DVD in Scandinavia

ANTHONY OWEN, Managing Director of DVD Scandinavia Angel,provides Jean-Luc a detailed picture of the growing DVD market in Scandinavia, and why DVD is an ideal support for TV programmes.

Give us a statistical snapshot of your market.

It’s very difficult to get figures. Scandinavia is four countries – Denmark, Sweden, Norway and Finland – each of which has its own electrical sellers organisation.

In Finland, the language is nearer to Hungarian than to other Nordic tongues and they don’t speak quite as much English there. While I can speak with Norwegians and Swedes, it’s more difficult to speak with Finns.

But I’ve heard figures of 100-150,000 DVD players out there – plus, maybe, 250,000 DVD-ROM drives.

Are Region-1 discs are readily available?

Region-1 discs are available in stores and over the Internet. We have the highest Internet connectivity in the world, higher even than in the States. But people don’t buy much over the Internet. The web makes them aware of what the product is; they then go to their local store to buy it.

Most of the cheap DVD players – we have DVD players down to £180 sterling – are advertised as Region-free. The more expensive Panasonics come in as Region-2.

Quite often, there are instructions in the box about to alter them if they can be altered by software. Stores will chip them for you, for a small extra charge.

How does it affect you if the consumer is able to buy Region-1 discs easily?

As an authoring house, we have no objection. I think it keeps our standards up, it means we’re competing with Hollywood. That’s our peer group. We have no option: we must produce disks as good as Hollywood discs.

Distributors say, publicly, it worries them. Privately most distributors I talk to say they’re not harassed about it. It means that they don’t have to release niche titles (to build the market).

The availability of Region-1 titles has given the industry a big push. To date, I doubt there are more than 500 DVD movies with Scandinavian sub-titles. However, because Scandinavia is a Region-1 and a Region-2 area, the consumer has an enormous range of titles to buy.

Region-1 titles have helped right from the beginning, We’ve never really had a software supply problem because people have always been able to buy American titles.

Do you concentrate on Scandinavian material?

As an authoring house, we are involved with a certain amount of regionalisation. We seem to be concentrating on homegrown titles. Denmark produces about 20 films a year, I guess. Norway about the same, Sweden probably more. Finland does fewer.

Local titles are big sellers since they reflect our local cultures. People are interested in these films.

How quickly is the DVD Video market growing?

The uptake of DVD is slow in Scandinavia, as was the uptake of CD. That was enormously slow for about five years or so.

But just before Christmas, a big hardware manufacturer dumped 4,000 first generation players on the Danish market. These machines were unable to handle high bit rates, among other problems, causing difficulties for us as an authoring house and also for the distributors.

We heard from a source close to Sony that we will get Playstation2 in March or April 2001, if we are lucky. Perhaps it will be later. Whatever, it looks like we’re going to get Playstation2 six-to-eight months after the rest of Europe.

So, on the one hand there are complaints that Scandinavia isn’t selling enough DVDs, but on the other we’re not getting the backup we need.

Thinking beyond the early adopters, what will stimulate local take up of DVD?

Even though we operate in a small market, people are very rich. There are a lot of early adopters who bought first generation machines about two years ago, because they’re media enthusiasts.

There are a lot of cinema fiends who are very into films. Especially in Sweden, to a lesser extent in Denmark. Many people are waiting for DVD recorders; a lot say they won’t buy until they can record.

Ironically, Denmark, and, I suspect, Norway, are not big television countries. Up until eight years ago we had one TV channel. People go to cinemas. Live theatre is huge, dance is big, there’s quite a cafe culture. People do a lot of socialising, they commune with nature. A lot of people have summer houses, weekend houses where they don’t have a TV set.

In general, people don’t sit down in front of the TV that much. In cultures where people now have cable they sit in front of TV every night but soon find it’s mostly rubbish. So they rent or buy DVD to get feature films.

In Denmark, people do actually go to the cinema or the theatre. So it’s another sort of culture. Not an easy territory to come into.

