DVDS PUSH MOLDERS, PACKAGERS TO CHANGE

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TUCSON, ARIZ. — Arrival of the new DVD medium poses plastics-related challenges to disc molders and packagers:

Disc makers need to modify equipment or acquire new capabilities.

Creative packagers vie near-term to establish their products' viability.

Criticism of the fragile polystyrene jewel box continues to grow.

DVD — once known as digital versatile disc — is a high-capacity compact disc that can store videos or computer data.

Industry participants discussed the subjects at the annual meeting of the Princeton, N.J.-based International Recording Media Association. Messages from initial DVD hardware and software rollouts rumbled in the background.

Some refer to DVD as a convergence medium with value beyond the touted capability to store an entire movie.

``A lot of early growth for DVD is going to come from the computer side in the ROM area,'' said Thomas Parkinson, president and chief executive officer of Shape Inc. in Portsmouth, N.H.

Several of Shape's software partners ``are looking strongly at the three-piece jewel box and its modified configurations, and boxes that allow them to have larger booklets,'' Parkinson said.

Richard Kelly, president of Cambridge Associates Inc. in Stamford, Conn., forecast that 300,000 households in the United States would acquire DVD systems in 1997, with the households increasing cumulatively to 4.3 million by 2001.

By comparison, 88 million households have videocassette recorders, and consumers have spent nearly $100 billion on VCR hardware and software in the last 15 years, Kelly said.

``As our analog fuel is being replaced by a higher octane digital alternative, our businesses are all at the crossroads of change,'' Charles Van Horn, ITA executive vice president, said at the March 19-22 gathering in Tucson.

DVD's retail rollout took longer than expected; no recording capability exists; and some studios avoid the format. Warner interests and Sony Corp. units are DVD's biggest advocates.

Processors need three to six months to acquire equipment and three months to optimize disc production.

``We definitely underestimated training for both operators and engineers,'' said Gregg Johnson, pre-production plant manager with Time Warner Inc.'s Warner Advanced Media Operations in Olyphant, Pa.

``We were running audio on our DVD presses until we launched at full capacity,'' Johnson said. ``In retrospect, we would have preferred to be testing DVD to get that training experience'' rather than doing as much work in audio.

Johnson said the production conversion to DVD from compact disc can cost about $100,000 to upgrade each mold and $50,000 to improve a molding machine's server control. A system to bond together two substrates costs about $400,000 for a hot-melt process or $800,000 for ultraviolet. Monmouth, Wales-based Nimbus Technology & Engineering Ltd. is Warner's technology partner on the disc transition.

A retail package may get ``seven-tenths of a second to catch a consumer's eye,'' said Timothy Russell, team leader for media packaging for Westvaco Corp. in Richmond, Va.

Russell said the challenge for packagers is to ``help your customer deliver added value and, at the same time, do it cost efficiently.''

Marketing consultant and keynote speaker Martha Rogers of Bowling Green, Ohio, called it ``standardized customization.''

Disc replicators and entertainment studios will experiment in packaging over the next 18 months to see ``what works for them,'' said Floyd Glinert, executive vice president of Shorewood Packaging Corp. in New York.

Packaging standards of the Video Software Dealers Association ``are very appropriate'' to distinguish video discs from audio products and VHS cassettes, Glinert said. VSDA recommends the DVD package measure 5.5 by 7.38 inches with a thickness between three-eighths and five-eighths of an inch.

The ``slow rollout'' of DVD ``is a plus,'' Glinert said. ``I don't see replicators going out and spending hundreds of thousands of dollars on automation until they see what is going to happen.''

About 12 packaging solutions will emerge over time, with the market selecting the survivors, said Anthony L. Gelardi, president of Gelardi Design & Development in Kennebunkport, Maine.

Creative packaging slows piracy, Gelardi said. Embossing, holographs and the like ``get the attention of the consumer and afford a degree of protection, particularly early on when those titles hit the store.''

The unique elements allow a content rights' owner to identify original material without opening the package. Gelardi noted an estimate of $14 billion of illicit products was sold last year.

``There will be several packages both for DVD video and DVD-ROM,'' said Andria McClellan, vice president of sales and marketing for Laserfile International Inc. in Englewood Cliffs, N.J. In January, International Packaging Corp. of Fort Wayne, Ind., began molding Laserfile's DVD packages on Netstal and Krauss-Maffei machines.

A replicator, soon to be identified, will use a machine from Langen-Kyoto Inc. of Mississauga, Ontario, to assemble the DVD package. The machine has a base price of $161,000.

Laserfile modified its CD-package concept and dimensions to create a DVD version. A concave polypropylene tray holds the DVD securely, slides out from the bottom of a clear PS outer container and hinges down and away from the disc for removal.

In a Laserfile-funded survey, C.A. Walker & Associates of Los Angeles found a 3-1 consumer preference for Laserfile's DVD package vs. the jewel box.

Laserfile's CD package ``significantly outperformed the standard jewel box'' in functional and aesthetic failures during tests at Michigan State University's school of packaging in East Lansing, Mich. Complex Tooling & Molding in Loveland, Colo., molds the CD package.

PS jewel boxes break frequently, in part, because standard wall thickness was reduced, Gelardi said.

``Consumers don't like cracked boxes, broken hinge tabs [or] broken rosettes,'' McClellan said. ``Most consumers ... want something more durable, as would the replicators, without spending more money.''

``If the industry is willing to support an additional dime, 10 cents, out of a $12 item, we can create a three-piece jewel box that will not break,'' Parkinson said. ``And people think DVD will carry a $20 retail price, so the margin will be there.''

He showed a jewel box of Phillips Chemical Co.'s clear K-Resin styrene butadiene copolymer. ``The problem is the cost'' at 20 cents per item, double the current market price, he said.

In 1995, Shape began selling PS jewel boxes in the aftermarket.

``That business is growing at 25 percent a year,'' Parkinson said.

Glinert said Shorewood sells ``millions of replacements.''

Philip Clemens gives replacement boxes to International Packaging Corp. visitors, saying, ``Here's for the ones that have broken hinges at home.'' The visitors ask how he knew of the problem, and Clemens responds, partially in jest, ``They all break.''

Jewel-box licenses from Philips Electronics NV mandate no design changes although ``the design geometry of the hinges is inherently weak,'' said Clemens, IPC president and chief executive officer.