiary of media giant Viacom describes itself as the world's leading renter of home videos and video games. But Blockbuster's involvement with DVD has recently expanded in a new direction. Beyond simply being one of the products the company makes available to consumers through its stores, DVD has become as well the vehicle through which Blockbuster influences its customers' decisions while in those stores. And because of the format's random access and programmability, Blockbuster is finding that DVD is making it much easier to exploit point-of-purchase video display as a revenue-enhancing profit center. Blockbuster uses DVD to deliver the in-store programming it calls Blockbuster TV (BTV). "Each program has 72 content clips, such as previews, trivia, spotlights, and music videos," says Ben Foote, director of DVD services at DVM Canada (a division of Canada Disc & Tape in Calgary, Alberta), where the DVDs are authored. "There are also 72 commercial breaks available. However, not all commercial spots are used every month; we leave spots open in authoring so that last-minute substitutions, additions, and deletions are easy. On average, the ratio of show to commercials is two-thirds to one-third, or roughly 2 hours, 40 minutes of programming to 1 hour, 20 minutes of commercials." The shows are distributed on DVD-9 to accommodate four hours of total video material.

Each of the 13 BTV programs produced in a given year is designed to be valid for 28 days. According to Foote, the program serves two main objectives for Blockbuster. "One is to promote the products Blockbuster rents and sells—new and old movies on VHS and DVD, candy, magazines, games, etc.—via trailers, special features on actors and directors, trivia Q&A, flashbacks, music videos from soundtracks, video game features, and in-store promotions."

Blockbuster's other main goal is to provide a revenue stream through advertising sales. "Blockbuster's audience for the program during a 28-day flight," Foote says, "is around 55 million customers—all at the point of sale—in over 6,000 stores in North America. The exposure opportunity is immense, and most advertisers are national brands such as Coke and AOL."

Foote says the show accomplishes Blockbuster's objectives by "maintaining high entertainment value to entice store customers to listen to and watch the programming. Their buying habits are consequently affected, and the show's advertisers gain the exposure they seek."

The Evolution of BTV

While BTV was first distributed on DVD this spring, BTV itself is not new; Blockbuster has been distributing material for playback on in-store displays for over a decade. "In 1991, I was hired to simply edit a 2-hour monthly trailer reel for the then 1,500 Blockbuster stores," recalls Gary Halpin, president of EMTAE films/Agency 225, the company that produces the show for Blockbuster. "I added behind-the-scenes features and promos to the reel, producing, writing, directing, and editing all of it myself." The two-hour show was distributed to stores on VHS.

"By 1995," Halpin continues, "with the store count up past 3,500, we felt we needed to upgrade the quality of the reel, so we created Blockbuster TV, adding a host and graphics to give the appearance of a program being beamed directly into the stores. We also started exploring the idea of selling advertising. I had the research department help me with a study of the impact of the show on rentals. Over a six-month period, we were amazed to find out that in more than 80 percent of the cases, the rental of a non-new-release title that was featured in the show went up by an average of 30 percent."

By mid-1996, Blockbuster had been acquired by Viacom, opening the door to "synergy" between BTV and other Viacom properties. For a couple of years thereafter, the program was produced in conjunction with Paramount Studio's Entertainment Tonight and featured hosts from that syndicated TV show. "The advertising sales took off," Halpin says, "much better than expected. They were so good, we added a show, changing from 12 monthly programs to 13, one every four weeks."

At around the same time, the program was lengthened to four hours. One reason, Halpin says, was to appease employee fatigue from repetitive exposure to the same material. Another was to give the VHS tapes a chance to cool down. "The tapes would get so hot from playing and rewinding all day, they tended to break." Halpin says that by 1998, the ad sales were doing quite well. "In addition to footing the entire production bill, they were also adding money to the marketing budget. After discussions with the company's advertising department, I proposed that we move away from a costly host-driven show to one that moves quicker, using graphic opens, bumpers, and voice-overs instead. I produced and directed a graphic package that we still use today."