Would you say most DVD homes have Region-1 enabled DVD players?

As a guesstimate I would say that the figure is very high, probably 60-70%.

Do the big titles that are accessible in Region-1 format come as Region-2 as well? Do distributors fail to distribute Region-2 discs?

Big titles do come out with local sub-titles. Eyes Wide Shut has already sold 6,000 copies in Norway I was told. Region-2 discs tend to come out almost simultaneously with the Region-1 discs.

The Matrix is this biggest selling title, having moved up to 15,000 units. I don’t know anyone who has a Region-2 version. Yet I’m told by the guy who packed the boxes in the factory that sent them out, the Region-2 version was selling extremely well.

I think the situation’s slightly different in Sweden; it’s more difficult to get Region-1 discs there.

Those are really good sales for Scandinavia. I think the VHS of Titanic managed something like 80-100,000 in Scandinavia. And that is the biggest selling title of all time. So DVD sales have a long way to go to catch up.

Does a Region-2 version of a movie come with a single set of sub-titles?

It has to be sub-titled in four languages, Danish, Swedish, Norwegian and Finnish. Distributors and the authoring houses want four-language discs.

So, this is the product differentiation between Region-1 and Region-2 discs in your territory?

Almost. What’s happening with locally-produced films, in our experience, is the distributor will have a multi-language menu structure or, in some cases, they will produce a disc for every market.

For foreign films, generally, we are asked to author a single language menu structure, in English, with the various sub-titles on it.

Children’s films will be dubbed. Other than that there is no tradition for dubbing.

So, the options you have are confined to subtitles?

Yes, that’s it. When we regionalise the film we put on the title menu “language.” So, you first choose language, then play back the warning in the appropriate language, plus the distributor’s logo. Quite often we do one disc for several distributors, when they have come together in a joint venture.

That adds to complexity. How do you cope?

You learn a lot of diplomacy. The big problem when distributors come together is the contract: they each have a different one.

We had a couple of instances where, between four distributors, one or two had a contract that allowed the director to veto things, while the other distributors had a contract whereunder they have full control. This can be a big problem.

We’ve had one disc which started as a multi-distributor project but in the end became separate discs because the contracts were effectively mutually exclusive.There was no way they could agree on what should be on the disc.

So now, when we’re approached by a distributor, who says they’re doing this in tandem with several other distributors, we insist they sit down together and go through the contracts they have with the production company and check that there are no catches. If that not done first thing, there can be a lot of heartbreak, a lot of expense, if at the last minute we have to split the disc apart.

Do you plan to author titles for other markets other than Scandinavia?

We haven’t done anything outside Scandinavia. We have a clear aim. We’ve looked at the economics and we feel that to make the best use of our resources, to have money for investment and to make a return on investment, we need 200 films a year.

When you think that in Denmark alone there’s 900 VHS released each year, it’s possible to meet our target. In fact, we know from the sort of people that we’re negotiating contracts with at the moment, it’s possible to get up to that.

Where would you position your company right now?

I would say out of the five authoring houses in Denmark, we rank number three in terms of bulk. Tocano and Dandisk, which are replication houses, rate No.1 and No.2 because they have been going for two or three years. And then there is SDC. In terms of quality we’re without doubt the best in Scandinavia – at least that’s what all our distributors tell us.

Now let’s move to the control over DVD menus that directors want. What’s the background?

The majors have been dealing with this for a while. We discovered very early on when we had a couple of titles where the directors wanted control, that whereas VHS was unnecessarily evil – the picture quality was so bad the directors of photography would not look at them – they realised that DVD is a very good option for home cinema.

The picture quality is so fantastic we’re now talking to some directors who are just looking at direct to DVD with us. My sales pitch is they no longer control the first picture on the screen, we do.

And we have shown that we can alter the entire experience of the film by putting in a different menu structure. We can alter the audience’s perception of a film. We can set colours, sounds, atmosphere – we can do all sorts of things to radically alter the film. A lot of directors want to get involved with this.

They’ve learned that it is important to be involved in this aspect of production?

