Disc Duel

A $130 million gamble

Ever want to invite friends in for a private screening of a hit movie? That lias long been a favorite entertainment form of super-rich folks who can both obtain films and keep home screening rooms to show them in. But now Magnavox and RCA are betting heavily on a new device they say will make this possible in any of the 70 million U.S. homes that have a television. It is called the videodisc.

Videodisc? Americans are already familiar with videotape recorders, or VTRS, which can be plugged into an ordinary TV set and record up to four hours of programming on a cassette for later viewing. Videodiscs are also used with standard TV sets, but they are like phonograph records that can "play" video images as well as sound. They cannot record TV shows but, like records, are sold pre-programmed with anything that can be shown on the tube: movies, concerts, how-to instructions in golf and cooking.

Magnavox, which has been marketing a $695 videodisc player in Atlanta since December and plans to introduce it in other cities this year, has already assembled a list of 202 recorded discs; they include 108 movies, among them Animal House, Jaws 2 and House Calls, which sell for a top price of $15.95. RCA plans to launch a less expensive system (about $400) next year and is also building up a library of similarly priced films, as well as concerts and opera performances.

The two companies believe their devices will build up a new home-entertainment industry that will complement rather than compete with the more expensive VTRS. They also hope to grab a share of the $2.4 billion a year that Americans currently lay out for movie admissions and the $3.5 billion they spend on records and tapes; when hooked up to a stereo system, videodiscs produce a better sound quality than regular records.

The two companies' systems are incompatible: RCA discs cannot be played on Magnavox machines and vice versa. Concedes RCA Executive Vice President Herbert Schlosser: "Eventually one system will dominate." Magnavox uses smooth-surfaced plastic discs. To see a film, one places the disc on the machine's phonograph-like turntable; a laser beam picks up the sound and images, which are then played through the attached TV set. Some Magnavox discs play for 30 min. a side, but movies take 60 min. RCA's discs, which will all play for 60 min., are grooved like records, and a stylus is used to pick up the sound and images. Because they are easily fouled by dirt, the discs are kept in plastic caddies; they are inserted in a slot in the videodisc machine rather than placed on a turntable.

The RCA player permits viewers to skip ahead or back, or to repeat the same 15-sec. segment over and over again. The costlier Magnavox system is more versatile: the action on the 30-min. discs can be run in slow motion or reversed or even held in freeze-frame position.

Movie companies, which will get a royalty of between $2 and $3 for every disc sold, have been happy to supply films. "It's a new market we cannot afford to ignore," says Norman Glenn of MCA, the big Los Angeles-based entertainment conglomerate, which is making discs for the Magnavox player. The company has been rummaging movie company libraries for popular films. While recent releases on the MCA discs cost $15.95, older classics like Destry Rides Again and TV movies (Battlestar Galactica, The Bionic Woman) sell for $9.95; how-to features like a Julia Child cooking course or films of Ali's boxing bouts are priced at $5.95 and up. RCA, which is producing its own discs, expects to start with about 250 offerings at a top price of $ 17.

Given the cost of pioneering the machines--Magnavox has already invested about $80 million, while RCA has spent more than $50 million--both companies have moved with caution. Indeed, RCA announced that it would go ahead with its system only after Magnavox began test-marketing in December. Magnavox, for its part, took the plunge because it had an agreement with MCA that it would launch videodiscs no later than 1978. Both players will be nationally available in 1980 when, despite Magnavox's test launches this year, RCA's greater number of dealers and lower price tag may give that company a marketing edge.

The Japanese, who make all available VTRs, have shown no eagerness to jump into this new market, even though several manufacturers, including Sony and Matsushita, are known to have developed disc machines. Evidently they do not want to begin promoting videodiscs while sales of VTR machines remain strong. A Sony spokesman insists: "We don't think the public is yet ready for the discs." Magnavox and RCA hope to prove him wrong.

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