Vialta Shipping DVD Entertainment System

FREMONT, CALIF. — Vialta, a new vendor of digital home entertainment products, is now shipping a line of multi-functional DVD players called ViDVD, that among other things will incorporate a TV-centric Internet browser.

The company will also offer ViDVD buyers the chance to take part in its "New Media" program. This includes a Divx-like convenience-oriented DVD movie "rental" program, using ViMagazines — DVD discs loaded with a range of content. When ViDVD owners sign up for the program (for the cost of shipping the discs beginning in early 2002), Vialta will send them ViMagazines every month including some 16 hours of content ranging from new music, magazines, karaoke songs, feature films, documentaries, cartoons and cooking shows. Some content is free to view on every disc, and the rest is offered on a pay-per-view basis.

A typical three-night movie "rental" will run about $3.49 per viewing period, without the need to return the disc.

Subscribers keep the discs to build "a virtual library," the company said. Each disc offers a table of contents listing titles on that disc and on all previously released discs..

Company president Didier Pietri said he believes Vialta has skirted some of the issues that kept Divx DVD players from succeeding.

"The big issue with Divx was its timing of introduction into the market," he said. "What we wanted to do was produce a player that is completely open — that can play almost every disc format we could think of and then transform the player into a system for the delivery of home entertainment."

Initially, Vialta is offering two ViDVD options — one with a full-size wireless keyboard and remote that carries a $299.95 suggested retail price and one with a smaller combination keyboard remote that carries a $279.95 suggested retail. Also available are versions with or without a slot for a "smart card" for credit card-style purchases. All models bundle a microphone for the karaoke system.

The ViDVD line will include a built-in dial-up modem and TV-centric Internet browser (broadband capability is in development), karaoke player, Kodak Picture compatibility, CD player and MP3 player.

The DVD player in the unit includes Dolby Digital and DTS pass through.

Vialta will also offer dial-up Internet access through the device for $9.95 per month under Vialta's Internet Gateway program. Users get a 60-day free trial period for the Internet services and a few months of free ViMagazines.

The players will also support use of other open ISP services, such as EarthLink and MSN, but closed services such as AOL will not be accessible with the products.

The company is now looking for retail partners and recently launched with the 18-store MicroCenter chain, said Ken Tenaglia, marketing communications director.

Vialta has developed an in-store kiosk to help communicate the functions and features of ViDVD players, and is focusing efforts on retail sales training.

The company is using a variety of distribution methods including reps, direct sales and, in some cases, distributors.

"Retailers are always looking for the next hot thing," said Pietri, explaining why he thinks ViDVD will work while Divx failed and WebTV has struggled. "This is a product that they can sell to consumers to get a wide range of content on demand through one inexpensive DVD player that will do a little bit more than the rest."