by Dean McIntosh
Bruce Hart's name will probably not be familiar to most of our readers, but his business could be considered an important one in the realm of DVD-Video - his company manufactures and markets an optical disc repair system called Disk Doctor. Essentially, he is in the business of selling machines that can repair all but the worst scratches on our beloved shiny discs. He is also closely in touch with DVD rental outlets, so in the interests of offering an alternate perspective to the rental versus retail argument, I had the pleasure of conducting this interview with him.
It is important to realize that the statements made by Bruce in this interview are often quite opposed to the consensus viewpoint held by the people who work on this site, although some of the points made are very valid. After establishing that there is a definite need for the Disk Doctor in a market with DVD-Video capable games machines such as the PlayStation 2, which according to him, puts five-millimeter scratches due to speed wobble in discs that are played on it, we soon settled down to other interesting topics...
Yeah, but what happens is when it [the disc] spins, it just scrapes the tray, so I went to four video stores today where they all showed me this straight line all around the outside. That's the most common problem out there.
I suppose... well, my history is with Video Ezy, and I was with them for about three and a half years. After that, I was the operations director for a large franchisee of Video Ezy. We had twenty-six stores, and we had all these problems when DVD came into play, and we didn't know what to do with them, so we just stored them. We just kept storing them and storing them, or putting them back out on the shelf, so a lot of video stores used a Three Customer Complaint rule. If you hire it, come back and say "this is faulty", they'd make a note on the computer system, put it back on the shelf, and if another person comes back, well, after three complaints, they'd pull it off the shelf and say "okay, there's got to be a problem".
Obviously, that doesn't equate to great customer service, so I started looking around for a solution to the problem, which took me overseas for a couple of months. There's about three or four in the States, which all perform on various different levels. I found one I liked, that I could manipulate, and I did a deal with the guys, working with them, changing it to the Australian market, and then I started importing it, but I was doing my current job and that job for about twelve months. Until the accountant came and saw me, and said "you're this much money in the hole, what do you want to do?", so I said "okay, I've got to pull my finger out", so I concentrated a bit more and took off. So I resigned from Video Ezy, and I have been doing this full-time for about twelve months now. It's great, because there is no doubt that at some point in the future, every video store in Australia or the world will have to get a CD repair machine.
The consensus view in the marketplace, that and me dealing with all the video stores - fielding complaints, fielding questions about my machine, and then talking about the issues surrounding DVD, is that DVD is not a rental format, a VHS tape will far outweigh in longevity a DVD, being that VHS tapes last about eight to ten years, DVD won't last that long. Just from customers not knowing how to take care of a disc. When CD-ROMs first came out, they were marketed as indestructible, and a lot of customers believed they were indestructible. They don't understand that when they're scratched, they're not going to work, so the whole video industry has got to change the customer's perception on keeping the DVDs clean.
Then again, franchisees of video stores need to better understand the problems, and DVDs have a lot of problems - they crack around the centre, in the rental industry they use push-button cases, and some people don't push the buttons, they rip them out, they either crack them or crack the centre, so they're actually useless. Gold DVDs came out about nine months ago, which in the olden days, the olden days is twelve months, sometimes we'd turn the DVD over to watch the other side, so obviously there's two layers now. I'd say fifty or probably seventy-five percent of franchisees wouldn't have a clue about that, and then, obviously being gold-layered DVDs, when the disc stops between chapters 17 and 24, the customer's come in and said "ah, look, this just dropped between this and this", and the franchisee's just gone "oh, okay, no problem, I can't fix it, you can't fix it, it's actually the DVD player, it's not reading the next layer".
You've obviously got the PlayStation 2 scratch, which adds a lot of problems, finger marks, again, if you look around the centre ring of a DVD, there's all these dots and dashes, and if you put finger marks straight over that and put it in the DVD player, nine times out of ten it won't work. All these little simple issues, for a video store, it's major because the customers take it home, they can't play it, and all they blame is the video store. It can't be their DVD player, because even though their player may be two years old, it's still brand new to them. The video stores understand, and are frustrated at, the issue of stopping between chapter 17 and 24, again, seventy-five percent of their customers don't even know that problem existed until we highlighted it. We found on our website that when we talked about it, they just don't know it.
