Samsung, Toshiba planning Net-connected DVD player

DVD players from the likes of Samsung and Toshiba will start to act more like a PC and should be hitting the market soon.

Through the use of chip technology from a company called VM Labs, Samsung will offer a new $499 DVD player this quarter that will enable users to play games with graphics capabilities equal to that of current game console systems. Samsung said that later this year users will also be able to access the Internet.

Toshiba has announced support for the technology but hasn't yet said when it will ship a product.

With DVD players as one of the hot consumer electronics items of 1999 and probably of 2000 as well, companies offering Internet access devices such as America Online and WebTV as well as PC companies offering simplified Web browsing terminals may all be facing a formidable new competitor for consumers' dollars.

DVD player sales rose 371 percent in 1999, and the Consumer Electronics Association (CEA) predicts another 6.5 million units will be sold this year. That amounts to about $1.5 billion worth of DVD players expected to be sold this year.

By building in new interactive features, DVD players may attract a large number of consumers--and a large chunk of market share--who are looking for an easy way to get games and Internet access in their homes. If even only a small fraction of the total players sold interactive technology, consumer electronics companies could soon wind up with a subscriber base comparable to that of WebTV, which has been on the market since 1996.

"These DVD players are aimed at people who typically wouldn't get a separate Internet set-top, game machine and DVD player," said Greg LaBrec, vice president of marketing for VM Labs. "There's a demand for interactive entertainment, but a lot of people don't have a PC" and don't necessarily want the action games typically available on devices such as the Sony PlayStation or Sega Dreamcast game console.

VM Labs has designed a chip that basically combines a high-powered graphics chip with an MPEG chip that's used for playing back movies into one piece of inexpensive silicon. Instead of making money on the chip, VM Labs hopes to make money off royalties from software and DVD discs that use its technology. The company hopes this strategy will help the technology come into widespread use at a faster pace.

VM Labs isn't the only company developing technology for these souped-up DVD players. National Semiconductor's Mediamatics subsidiary and C-Cube Microsystems will both be producing chips for interactive DVD players and are working in alliance with PlanetWeb to enable services such as Web browsing, online banking and the like.

Another mainstay device also could be offering Internet connectivity soon: television. San Jose-based TeleCruz is working on embedding chips into TVs that allow many of the same functions as a stand-alone WebTV device. The company is working with four of the top 10 TV manufacturers, one of which is Sony. Its chips could also get used in DVD players to enable Web surfing, say executives, although the focus is currently on TV sets.

Companies like Sony are looking at potential e-commerce applications on the TV and worrying that set-top box manufacturers like General Instrument and Scientific-Atlanta will help cable operators cut them out of the loop of those opportunities, said Jodi Hughes, president and COO of TeleCruz. Hughes recently joined the company from Sony Semiconductor Business division, where he was a senior vice president. Chips from that division get used in Sony products around the world.

It's too early to say that interactive DVD players will be the death knell for PCs and other computing devices, though, say analysts.

"All of the stand-alone devices like DVD players, TiVo-like digital video recorders, game consoles, cable set-tops, WebTV devices, not to mention the PC and TV, are all in the process of assimilating the functions and features of each other," said Jon Peddie, president of research firm Jon Peddie & Associates. "They are all converging on the same set of features," he said.

But Peddie believes there won't be one device that dominates over the other in terms of popularity; each will have its uses, and each will need to be able to distribute content to each other.

An interactive DVD player probably still won't suffice as a primary Internet access device, for instance. VM Labs won't be offering a browser for the DVD players until later this year, and support for the newest versions of multimedia content players such as RealNetworks and Microsoft's MediaPlayer and Apple's QuickTime often tend to lag development for PC products.

Still, the devices could offer unique opportunities to reach consumers who might not ordinarily go online. LaBrec envisions a company such as Amazon.com, for instance, offering a free dial-in number so consumers can pop in a disc, browse through a catalog of items and place an order on the Web site.

Content developers are eager to take advantage of such opportunities.

"DVD is a natural platform to expand interactivity into," said Marlin Davis, president of Screamingly Different Entertainment, a multimedia production firm. DVD has a large storage capacity, and developments in software and techniques for producing interactive TV are readily transferred to the DVD format, he said.

"By using enhanced TV technology on DVDs, you will begin to see all these players interact with live data from the Internet and other sources," said Davis.