Rather than the threat some pundits predicted DVD would be to the television industry, the reality is that it's become both a useful marketing tool and revenue spinner.
Unlike the success of VHS in the 1980s, of which there are echoes, DVD today is promoting TV, with sales of comedy and drama now in third place behind movies and children's titles. It's also providing a much-welcomed tranche of work for specialist authoring houses and post facilities with DVD departments such as DGP. This post house was one of the first to diversify into DVD authoring. Managing director Julian Day says that while most of his company's post operations remain successful, DVD now accounts for the majority of the company's turnover and profit - in the region of 60%.
It works predominantly with Hollywood studios on major TV series, including Nip/Tuck, Six Feet Underand Friends, as well as blockbuster films such as Lord of the Rings: Return of the Kingand The Life of Peter Sellersand is also a contractor to the BFI.
Day feels the market is "very competitive and susceptible to intense price competition from abroad". Facilities offering DVD authoring fall roughly into two groups: those that started out in DVD and concentrate on it and post-production houses that expanded their operations into the field. Some of the latter were so successful that they have set up separate divisions dedicated to DVD. Prime examples of this are Stream (which was formed originally from TVi and now forms part of Ascent's empire) and Squash, one of The Farm's group of companies.
The Machine Room (TMR) has made a similar move, adding DVD authoring to its post facilities six years ago. Since the restructuring of its parent company, the VTR group, this operation has been merged with its Clipstream company to form TMR Digital.
TMR offers digital asset management, web design and streaming in addition to authoring; the only impact on DVD work, notes operations director Tony Bradley, is opportunities in designing interactivity for children's DVDs.
Bradley views the top level of DVD as "a close-knit community" with businesses that have been involved in the trade for some time. Consequently, he says, DVD authoring is "less competitive than other aspects of the industry". He adds that although companies vie for the same projects and it's become a crowded market, those which have got in early - such as DGP, Stream and The Pavement - have all been able to carve out their own niches
The holy grail these facilities are all seeking is a DVD authoring contract from one of the big Hollywood studios. US studios tend to farm out film and TV titles to local facilities in different territories, partly to ease the load on American authors and partly because the studios feel that local versions are best done in the areas which they'll be seen in.
Although this part of the market is not sewn up entirely, those that entered early and proved their worth have kept such work, leaving later entrants to find another specialty.
At Cheerful Scout, head of DVD Andrew Harvey estimates that 70% of the company's authoring is of TV material, which gradually built on the back of a contract with the cult TV and children's specialist Contender. The company now works with other TV distributors including Fremantle. Among its credits are shows such as Convictionand Jamie's School Dinners. Harvey is aware of the competitiveness in both DVD authoring and post-production, especially on price.
Competition has sharpened with the growth of budget DVD - film and TV titles in the bargain baskets at high street stores retailing for as little as£3.99 because they can offer basic graphics, simple menus and extras. This market also extends to corporate productions and promotional material.
Harvey observes that pricing is falling ever lower but adds, "not to the extent where we would go out of business". Part of this is due to the contract nature of the business, with the big publishers looking to form long-term relationships with suppliers.
The bigger service companies are also looking to tie clients into all-encompassing contracts for audio, visual effects, mastering, replication and distribution as well as compression and authoring. Technicolor Creative Services' general manager of DVD, Neil Bottrill, does not see this situation as unfair, as different studios and distributors have individual models to which they work. "There's a lot of work out there for compression and authoring companies," he adds.
Another emerging business model is forming partnerships with authoring and compression companies, as DGP is with Warners associate Global Digital Media Exchange (GDMX). According to Kristen O'Sullivan, a director at DVD authoring outfit The Pavement, this set-up can often improve efficiency. Because the US continues to control the bulk of DVD film releases, there's a set template for how a DVD is authored. "A large production line operation means the author can simply hit 'import project' and move from one job to the next," she says.
An early specialist in DVD, founded by former Stream employees, The Pavement started off with a healthy raft of music DVD work but has recently made its name in TV titles thanks to its association with distributor VCI.