When the Nintendo Gamecube comes out tomorrow, or the next day, that's a three-and-a-half inch disc. Video stores don't even know that. So the whole CD-ROM industry is not geared to rental stores whatsoever - they hate it with a passion, but it's here to stay. I must admit, the distributors or marketers or manufacturers did a fantastic sell job, because in the old days, I remember the old Beta versus VHS, Beta was far superior to VHS, but they marketed VHS a lot better than Beta, and the public took VHS under their wing, so VHS took off and Beta died a horrible death. Same thing just happened with DVD or CD-ROM - MiniDisc is far better than CD-ROM because of its protective coating around the outside. DVD-ROM won out over MiniDisc, but what we're finding is that the distributors, when DVD was first introduced, a VHS tape was around a hundred dollars and a DVD was twenty-six bucks.
So obviously when you're in the rental business, and you're charging a figure for overnight rental, they're like "oh, well let's jump on DVD's bandwagon because it's twenty bucks rather than a hundred bucks, we'll get more revenue out of DVD".
Well, it's more that they take up the same shelf space, but to recoup your money is a lot quicker in DVD than it was in VHS. So the video industry, I must admit Video Ezy got into it first, they spent a lot of money buying a lot of back-catalogue titles and getting DVD on their shelf, and it's now paying off big dividends. What happened is that as the shift went from buying twenty percent of their purchases in DVD, they're now probably either going fifty-fifty or sixty percent DVD, they're slowly buying less VHS tapes, but what the distributors did, and its a cunning act on their behalf, is they raised the price. Now a DVD is the same price as was a VHS tape. [Dean's note: this shoots a massive hole in the rentailers' claim that they couldn't afford to pay rental window prices for DVD.] So they sucked the rental stores in and put up the price, so here we go. There's a lot of unhappy people out there, but the other issue you've got is, and you probably are aware of it, laser rot.
Oh, big. Major. Legally Blonde had it, and distributors will not step up to the plate and say there is a problem, because that would really hurt the DVD industry. What retailers are finding now is that as people learn about laser rot, and when they start to go check their back catalogue, they're finding a lot of DVDs have laser rot, but they can't do anything about it because distributors won't do anything about it, but now what you'll find is, well in the last month there's probably fifty cases in my stores that I know of where if you ring the distributor and say "this has got laser rot, this has got a shadow", the distributors will exchange it and send you a new copy straight away, and pull that one back, but they will not admit there is a problem at this stage. It's a bigger problem than people think. They go back through their catalogues, and it's a big problem.
You've got to understand that, well, you are ninety-nine point nine percent correct, that DVD when it came onto the marketplace, nobody expected it to explode the way it did, but then for rental stores, nobody expected the problems that DVD would have within the marketplace. When the technology came out, everyone loved it - better sound quality, better picture quality, fantastic, you beaut, then DVD players dropped in price, especially over Christmas when you could buy them for $299. So every Ma and Pa got one, the kids bought them for their parents, so the user base just went through the roof.
The problem is that as the user base went through the roof, they turned to rental stores and said "you're the experts, why isn't this working in my DVD player?", and unfortunately, DVD and DVD players aren't as simple as VHS, the only problem with VHS with people complaining was a case of "oh yeah, it's the tracking, get your heads cleaned". With DVD, you've got at least ten possibilities that it could be, and a sixteen-year-old behind the counter going "ahh... ahh... ahh..." and what we found was that it wasn't just Video Ezy, it was all the video stores, big and small, didn't know what they were selling or renting, and it's taken a good eighteen months and people still don't know how DVD players work, and what problems go with what players. What we're trying to do now is we're creating a disc that goes out to all the video stores to help them with the most common problems out there in the marketplace, so their team members can be better equipped when a customer walks in the door and says "this stops here" or "this does that", instead of the team member saying "oh sorry".
