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Ventura County Star

By Allison Bruce, Ventura County Star, Calif.

Dec. 24--Infomercials are infiltrating DVDs.

But in contrast to the "yell-and-sell" technique found on late-night television, the point of these ads is to get the DVD viewer to come to them.

It's the difference between having someone knock on your door selling a vacuum cleaner and driving to the store to buy a vacuum, said Reno R. Rolle, CEO of Studio Store Direct.

The Ventura company is starting to sign up partners to put video catalogs of items on the menu of the latest blockbuster or independently distributed DVD release.

The concept is simple: Take merchandise that would appeal to the viewers of a particular movie or television series and pitch that merchandise from a virtual "store" that DVD viewers can access from the menu.

The store would have video presentation of the items, perhaps by one of the actors or characters. People could call in and order merchandise or go online to buy.

Studio Store Direct creates the content, works with the studio to identify products and hands over the programming to be included on the disc. Then the company handles calls and orders, processes the credit cards and ships out the products.

The idea takes advantage of a hot revenue stream for movie studios, Rolle said.

The Walt Disney Co., for example, brought in $8.7 billion in studio entertainment in 2004, but the company earned an additional $2.5 billion from related merchandise.

The Electronic Retailing Association reports that direct response, which includes infomercials, live shopping, radio and online retailing, grew by 8 percent in 2004, bringing in more than $296 billion. Of that, $156 billion was in direct-response television, said Molly Alton Mullins, association spokeswoman.

The association's annual survey found people most commonly bought music through TV infomercials, followed by kitchen utensils and cookware, cosmetics, skin care and hair care products, exercise equipment and audio/video equipment.

The average amount spent on infomercial shopping was $98.

Traditional infomercials broadcast not knowing who they will reach, paying expensive fees to do so. Shopping channels have the benefit of people tuning in who may want to buy but cannot guarantee that the person watching at this moment wants what's on the screen.

Studio Store Direct targets ads to people inclined to buy a movie by the same director or chess set depicting the movie's fantasy world. The DVD viewer chooses when to enter the virtual store and watch the presentation.

"With Studio Store Direct, we really know exactly who's watching," Rolle said. "If someone buys Star Wars, chances are they are a Star Wars fan. We can customize our offering." There is the risk that someone buying or renting a DVD won't want shopping with their entertainment, but new approaches are needed in the direct-response industry, said Tim Hawthorne, founder of Hawthorne Direct Inc. in Iowa and one of the pioneers in infomercials. "People have to experiment," he said. "Nobody knows what will work." He said Studio Store Direct is taking an interesting approach to addressing the problem of on-demand viewing.

Nobody seeks out an infomercial; people stumble upon them while watching television, he said. Digital video recorders and on-demand programming get around that.

Marketers will have to figure out ways to entice people to watch advertising on their iPods, cell phones or computers. Short teasers probably will refer people to longer ads with more information. Those who deal in infomercials have experience with keeping people interested in longer ads, Hawthorne said.

"Our golden era is about to arrive," he said.

Studio Store Direct has applied for a patent, but Rolle said the main selling point is the company's expertise in direct-response television.

Operators familiar with direct-response television sales know how to capture an order when a call comes in and up-sell and offer additional related merchandise, Rolle said.

After operating expenses, profits are split evenly between Studio Store Direct and the partner company. "There's no out-of-pocket expense to the studios at all," Rolle said.

One of the first partners is Ventura Distribution Inc., a privately held, independent DVD distributor based in Thousand Oaks. Another partner is National Lampoon, a holding company that owns the comedy franchise, where Rolle founded the home entertainment division. The companies can use the virtual store to promote their other titles or sell merchandise.

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