Probably as important as the film itself. Because the menu starts as soon as you put the disc in the player, before the audience experiences the movie.

Are you seeking to enhance your creative contribution in this way?

We have to be very creative in a market as small as ours. It is a question of how are we going to get the money to make the sort of titles we want to make and put in the special effects, or these wonderful animated menus which we know really enriches the experience.

We are starting to talk to directors in pre-production, so that from the first they know what the possibilities are, so they’re starting to prepare the material early, starting to prepare the alternative shots, director’s commentary, behind the scenes documentaries – which are a little more than the standard EPGs – still shots, all sorts of things. Maybe they have ideas underway while they’re filming, things they can’t do in the film but we can do on DVD.

This is especially important on documentaries, where the producers end up with an enormous amount of material.

Traditionally, they’ve always worked under a time constraint but, now, suddenly they can allow an interview to run its full course because they can put it all on the DVD. We will then have the director choosing chapter points, choosing the small clips to use, choosing the music.

Often, if a distributor wants to use the film’s music for the menus, the composer holds out for royalties and all the rest of it. The director asks us to do some music for the menus, mixing 27 clips where you take one of the themes and alter it slightly.

We can then talk to the sound man and say, well, you know, you’re doing the cinema mix, you’re doing the TV mix, and now you’re doing the 5.1 Dolby DVD mix. We can talk to the director who gets sent test discs and the JPEGs.

There’s a lot of dialogue with the director and the production company while we’re putting the DVD together. When we’ve finished with all of this, we’ve actually got a director-approved version.

We may have decided that we’ll put in the development costs ourselves but we don’t do that until we’ve got at least one distributor on board. Then the production company can go to worldwide with a director’s approved version.

So this is a premium, it’s like the director’s cut?

The film is the same, but it’s a director--approved DVD. And what’s so wonderful about it is they can say if a film is sold to 10 territories, and in each of those territories the distributor would spend 40,000 kroner to make the DVD in the individual territory: that’s 400,000 kroner.

OK, we still have to localise the menus with local language, and maybe we have to make some alterations in view of cultural differences. That would still leave around a 20,000 kroner return. Multiply that by 10 territories and you get a total of 200,000 kroner. That produces a beautiful disc. A much better disc than an individual distributor could afford to make.

We have big two replicators close together in Denmark so we can offer incredibly low disc prices. We can even offer the distributor a price per disc. They can be packaged locally, have the printing done locally, but for all the rest of it they are paying less, or the same, as they would pay their local authoring house for a Hollywood product.

In a way, it is the same deal as the majors do, as, for example, New Line does. But we’re organising it as an authoring house.

Are you talking to the majors studios?

Our market is small-to-medium distributors: we’re not after the big boys yet. But we’re getting more experienced and we can produce as good a disc as the big boys. But our market remains the smaller distributors.

It’s very different. Some of these guys run their companies out of the back seat of their car with a mobile phone and a portable PC.

They never see their gear, they just arrange for the digibeta to be delivered to a factory and 500 VHSs to be sent out. Suddenly, they’re faced with DVD. So what we try to do is simplify the entire process for them.

We offer to provide them with a director’s approved version or, if they come to us and say we want a certain property, we can say we’ll talk to the director and look after that side of it. We’ll make sure that the director approves of everything.

So for the small distributor the routine is basically the same: they ring up and say send the asset to DVD Scandinavia, send the digibeta to DVD Scandinavia. We ask who’s your physical distributor, who sends the disc out to the shop? Then we will ship the discs directly to them.

How does your client check on progress?

They get some graphics sent to them over the Internet, which they approve, and they get a test disc.
Of course, distributors are welcome to come and be as involved as they like, but if they haven’t got time, we can do everything.

Are there directors who go directly to DVD? Is there any need to go to celluloid first?

This is the other thing. The facility house Destiny 501 Warehouse in Copenhagen, which is a completely digital post-production facility, do a lot of our post-production. They scan in at 4K for cinema but they downsize to 2K for DVD. Because digital media lacks the wide range colour range of celluloid, they take the black and white end of the spectrum.