Formerly a regular contractor to Channel 4's comedy output, VCI has since brokered a deal with BBC Worldwide. VCI's C4 deal led The Pavement to author C4 comedies such as Spaced, Phoenix Nightsand Bo' Selecta!and more recently Little Britainfor the BBC. "Nearly every TV series seems to be making its way to DVD and box sets seem to be a great way for distributors to make good profits," says O'Sullivan. The Pavement has also done film work - most recently on an upcoming 30th anniversary edition of Jaws.
Meedja too has had its fair share of film work recently, The company founded by former Abbey Road Interactive and Sony staffer Sarah Bradley has recently worked on Racing Stripes, the special edition of Raging Bulland Eternal Sunshine of the Spotless Mind. Bradley is aware of the competitive nature of the business - especially when it comes to film work - but thinks that undercutting cannot reach the same levels as seen in post-production.
"We've got to pay experienced people the money they deserve," she says, "and there is loyalty from the clients because this is still a difficult thing to do. It's about personality and experience," she says.
But the ongoing development of cheaper and more powerful desktop technology has made low-cost DVD authoring tools available to producers and facilities at the lower end of the market.
While this has given greater freedom and flexibility in the production of short-run DVDs for promos and show reels, the feeling in the DVD fraternity is that authoring remains a specialist area.
"DVD is not something to get into on a whim or to make a fast buck," says Day at DGP. "It is very labour and equipment intensive to do properly and in the sort of volumes that justify the investment."
Interactivity, particularly in the games arena, is the next new challenge for DVD houses, particularly with the introduction of UMD format DVDs for the PlayStation Portable (PSP). "European PSP hardware sales are expected to be high after the successful launch in North America," says Bottrill at Technicolor. "Film studios are seeing PSP as an additional revenue stream and production volumes are set to increase as hardware penetration expands."
More dramatic will be the introduction of high definition DVD, which will require a large, fresh investment in equipment from the facilities, particularly as there are two formats for the technology. While the DVD Forum and the Blu-ray Disc Association finalise HD-DVD and Blu-ray Disc respectively and the market prepares for a launch of one or both into the UK during the fourth quarter of 2006, authoring houses are contemplating new techniques as well as new purchases.
DGP's Day observes HD DVD will be expensive to get into at the beginning and encoding will take longer, with new workflows to be designed. Sarah Bradley adds that how the compression is managed and how VT is monitored are further issues. TMR Digital's Tony Bradley points out that the approaching format is not just about high picture resolution but additional interactivity and access to online content through HD DVD boxes with broadband connections.
Broadband however could ultimately challenge DVD by allowing consumers to download films and TV programmes direct onto a hard drive. But, while the taste for packaged media continues, authoring continues to keep post-production fresh.
While film and children's titles are still the main sellers in top 10 DVD lists, TV isn't lagging too far behind. Little Britain's ninth place in the 10 best-selling DVD titles of 2004 may not seem that high considering the popularity of the show, but the BBC can perhaps take some comfort in the fact that it was beaten by the likes of Shrek 2, Lord of the Rings: Return of the Kingand, at number one, Finding Nemo. The achievement shows the overall attraction of DVD and the growing importance of TV material for the format.
Film continues to be the big seller in DVD, taking 42% of the market, according to the annual report of the British Video Association (BVA). But non-film DVD sales are now more significant, with children's accounting for 9.5% and TV closely behind at 9.3%.
The power of DVD as both a money-maker and a promotional tool is leading to increased marketing efforts. Last September BBC Worldwide - which took 25.6% of the TV video and DVD market in 2004 - formed a joint-venture with VCI (owned by the Woolworths retail group). The ownership is 60% BBC and 40% VCI. All VCI and BBC DVDs are now label brands under the 2Entertain label.
VCI (which currently enjoys a 16.7% share of the market) was formerly a partner of Channel 4 until the broadcaster decided to take its distribution in-house with the launch of 4DVD early next month. "It will give us more control and allow us to offer a better deal to the rights owners and talent," says Mike Morris, deputy managing director of rights and consumer products for C4I.
