Arnold In Divx Hunt

NEW YORK-Circuit City Stores is in the final stages of a search for an ad agency to introduce a new technology that could revolutionize the home video rental market.
Sources pegged spending on the account at upward of $50 million. One source said the budget could reach as high as $100 million.
Four shops are scheduled to make final presentations to the client today. They are Arnold Communications in Boston and Bozell Worldwide, Kirshenbaum Bond & Partners and Angotti, Thomas, Hedge, all in New York, according to consultant Steve Liebmann of S. Liebmann & Associates, New York.
The finalists were selected following an evaluation of various other agencies, Liebmann said.
In a letter dated Oct. 16 to Circuit City chairman and chief executive officer Richard Sharp, Liebmann said the contenders “will each make two-hour presentations” at the company’s headquarters in Richmond, Va.
The new technology, called Digital Video Express or Divx, puts movies on digital disks that have a built-in pay-per-view system. Consumers can check out a Divx movie at a video store for about $5. A two-day viewing period begins when the disk is first played. After that, the disk will not play again unless the customer pays for another two-day period.
The Divx player has a built-in modem that contacts the video store, which can unscramble the disk for further viewing.
Consumers get higher quality images with Divx than they do with rentals or pay-per-view, according to the client.
Divx has been scorned by critics, including electronics manufacturers, environmentalists and privacy advocates. Circuit City has countered the criticism, saying it originates from competitors who are threatened by the product’s potential success.
Industry reports said the client invested $30 million over the past three years developing the new product, which is the result of a partnership between Circuit City and a Hollywood, Calif., law firm.
Circuit City’s total media spending was $390 million in 1996, according to Competitive Media Reporting.

DeVito/Verdi here handles some creative duties for the company.

The letter lists the agencies batting order, leading off at 7 a.m. with Bozell’s team, led by managing partner Warren Kornblum. Bozell will be followed by Arnold and its president Peter Hanley, then Kirshenbaum and co-chairman Jon Bond. The presentations wrap up with Angotti’s group, led by president Barrie Hedge. Agency executives referred calls to the client.