Now, what normally happens with a digibeta is everything outside the frequency range gets cuts off. That’s a big problem with material in shadow and snow – you lose contrast. To overcome this, they compress the wavelengths, take the white light and suppress it to keep the contrast, downsize to PAL and output to digibeta. We’ve done trials. Both D1 and 24P are wonderful in first generation but an enormous information loss becomes apparent once you make third or fourth generation copies. This means there is already a loss with your first copy, with your output digibeta.

The output for digibeta will be undergoing trials within the next few months. They will send over their disk array and we’ll have a Matrox disc player, where we encode directly. So, if the stuff comes in and it’s been filmed on 24P digital, it will never touch celluloid. Digital all the way through to the consumers living room. Celluloid simply becomes one of a number of output media.

Though digital projection has a lot of promise, in some facilities it’s amazing, but it’s not there yet. Celluloid is the normal distribution medium for the mass market. DVD is, hopefully, the distribution medium for home delivery.

What other innovations is DVD Scandinavia planning?

We’ve put a number of trailers on discs and we’ve done test discs. This is another important market for us. Again, it is for film production companies that want to sell product abroad.

Whereas before they’ve always taken VHS they have been very embarrassed to show it to distributors. We now do quite a number of projects where we simply have the film scanned in if it’s not already done, put on a very simple menu, maybe with sub-titles if they’re available, burnt four or five test discs from our own facility. They take them round the world with a little player and 5.1 sound. the presentation makes much more of an impact on buyers when the distributor walks in and says this is how it looks in the cinema.

All this has happened within the last six to nine months. I was asked to start the studio about 18 months ago and we’ve been operating about a year, in commercial operation for about nine months.

In the film world things do actually move quite slowly, but we’ve got some projects where we’ve put some test menus on because the director’s got graphics he likes and can say to the distributor: “Here’s my film and some ideas for the DVD.”

We’re looking at going directly digital. There are some issues about the Sony 24P. Some people say the quality isn’t quite as good as was expected. There’s still a little way to go. DVD was made for high contrast films. The new Blair Witch type films. These are filmed on DV or 16mm with a low contrast natural lighting and a lot of movement are very, very difficult to encode.

This is where optimising through the filming process, through the post-production process, actually helps. We have to put them on constant bit rate, at the highest bit rate we can possibly do. OK we’ve captured the grain but it’s not quite the sort of film grain we want.

The whole DVD process is designed to get rid of the film grain and now the grain has now become very important.

Exactly. This gives us some problems, but it’s nice to have technical challenges like that. We will find ways of doing it.

One thing I was going to say about made-for-DVD: there are a number of cult films, niche films, which come out for Scandinavia. I’m talking with at least one production company which is faced with a choice: for the whole production process, they can use up 1,000,000 kroner and produce a couple of celluloid prints, which, maybe, will be seen in an art house cinema in New York, a few film festivals and, let’s face it, that could be it.

For the same price we can author a multi-disc set, with a lot of additional material, and press, in a very smart box. A couple of thousand discs could then be sent out worldwide. They could still be shown at film festivals, digitally projected. In fact, they’ll end up with a much bigger audience for the same money. It will last much longer, it will be instantly accessible.

In five or 10 years time, when the director is famous, and film festivals want his early work, they won’t be in a situation where they have one celluloid copy that can be sent out of the country. They will have discs sets available.

So the DVD solution becomes attractive. And in many ways direct DVD release is cheaper than cinema release for minority films. Maybe Hollywood will turn round and say well who wants a film that’s going to be seen by 500 people? But take the big directors, the Tarentinos, the Spielbergs, and look at their influences – cult films.

How do you see the corporate market developing?

It should be huge. For the size of the Scandinavian market, we’ve got an enormous number of world famous companies. Lego, B&O, Volvo, Nokia. Because the market is so small for industrial companies, no large company can survive on the Danish market, they have to export throughout the world. DVD is perfect for that.