Morris acknowledges that DVD sales have become an important revenue-spinner for the broadcaster - using Paul Abbott's award-winning drama Shameless as a case in point. On the back of the show's Christmas special, C4I launched the box-set of the first series, which clocked up 160,000 units.
Morris acknowledges this figure is "very good" for a drama series, adding they targeted the Christmas voucher market. Comedy continues to be the big seller for all broadcasters with figures of 1 million to 2 million for Peter Kay, Little Britainand Bo' Selecta!.Usually there is a big gap from there to the 30,000 to 60,000 for TV drama and Morris makes the point that a drama series will need "some currency" to persuade viewers to become collectors, combined with usable and fun menus and interesting or appealing extras.
A longer established sales operation is Granada International, which deals with much of the ITV back catalogue, as well as the Rank film archive. It's also involved in the production of American TV movies, which sometimes go straight to rental. Simon Wheeler, head of home entertainment, says the money from sales goes back into production and has given broadcasters a bonus.
Independent DVD distributors also appear to be flourishing. The prolific 3DD also co-owns the inD label with Red Production and Lorber Media. Recent products from the company's stable includes Really Bend It Like Beckham- which was 50% financed by advance DVD sales. Dominic Saville, chief executive of 3DD, comments that producers are now thinking about the DVD release before production starts. As a result, Later with Jools Holland is now shot in HD and 5.1 with the American DVD audience in mind.
Another independent, Contender - which launched in 2003 - handles a variety of film and TV titles, including Spooks and Cutting It. Jon Bourdillon, director of home entertainment, comments that TV drama did not have much value for VHS but the collectability of DVD, combined with the capacity for well-chosen extras, has proved successful. "And the market will bear it," he says.
As not every title will fly off the shelves of HMV, companies have to know where to sell titles with a special appeal. An example is Out of Town, the gentle country ways series of the late 1970s and early '80s presented by bearded, pipe-puffing Jack Hargreaves. Contender sold selected episodes through a single mail order outlet and shifted 50,000 copies in six months.
Post House Survey
EvolutionsAuthoring and duplication N/A N/A 100% showreels 1
Lip Sync PostPost for extras, menu design, animation, 16% 3% Film 70%; TV 10%; 5
two content agents, censorship edits music 20%
DGPDesign, compression, authoring, 60% 20% Film 20%; TV 50%; music 5%; 30
QC, Video on Demand corporate 15%; interactive 10%
PepperPost for extras 30% 0 Film 28%; TV 35%; music 26%; 20
TMR DigitalAuthoring, post at TMR 30%-35% 10% Films 50%; TV/children's 30%; 20
and VTR group facilities corporate 10%; music 10%
FrontierpostAuthoring and post <5% 0 100% corporate 1
MolinarePost with basic DVD burning 7% 0 Film 35%; TV 30%; music 20%; 1
SumnersAuthoring and post 5% 1 80% TV; 20% corporate 0
422 (Manchester)Authoring and post <5% 0 TV 33%; commercial 33% 1
BBC Post ProductionContent editing, editing for extras, Small but growing 0 Equal work from No specific
remastering content and copying all sectors DVD team
Authoring house survey
DGPShooting, editing, production management, 30% 20% Film 20%; TV 50%; 30
asset research, special effects, corporate 15%; music 5%;
picture restoration, design interactive 10%
Metropolis GroupMultimedia scripting, broadcast design 30% 80% Film 10%; TV 50%; 17
DeluxeGraphics, subtitling and content creation 0% 40% Film 59%; TV 40% 43
MeedjaNone approx. 100% 50% Film 60%; TV 0%; 6
corporate 20%; music 20%
SquashProduction management and production, 30% 2%-5% Film 75%; TV 20%; 17 full-time
design, manufacturing, plus hypermedia corporate 3%; music 2% 25 freelance
The PavementDesign, quality control, audio and video 45% nearly 100% Film 28%; TV 35% 20 full-time
encoding, production management, Music 26%; Other 11% 4 freelance
consultancy (post through Pepper)
TechnicolorFull post-production services, 30% 40% Film 55%; TV 10%; 42 full-time
Creative Servicesincluding Anvil for audio corporate 5%; music 30% 24 subtitling