Grocery delivery service to offer DVD burning on demand

UPDATE: Test to begin in Chicago during the first quarter

By Ned Randolph -- Video Business, 11/21/2007

NOV. 21 | Grocery delivery service Peapod may be one of the first retailers to manufacture DVDs on demand, under a new deal with TitleMatch Entertainment Group.

The service, in which Peapod will deliver DVD movies to customers with their groceries, will be tested in the Chicago area starting in the first quarter, said Mary Litchhult, VP of business development for TitleMatch.

“The customer orders their groceries and a movie online. The movie is burned and shipped with the grocery order within 24 hours,” she said.

Peapod, which is owned by the Dutch company Royal Ahold, provides next day delivery of groceries to customers of Giant Food and Stop and Shop.

If the test goes well, it could be expanded nationwide, Litchhult said.

With use of preferred anti-piracy encryption Content Scrambling System approved for recordable DVDs, Hollywood inches ever more closely to licensing its catalog and blockbuster titles to companies to burn onto DVDs.

But even the strongest advocates for ‘media on demand’ say it will be some time in 2008 that pilot programs are finally deployed around the country.

“When is the soonest it could happen? First quarter is the soonest, but a lot would have to happen for that to occur,” said Jim Wuthrich, Warner Bros. senior VP of digital distribution. “Still, as I understand it, they’re working on the drives and getting that in play.”

Sonic Solutions’ Qflix encryption has been licensed to offer CSS to manufacturers that are producing commercial parts for the drivers and required special optical discs. Meanwhile, retailers are making pitches to place kiosk stations in their stores.

TitleMatch also will begin testing a pilot program with a major retailer in 200 stores, said Litchhult, adding that she can not yet name the retailer.

The service would provide in-store kiosks where customers can order a DVD that’s burned on-site from a choice of 1,000 titles. Litchhult said several independent studios and at least two major studios have agreed to participate so far.

“We’re actively talking to the major studios and taking the steps we need to get the major content on board,” she said.

The biggest stumbling block to manufacturing-on-demand has been the willingness of studios to embrace media-on-demand, said Anthony Bay, CEO of Mod Systems, which is operating download-to-burn music kiosks at certain Best Buy stores with plans to eventually add video.

“I think the majors are like anything else. You can’t lump them all together. They are pursuing different strategies,” Bay said.

Wuthrich said Warner sees a definite advantage with manufacturing-on-demand. For one, they can open the entire catalog without incurring heavy costs of printing discs and stocking inventory. And customer purchases give them a glimpse into popular trends.

“We see this as an opportunity to test demand for content. If there is a significant demand for content, absolutely we’d go down the path to make [the titles] more widely available,” Wuthrich said.

Warner has licensed titles to Sonic Solutions’ Qflix service for testing. But the studio will not make everything available at once. It plans to actively work with retailers about their particular sales strategies.