We can go in and do training videos with all the advantages that everybody in the trade knows.
You have multi-streaming so that people in different territories see only what they’re supposed to.
You have different audio tracks and different sub-title tracks.

You have multiple camera angles, so you can show how things are done from every single perspective.
And Scandinavian design is something else. We have an enormous tradition of design and this is a reflected in our menu design, which people really like.

We have enormous Internet experience in Scandinavia, it’s all user interfaces and interreaction.

What is this we hear about one-button navigation?

We haven’t quite managed it, but we are very close to getting a disc where all you need to press is enter, and you go through every single feature on the disc – we cannot see why a user should have to press more than one button.

The idea is that at the main menu you press enter, the film plays, at the end of the film you come back to the main menu where extra material is already highlighted. So you press enter. The extra material goes line by line. You come to the biographies, you press enter. Scrolling to the next item is automatic. No matter which menu you’re in you always return to choose scenes, you always jump back to the choose scene menu with the next one highlighted. That’s the most difficult part because there, of course, the user does have to press the arrow button to get to the scene they want. But with everything else it should be that you just press enter.

We should be able to make intelligent guesses about what the highest probability of what they want to do next is, and have that already highlighted.

So, the enter button would scan all the possibilities?

No, what it does, when you press enter something happens, you play the film, or whatever. But once you’ve done something and you return to the same menu, the next choice is highlighted for you. So then you just press enter.

And we work out what is the most likely thing you’re going to do next. We put that as menu point No.2, and automatically jump down to it.

How much more user-friendly does DVD have to become?

I think the big problem with all high technology – and DVD is turning home cinema into high technology – once you’re working with computers every day, you forget how many people find computers confusing and are actually frightened of them.

Everything should be simplified, every high tech company, including DVD authoring houses, should have somebody sitting in the corner, playing with this stuff, somebody who is frightened of computers.
If they can’t get it to work, if they find it disturbing, then it’s wrong.

Coming back to the corporate market, what other areas are you work in?

We do a lot of work for advertising agencies making video for exhibitions. Once you put a loop of something on a DVD, it makes your competitor’s VHSs look horrible. You can do a lot of damage. Merks are very big and we’ve done a few small jobs for them. We know they do a lot of DVD, because they have an enormous Asian market, which requires multi-languages.

I’m disappointed that a lot of them are only just moving from VHS to CD. It’s going to take them a little while to catch on to DVD, but we’ve put together a number of models. For example, one idea is to make a single password-protected disc for a number of small companies. Each company can access only part of the disc.

Small companies may want 200 or so discs: this is very expensive. But five small companies that want 200 discs, that’s 1000 discs, and that’s when the prices start to go down. So we are in business if the end user will accept that they have to put in a PIN code to access their part of the disc, and the PIN code is on the packaging.

We’re talking to some people about that, particularly unions. They’d love to do some stuff on DVD. The plumbers’ union needs a couple of hundred, and the electricians’ union needs a couple of hundred; they’re the sort of people who would say OK but you’ll have to make it secure.

We can also play around with it so that when pressing the number control you can must spell out the name of the company, or something like that.

What if another company tries to enter your name?

Why would they want to? You wouldn’t put two competing companies on the same disc. The participating companies must know exactly what’s going on and must approve the entire disc.

It would work like this: a company would send out the DVD disc instructing the end-user to put it in a DVD player and press 123. The next company would send out the same disc, but with packaging that says press 345.

We’re selling the concept and we’re starting to get interest. People are still frightened of all this stuff but as an authoring house in such a small market we cannot wait for customers to come to us. We have to go out with all these ideas, knocking on doors, telling people about this.

What brought you into DVD authoring?

I think it’s a fantastic medium. I got into DVD because if you go way back, story telling started with somebody telling stories to an audience, feeling out the audience, feeling out what they were interested in, what was relevant to them. They altered the story to suit their audience. Anyone who’s stood up in front of an audience knows, you adapt your speech to your audience. It was printing that fixed the linear story process. Video and film are all linear. It has advantages, it forces you to go into the author’s world.