The DVD Alternative

While the program—which Halpin characterizes as a "team effort" involving Foote, producer Bill Ziady, editor Michael Veltri, and Andrew Green of Green Solutions—has been going strong, it became evident in recent years that VHS was far from the best medium available for distribution to the stores.

"With four hours of content, they needed two VHS tapes per store," Foote says. "The staff had to rewind and remember to switch tapes, which was a major sore spot. And the shipping charges to the stores was huge."

Perhaps the biggest drawback, however, was the need to produce several different versions to accommodate different stores. "Because we distribute the show to more than 6,000 Blockbuster stores in the U.S., Canada, and Puerto Rico," Halpin says, "it's inevitable that one show will not fit all. There are corporate and franchise stores that don't always share the same promotions, there is regional advertising, and even markets that test promotions and sales of items." The result, says Foote, was a logistical and tape-editing nightmare, with "500 tapes to this market, 1,040 tapes to that market."

Using DVD, Foote says, offers several important advantages, not least of which is convenience for the staff in the stores. "Once it is started in the morning," he says, "the DVD is completely hands-off, and it has an autoloop so it just replays all day." Another benefit is cost-savings, with DVD replication and shipping costs below those of duplicating and shipping VHS.

The biggest differences between VHS and DVD for the POP display come from the fact that DVD is a programmable medium. "Before," says Foote, "EMTAE films had to edit several Beta masters, one for each version of the show. Any last-minute changes meant uncomfortable scrambling. Now, all stores receive the same disc, but unique PIN codes for each version activate specific features or commercials for that particular location. And we've set up a DVD authoring structure in which changes are easy and quick."

DVD has also allowed Blockbuster to offer potential advertisers greater flexibility, which makes the program a more attractive advertising vehicle and thus boosts ad revenues. "Before DVD, advertising runs and rates were calculated based on the entire 28-day schedule for the program," Foote says. "But now, advertisers don't have to lock in for an all-month contract, especially if they're launching a new product or a new film is debuting. We have given Blockbuster the ability to sell to advertisers based on ‘date-parting' or day-of-the-month, so they can jump in mid-month, for example, or just on weekends. The DVD's ability to do this now makes advertising on this show a viable alternative for scores of would-be advertisers who previously were shut out because of the locked-in 28 day ‘all or none' cycle."

Designing for Differences

The ability to "date-part," Halpin says, will likely lead to a doubling of the number of versions—currently eight—required for each 28-day program. But with DVD, instead of creating different versions through editing, they are created upon playback using Program Chains (PGCs) to allow alternative navigational paths through the material on disc. "The entire project is comprised of one Video Title Set [VTS] made up of 157 title PGCs, and one VTS menu [VTSM] set," explains Dave Bartsch, DVD author/compressionist at DVM Canada.

The key to getting the right version to play in a given store is the entry of the store's unique identifying code. "There are up to 9,999 different codes," Bartsch says. "When the disc is inserted, the first PGC takes you to the first code menu, which is a VTS menu with buttons for digits 0-9. The ‘digit one menu' links to the ‘digit two menu' and so on, so you have to enter the appropriate digit to proceed to the next successive menu in the four-digit code." If an employee enters an incorrect digit, they end up at a menu that alerts them to the problem and forces them back to the first code menu. Because all General Parameters (GPRMs) are reset, they will have to start over from scratch.

"Once the correct fourth digit is entered," Bartsch continues, "you go to a calendar page, which is a VTS menu with a button for each of the 28 dates." The four-digit code, stored in GPRM memory, is used to determine the specific destination to which a given button will link in a given store. Each destination is a part of the VTS that is a unique preprogrammed version of the BTV show. "Any link from the calendar page," Bartsch says, "can link to any one of these versions for different playlists on a daily basis."