Well, that's not good. In today's society, that's not great customer service.
Oh, they have to - everybody does. I know that Rascals is Video Ezy's team trainers, they're traveling Australia right now and a lot of their content is disc management, preventative maintenance, you could call it disc management because the idea is to head off the problem before the customer takes it out the door. So you've got disc management, but there's a lot of disc education going on now, not within Video Ezy, but within everybody, to educate their team members, because the customers are getting rather upset because maybe one out of five DVDs won't work for some apparent reason, and you're right, scratches are a major thing. Just finger marks can stop a DVD from playing, so it's not as simple as it was in the good old days, and I think the video stores are having an interesting and slow time reeducating their knowledge on DVD players and all the problems associated. It's evolution - here we go again.
Yes. We go to the States next week, and the reason why we linked up with the States is that the States is about eighteen months ahead of us in DVD. Not so much titles, but the size of their stores, the average size of a video store here in a DVD library would be, well, I know stores that have five or six thousand, but the small independents, they've got three hundred or four hundred. So taking the averages for what we talk to our customers about, we're talking about three and a half thousand as the average, so we haven't hit the major problems that the States has.
The States has gone through it all, and our machine's the biggest selling machine in the States - all the major brands have got them in their stores, as you've said, they've got over ten thousand titles, so they have no choice but to ensure their CDs or DVDs and games are free from scratches. Otherwise the customers will go somewhere else, and if they don't have the machine that does it, then they'll go to the next one. I think we know that now competition is growing, Blockbuster now are really making headways in Australia, that instead of having one video store in an area, there's now probably three, and they're all fighting for the same dollar, so it's all down to customer service, if they can watch the movie as promised.
So I think video stores are slowly getting onto the case of rather than renting a DVD using the "s***, I hope it works" attitude, the customer comes back in and complains, is upset, they get a free rental whether that be five dollars, six dollars, seven dollars. The customer takes one home again, that's revenue straight out the door, where if you use the machine like ours, for anywhere between ten and thirty cents, you can fix it and the customer walks home satisfied. I mean, what's that worth? You can't measure it, you know, it's unmeasurable because that customer tells ten people who tell ten people, so in the home use environment, we have something but we need to fine tune it substantially.
What we're finding is the lack of knowledge in the customer's arena is massive, a lot of people don't know that this side's this side, and this is how you fix it, it's very frustrating. So we're happy to sit back, we've got the commercial version out now, we've got a couple of other retail products coming, so the customers can take care of their discs, being wipes and sprays and all that, but as to a machine that will remove minor scratches, there is something in the pipeline but we're going to sit on it for a little while. We'll let the video stores try and educate the customer [Dean's comment: this would be like letting the blind lead the blind...] basically before we go out and sell ours.
I suppose you're right, considering now if you look at the [cost of] manufacturing of a DVD is a lot less than VHS tape, because you can manufacture it in one place and ship it around the world, obviously thinking what language you want and all that, you know, the only thing you really see from the distributors is that beautiful advertisement at the start of the movie that says "DVD's fantastic, you get this sound, you get all that", and that's it. So customers get bamboozled by that, go buy it, and all they are doing in the video store is bearing the brunt of their advertising being lack of following information. I believe that if you did a survey, I would say it would be as high as eight out of ten people wouldn't have the foggiest what DVD's all about. They bought it because they saw that ad.
Yeah, it's mind-boggling, and it's frustrating. I think the next two years are going to be rather interesting. Not only for the distributors but video stores, it's all going to change dramatically, and in a way, the customer is the guinea pig, which is not a good thing to do. But at what point, whose fault is it? Was it the distributors, was it the video stores, how do you pick who to blame? No-one's going to step up to the plate, so it's our problem. At the end of the day, you get a better quality picture, and better sound, but if you add the equation of DVD versus VHS, and I reckon if you did another survey to video store owners, they would definitely go back to VHS. [Dean's comment: Good thing they don't ultimately decide what the distributors and studios market to the consumer then.] Just specifically for the problems associated with DVD.