Now here’s DVD, with hyperlinks to the Internet. And we are back to where we began: stories become interaction between the teller and the audience.

At DVD conferences people talk technology, technology, technology. The people at the heart of this industry are people who say I have a view of the world and I if don’t tell you about it I’m going to die. They are passionate and we should be concerned about giving them tools to tell their story in a different way.

As authoring houses, as hardware developers, as software developers, we are the link between story tellers – I hesitate to call them content providers – and their audience.

Although DVD and all this other stuff may give us a commercial basis for doing this, we, in my view, are missing the entire point if we don’t remember that what we’re doing is letting genius story tellers affect the lives of people.

DVD media is ideally suited to TV programmes, especially those shot in widescreen. Do you detect an interest on the part of Scandinavian broadcasters for DVD?

Norwegian television, I know, have their own authoring studio. They’ve bought two or three Sonic Solutions kits so I presume they’re going ahead. We’ve been trying to get interest from Danmarks Radio. They are well aware of the potential. In general, there is an awful lot of inertia out there. We need people with vision, who are burning for this medium, to get up the enthusiasm to make telephone calls.

Other huge problem is the enormous amount of legal work – copyrights, clearances, etc. It’s been said quite a few times, the people who are really making money are the lawyers, because they have to negotiate all these contracts.

The other big market I see is archiving, we’re talking to the Danish film industry. There’s a lot of talk there that DVD will be part of film development and, as such, will be eligible for a grant for director-approved cuts.

When the director goes in goes in with a project, the production company asks for a grant from the Danish government – as with most European territories, the only way the Danes get films made is with government help. The development costs for the DVD are a part of his budget. This is very exciting for us, because again it means that we can produce a much better disc.

So, part of the grant goes to you, if you have the authoring of the film?

To us or whoever the authoring house is. Part of the money the director will get from the government includes making assets for DVD programming, the graphics for DVD, the whole thing. Not replication. Just up to DLT.

The other thing we’re talking to the Danish Film Institute about is archiving. DVD as an archive material is just as good quality as the digibetas that they’re already using. If they’re going to get it scanned to digibeta, they can just as easily scan it to DVD. Not only will they have something they can use for internal archiving, they can sell the discs also – because they can make copies, for the first time.

DVD’s not the ideal archiving material in that it is compressed. But so is digibeta. The only media that isn’t compressed is celluloid but that is expensive and unstable. They probably have the celluloid, but what they send out to schools etc, is the digibeta. That could now be a DVD disc. And popular titles could be sold. DVD media is good for both professional and consumer formats. This means we can spread.

For example, if the DFI has 100 films they want to archive, 10 may have commercial potential. They could possibly pay for all their archiving costs by pressing a couple of thousand of the 10 that have commercial potential. They won’t be wonderfully packaged necessarily but they could be, they have the rights.

The DFI has fantastic black and white films from before the first world war. From the early Nordisk films. People are really interested in them and, suddenly it’s become commercial to put them out, so this is really interesting.

Going back to direct to DVD, I really hope that we can develop the market for cult films which are critically acclaimed abroad but can’t get distribution. We could make a director’s approved disc, which could be sold via the Internet, or directly to box shippers, or directly to Kmart or whoever wants it. Films that otherwise couldn’t be made, suddenly become economically viable. So far, it’s not been done.

I’ve got contacts in the Internet world, and others who are always interested.

Unfortunately, we get back to regional coding and the whole sad thing is that to make discs for the whole world it has to be in NTSC. This disturbs directors because the quality isn’t that good, though the quality on an NTSC disc is better than through NTSC television. You can put in more saturated colours because you’ve not got a composite signal, it’s coming off as a component so there’s not the interference.

You still have a lower resolution but if you’re prepared for that trade off, I see this as opening up a bigger market for niche product because of this one disc, one world.

So we’re now all ready for one film, where the rights have been sold to very few countries. As a group, we’re buying back the rights, in order to produce a pan-European disc....

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