Will It Really Take That Long?

According to research just released by Strategy Analytics, manufacturers will increase worldwide shipments of set-top DVD players by 300% this year, while retail revenues across the three major regions (US, Europe, Japan) will rise by 220%, to $7 billion. SA says that this year's market is being driven by the launch of DVD-based games consoles, and that DVD recorders will fuel the momentum from 2001 on.

The report, called the "World DVD Planning Report," also concludes that DVD will become the standard home video format within five years, largely replacing VHS cassettes. SA predicts that DVD video disc shipments this year will reach nearly 400 million units, and will soar to 2.3 billion (worth $44 billion) by 2005. Including other DVD formats (games, ROM, audio), shipments will reach 3.7 billion by 2005 (worth nearly $100 billion).

The report indicates that rising hardware sales are being offset by falling prices, with Chinese-sourced players in particular having a noticeable impact. SA's David Mercer states that "the content industry will ultimately benefit the most from DVD's success. Manufacturers will continue to suffer from falling prices and declining margins, but DVD's superiority will tempt many consumers to buy more video and to replace their existing VHS collections."

According to SA, overall consumer sales of DVD devices (set-top, PC, other) are expected to reach 46 million units this year, including 21 million in the US and 17 million in Europe. Basic DVD players will account for two-thirds of set-top shipments in 2000, the remainder being DVD games consoles. The US leads the way, with expected sales of 9.0 million players, followed by Europe with 4.9 million. Finally, the report predicts that, by the end of 2000, 14% of US and 5% of European homes will own at least one TV-based DVD player. In addition, many homes are acquiring DVD-capable PCs, so that overall household access to DVD will be 25% in the US and 14% in Europe.