Closed- captioning company adds DVD subtitling to services

From: Pittsburgh Business Times, PA - Jul 26, 2003

Tim Schooley

DVDs and their growing popularity are creating a clear picture of a profitable new market for VITAC Corp.

Southpointe-based VITAC, which for years has seen the bulk of its business come from its service of providing closed-captioning services for broadcast TV programs, now finds itself staring at a growing market for DVD subtitling.

"There is great potential. We're going to do everything we can to capitalize on the marketplace," said Pat Prozzi, president of the 17-year-old company.

"We're shooting for a 20 to 25 percent share in the next 18 months."

That's ambitious considering that currently VITAC's share of the market for offering subtitling for DVDs is just a pixel-puny 1 percent.

Yet the company, a division of Boston-based WordWave Inc., is preparing for such growth.

In May, VITAC launched a DVD subtitling division to pursue a new source of business with the kind of demand that could be as deep as the film catalogs of the major studios and as wide as a world of different languages into which those films need to be translated.

To make the most of such new opportunities, VITAC also launched a new re-engineering program last week. Through it, the company is shifting the methods its employees use to add subtitles and closed-captioning, targeting staff expertise to specialize on more specific tasks to improve speed and efficiency.

With the expectation of new demand, Ms. Prozzi said the company plans to hire more than 20 people by the end of the summer. While she estimates DVD growth will make up only 15 to 20 percent of VITAC's business next year, it still represents a strong segment of the company's growth, which she expects to see jump by 20 percent between this year and next.

Before VITAC had even launched its DVD subtitling division, the company already experienced tenfold growth this year providing English subtitles for DVDs. Ms. Prozzi also reports that the company is in negotiations with five major studios to establish "substantial" contracts for VITAC to provide foreign language subtitles for their releases.

"All of our industry sources say there will be close to 2,000 releases this year and approximately 200 of those are first run," said Ms. Prozzi. "The studios are just gorging on their libraries right now."

For good reason.

DVDs have recently eclipsed VHS videotapes -- a technically more limited analogue format that can't offer multiple languages and subtitles -- as the most popular video format.

Marcy Magiera, editor of the trade publication Video Business, noted that all sales of DVD, for both rental use and consumer sales, have seen double-digit increases over last year.

While DVD sales to the home market overtook VHS last year, rentals of DVDs surpassed VHS rentals this year.

According to Video Business, consumers spent a record $10.2 billion to rent and buy DVDs during the first half of 2003.

Consumers spent $4.8 billion buying DVDs, according to Video Business -- more than four times the $1.05 billion spent on VHS copies of movies during that same period.

To meet the demand, the movie studios, which have long issued newly released films on DVD, are delving into the thousands of films of the past for re-release in DVD versions, often as collector's editions with special packaging.

Ms. Magiera noted that the movie studios often don't even release deep catalog titles on VHS anymore, focusing solely on DVD.

More so, DVD sales of films often can represent a movie's most lucrative opportunity.

"Certainly, if you look at the top money makers on DVD, it's not unusual for films to generate more consumer spending on DVDs than they do in the theaters," said Ms. Magiera.

All of which represents a highly visible opportunity to help serve a business of communicating with film audiences -- a much larger one than the hearing-impaired TV viewers that have been VITAC's main focus until recently. VITAC's potential market of the hard of hearing is about 28 million people, estimated Ms. Prozzi. Film audiences are far larger than that.

"That's all thanks to the digital age," said Ms. Prozzi of the new market that DVD technology has opened for VITAC.

Ms. Prozzi points out, however, that such markets for VITAC aren't necessarily mutually exclusive.

Baby boomers who are deafer than they want to admit are using such tools as DVD subtitles, just as patrons of bars and clubs who are hearing-impaired, due to throbbing dance music, will watch TV with closed-captioning.

"When we say deaf and hard of hearing, with the graying of America, the people who don't consider themselves hard of hearing, but turn up the volume, is a growing market," she said.

But with new subtitling, VITAC is working to broaden its reach to serve studios with subtitles offered in as many as 41 different languages. So far, said Ms. Prozzi, VITAC has developed a network of translators working both in the United States and abroad to provide subtitles in languages as diverse as Farsi and Portuguese.

The company, which also has a Los Angeles office, has established about four independent contractors for each language it provides subtitles.

Despite all the growth potential, Ms. Prozzi acknowledged it's a business in which competition has tripled in recent years. Also, she said VITAC fully understands that the kinds of opportunity brought on by the new technology of DVD could also be sideswiped by other new technologies that can make it easier and faster to provide translation in some other way.

For VITAC, the most immediate threat would appear to come from recent advances in voice-recognition technology.

"We're watching voice recognition very, very carefully," said Ms. Prozzi.

Yet she said that voice-recognition software, which in concept could translate film dialogue automatically, is still years away from being effective enough for subtitling films.

For one, such technology still can't translate accurately the way human staff can, she argued, and subtitling often requires people to make decisions when trying to match translated dialogue to pictures.

That human element at VITAC is facing not only new demand, but new challenges for the new technology.

Dina Smith, VITAC's director of off-line captioning, which includes DVD, has seen her department's demand to provide subtitles for such films as "Gangs of New York" and "Sweet Home Alabama" increase to nearly 10 each month.

She notes that providing subtitles for DVDs requires a different style and working with different technology. She added that it can also take longer to provide subtitles for DVD than developing closed captioning.

But Ms. Smith also notes as a point of pride that the name VITAC also is now being printed on the boxes of DVDs throughout the country along with the rest of the credits.

"With DVD, you have more of an exposure with the credit on the box," she said, noting the extra marketing kick that comes with such credits. "It just broadens your opportunities."

MR. SCHOOLEY may be contacted at tschooley@bizjournals.com.

© 2003 American City Business Journals Inc