Bartsch says that each version of the program is basically built around a "master" PGC that is a menu using nothing but pre-commands. "Each master list needs 364 pre-commands. When a video segment ends, it is directed to this master menu, where a counter increments its specific GPRM by 1. The next title PGC is selected, thus starting the appropriate video segment. When the video master list is over, the count is reset to 1 so that the video will start over at the beginning of the playlist. At any point, pressing the menu button will return you to the root VTS menu, which is the ‘enter the first code' menu. All GPRMs and counters are reset, so you then have to start over."

The use of the ID code keeps the employees from having to worry about what version of the program they are supposed to be playing. "We completely manage this process," Halpin says, "and the store locations really have no idea that there are actually different versions of the program. They certainly don't know there are different versions on the same DVD disc they receive."

"The disc is very easy to use," Foote adds. "All stores are equipped with standard, commercial DVD players, wired to multiple monitors throughout the retail environment. The sleeve has the log-in procedure printed on it. Staff enter the store code, which is printed on both the disc and the sleeve. They enter today's date, and the programming automatically launches. Blockbuster customers can see and hear the program from anywhere in the store, and an autoloop keeps the programming going all day with no staff attention."

Encoding and QA

In addition to the authoring process for BTV, DVM Canada also handles the encoding and quality assurance phases of production. "Masters come in on Betacam SP," Foote says. "There is one tape for each running hour of content, and a separate tape for all the commercials. All the material is encoded to MPEG-2 with the Sonic Solutions SD-2000 encoder using 2-pass VBR [variable bit-rate encoding]. We've been using a bit-rate of 5Mbps so far, and doing segment re-encodes where necessary." Audio, meanwhile, is taken directly from the source videotape and simultaneously encoded by the SD-2000 to Dolby Digital.

As for verification of project performance and quality, Foote says that quality checking occurs at many different levels. "Before sending clips and spots to authoring, every piece is checked for errors, drop outs, and other problems," he says. "After encoding, they are checked again."

DVM Canada has two different DVD-R burners, Pioneer's DVR-S201 for Authoring discs and A03 for General Purpose discs. But Foote says the layout of the BTV project means there is constant accessing of both layers of the DVD-9, so proofing on a 4.7GB DVD-R is not a practical option.

Instead, the project is tested from a disc image on hard drive. "Testing is very simple," Foote says. "After the project is encoded and authored, we output a ‘File/ Folder Hierarchy' from Sonic Creator. We then use Apple DVD Player to play the VIDEO_TS folder, thereby emulating the play order. Apple DVD Player has proven to be the most reliable proofing tool, and it allows us to fast-forward through the content quickly. Testing a four-hour show is cut down to around 45 minutes to 1 hour with this method."

Once a project is on DLT tape for shipping to the replication plant, Foote says, the process gets easier. "At that point, we only need to QC the show rundown, confirming that spots and segments are in the correct order. If a release has 8 versions, it takes roughly 6-8 hours to make sure all the spots are correct."

Testing is not only done at the authoring facility, but also at the producer's end prior to replication. "We ship them ‘Data DVDs' or a DLT with the Video_TS files," Foote says, "and they do their own QC for a final look. Not every store's disc is tested, but every version of the show is completely tested for playlist accuracy before and after DVD replication. Check discs are prepared before the final replication run."

So how challenging has it been to implement the new system across the vast Blockbuster retail empire? Foote says that the company first approached DVM about developing the system back in Fall 2001. "It took a couple of months and a couple of tries before we nailed it," he recalls. "The official decision to go with DVD came in January. It then took a couple more months to inform staff, install DVD players, and complete the transition." The first program under the new system was the disc for late April/early May. Work on a second disc (May 21 - June 17) was completed in early May.

So far, Foote says, the feedback has been very positive. "There's been some minor tweaking, but that's to be expected with something of this complexity. Having twelve-plus years of experience with Blockbuster operations, this was as smooth a transition as I have ever witnessed."

Companies Mentioned in this Article

Apple Computer, Inc.

Blockbuster, Inc.

DVM Canada

Green Solutions

Pioneer Electronics (USA), Inc.

Sonic Solutions

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