Walt Disney Co. is getting set to launch one of its most important home entertainment initiatives in years, as it seeks to protect its highly profitable but waning DVD business.

The Burbank-based media giant in October is planning to unveil its "BD-Live Network," which takes advantage of a second generation of Blu-ray video players and discs that few consumers have even heard about.

The players and discs not only feature the high definition video and audio of regular Blu-ray but are interactive and Web-capable hence the BD-Live name.

Underscoring the importance of the initiative to Disney: The network is getting a kick start Oct. 7 with the release of the 50th Anniversary edition of "Sleep ing Beauty," one of the company's all-time favorite animated tales. A month later the recent box office and critical hit "Wall-E" will be released in BD-Live format.

The Disney network plays off of the viewing habits of today's tweens and teen-agers, who often text message and talk on the phone with their friends all while watching a movie or TV show. A video game can be in the mix as well.

Here is how it works:

Parents must buy BD Live Blu-ray disc players, which can be hooked up to the Internet and allow movies to be played simultaneously in multiple homes. Then, once a movie gets going, kids can chat about the action using the player's remote control or even a laptop or smart phone all in real time.

Viewers also can record and send video images of themselves within the context of the movie, in what Disney calls "Movie Mail."

As if that weren't enough, viewers can play trivia games about the movie as they watch, and garner rewards points that they can cash in for online goodies.

Sound complicated?

Not according to the experts, though some believe there may be more fundamental problems. One big one is the limited pool of Blu-ray players.

"The problem is not that BD-Live is too complicated, it's that the number of Blu-ray players much less BD-Live capable players and BD-Live capable PCs in households today is infinitesimal," said Tom Adams, a Monterey-based home entertainment media analyst who sees the format taking five years to come to fruition.

BD Live-enabled Blu-ray players first hit the market this year, and so far are being manufactured only by Sony Corp., Panasonic, Samsung and Sharp. The players cost between $300 and $700, about 20 percent to 40 percent more than regular Blu-ray machines, though costs are expected to fall quickly.

However, the four manufacturers, while large, are only a fraction of the companies selling Blu-ray, the high definition video disc format that only last year beat out HD-DVD to become the new video standard replacing traditional DVDs.

Still, the studios see BD Live as a technology that offers the best chance of maintaining what has become their most important stream of revenue: DVD sales.

While domestic box office numbers seem impressive, nearly hitting $10 billion last year, that figure is far smaller than the $24 billion pulled by the studios from DVDs sales and rentals. But the DVD market is mature and sales are expected to be flat this year, even as Blu-ray movies top the $1 billion sales mark for the first time.

The problem is that while Blu-ray movies are superior to traditional DVD, the media world is heading online. And that's where BD Live comes in with its interactive, Web features that bridge the gap between traditional video and the online world.

Now, with its BD-Live Network, Disney could jump out ahead of most rival Hollywood studios in taking the biggest advantage of the technological advances made possible by interactive Blu-ray players.

Moreover, the network will allow Disney to eventually lead network users to various Disney or partner Web sites where they can purchase everything from apparel to music and other products that would be linked to the latest BD-Live offering. Disney has ideas to expand BD-Live to concert viewing and other live events.

"We are reinvigorating the home viewing experience and taking advantage of the enormous possibilities that meaningful connectivity with the Internet can bring," said Dave Hollis, senior vice president of Worldwide Product Management for Walt Disney Studios Home Entertainment. "Once they get a hold of one of our discs and put it in a player they'll understand BD-Live's capabilities."

Competing studios

Neither Hollis nor other Disney executives would disclose how much money the company has spent or expects to spend on the network nor how much revenue it might generate.

However, Adams said that ultimately Disney could see hundreds of millions of dollars of annual revenue through the network's ability to generate everything from disc to merchandise sales. "It may lose money in the early stages (but) it is sure to be a success," he said.

Of course, other studios are not standing still.

Sony Pictures Home Entertainment has released the film "21" with several BD-Live features, including interactive poker games. Of course, Sony has a particular interest in the format, given how it is one of the machine's manufacturers.

Lions Gate Inc. also has scheduled the release of two BD-Live features, "War" and "Saw IV," early next year. The discs will feature what the studio is calling MoLog, which is much like Disney's on-screen movie chat feature.

And for the 30th anniversary Blu-ray release of the film "Being There," Warner Bros. is adding 10 minutes of deleted scenes and never-before-seen alternate endings that can only be found on the BD-Live Blu-ray version.

James L. McQuivey, a media technology analyst for Forrester Research, said that if consumers adopt BD Live it would mean a new world for marketing and monitoring consumer behavior.

"This is the first time in history that you will able to track the viewers' every move, whether they're playing games, chatting and sending video images," said McQuivey. "The studio will be able to monitor exactly what they're doing and what is most popular."

But, of course, there are no guarantees that consumers will even want BD-Live players or discs. For now, retailers such as Best Buy have their hands full just pushing consumers to move from regular DVD players to Blu-ray. The pitch at big box retailers is currently about the basics, such as increased resolution and better sound of Blu-ray.

That means that though Disney may be aiming its BD-Live Network at female tweens and teen-agers to start, the most likely movers of the devices may be older teen-age boys and young males who addictively play video games on their PS3 BD Live-capable players.

"The major hurdle that Disney and the other major Hollywood studios face when it comes to BD Live technology is that the consumer is simply not interested enough about Blu-ray, much less BD-Live technology, to care right now," McQuivey said. "I think that you have to go after the gamers right now and the families will come later."

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