Well, everyone's buying for the dollar value of each customer who spends maybe six dollars a week in the video store, but there's more competition to get that luxury money, and by the time you get it, you've got to reeducate your customers about DVD. It's their outgoings, or their operating costs that are growing because they've got to retrain people, and the video industry's going through a tightening of the belt. The good old days are gone, and in some ways that's a good thing, in some ways it's not.
Yes, I do, it's massive.
Well, I've got all the goodies, I've got all the X-Boxes, the PlayStation 2's, I have all the DVD players and the big-screen TVs, I've got the sound. I'm a bit of a technological junkie, which is why I went into this business. I like challenges. I want to get out there and make a difference. As to DVD titles, I don't buy new, I actually buy ex-rentals from video stores. The reason for that is why pay thirty-five dollars when you can pay twenty-five bucks six weeks later? It's a great saving, to save ten dollars, so over a period of a year you get maybe ten, fifteen, twenty DVDs into your library, but anyway, I've got boxes of them.
I've never actually sat down and counted them, myself, we've just moved from Sydney to the Gold Coast to expand our warehouse. Sydney got too expensive in real estate, and to buy something there, unfortunately our customers would pay the price, because we'd have to raise our prices. We want to keep our price down, so we bought a place on the Gold Coast, and we've only been there two weeks. So I just go home and unpack everything. I've never counted my DVD collection, so it's one thing I will do in the next month or so.
Quite a lot of people, I think, are obviously as things get tighter, watching a DVD at home, either with friends or alone, obviously if you've got the stereo system and a decent-sized TV, it's far superior to going to the movies. I've always been one for the movies, but now with the technology and just the picture quality of DVD, you know, I have friends over regularly, who sit down and, at least you can stop it or pause it and do whatever. So I believe the cinemas are going through a boom time at the moment, they seem to be doing very well. I do go to the movies, but I'm not an avid fan to go there all the time. I'd rather sit at home and rent my best movie and if I want I'll buy it four weeks later.
I suppose that's an unknown. The rental stores, well basically there's about two thousand rental stores in Australia, but then you add other markets that this can go into. You have some stores that have two hundred titles, with the unit being around the twenty-nine hundred dollar mark, I don't think I would sell one to them. I would rather get them to send their discs to somebody that's got one and do it for a fee until their library builds up. As for the figure, who knows? We're constantly trying to better our products, I would love to get two thousand, but at the moment, I'd rather crawl before I can walk.
Again, I suppose that's an unknown, it's like predicting the Lotto numbers, but all we know is that you obviously need to take into account factors like what people are prepared to pay to keep their discs clean and clear of scratches. As the DVD market grows, more and more people and the rental stores are trying it, buying ex-rentals, so people are building up their collection. We want to get it below the fifty dollar mark, to make it affordable, we'd want it to be automated, so there's nothing they need to do - just whack a disc in, press a button, and ten seconds later it's done. But we're constantly updating it, we have three versions on the go at the moment, and they're being tested in the States, they'll be tested thoroughly for three to six months. I suppose when you start dealing in the retail market, it's all about brand recognition, the last thing we need is to get a version out there and have something go wrong with it. So we're quite happy just crawling at the moment.
Yeah, I do, I've got a number of them, I suppose my favourite one, whether it be twisted or not, would be The Game, with Michael Douglas in it. The reason being that it's a twisted movie, with different plots. I'm an action guy, I love the Top Guns and all that, but I suppose if that stood out, that'd be my favourite. I like all kinds of movies, but I'm into a lot of kid's movies because of my son and daughter, and they've got a massive collection. I suppose that's what also inspired me to do this machine - they scratch them all the time.