DVD holiday sales hot

Disc future looking up

If sales are any indicator, DVD players filled many stockings this past Christmas, signaling that the future of the digital homevideo format will be a merry one.

Nearly 4 million DVD players were sold in 1999, creating $1 billion in sales for the homevid market, according to figures released by trade groups DVD Entertainment Group (formerly DVD Video Group) and the Consumer Electronics Assn. One million players were sold in the fourth quarter alone, more than were sold in all of 1998.

The groups released the numbers Thursday at the Intl. Consumer Electronics Show (CES) in Las Vegas.

“It was a huge item at Christmas,” said Steve Nickerson, formerly veep of marketing at Toshiba, now veep of DVD marketing at Warner Home Video. “Some retailers thought they were overstocked but ended up selling out.”

Growing popularity

Overall, 5.4 million DVD players and 130 million DVD titles have made their way into consumers’ homes since the format launched nationally in late 1997, fueled mostly by lower prices, the industry’s adoption of DVD as the digital video format over Divx, and more popular titles hitting the market, including “Titanic” and “The Matrix.”

The numbers are better than expected (analysts hoped for 4.5 million), making DVD the most successful consumer electronics product launch ever, and a savior for the homevideo biz, which critics once said was running out of steam on VHS.

“DVD sales exploded during the holiday season, with stores reporting triple-digit increases in both hardware and software,” said Joe Pagano, VP of merchandising for Best Buy.

‘Mainstream acceptance’

Hardware shipments could hit 8 million players in 2000, reaching an installed base of 10% of U.S. households, the Consumer Electronics Assn. predicts. VCR penetration is 90%.

The improvement in sales were much-attributed to a drop in DVD player prices. In November, the average price was $298, down 30% from $428, the average price the year before, according to Intelect ASW. Even less-expensive players are expected to hit the market.

“With over five million players in consumer homes, DVD has clearly reached mainstream acceptance,” said Emiel N. Petrone, chairman of the DVD Entertainment Group and executive VP, worldwide, for Philips Entertainment Group.

Recordable DVD players, expected to bow in 2001, should overcome consumers’ final objection and boost sales even further, much like DVD-playing devices such as Sony’s PlayStation 2, computer DVD-Roms and DVD-based camcorders have.

Hardware boosts software

With hardware sales naturally come software sales, and several blockbusters in theaters also turned into DVD’s first 1 million-unit sellers in 1999 — Warner Bros.’ “The Matrix,” DreamWorks’ “Saving Private Ryan,” New Line’s “Austin Powers: The Spy Who Shagged Me” and Universal’s “The Mummy.” In August, Par’s “Titanic” became the first DVD to break the mark.

Increasing the number of family titles on the format, Disney in 1999 finally agreed to distribute its animated classics on DVD after watching the discs make up 25% of its overall homevid sales. Although late to the game, Disney still sold 4 million units of its animated vids on DVD.

In fact, the DVD Entertainment Group estimates that DVD brought in more than $2 billion in revenues to Hollywood studios and music labels in 1999, through the 100 million discs that were shipped during the year as new buyers built libraries. Warner Home Video controls 30% of the DVD software market.

In the fourth quarter alone, almost 50 million DVD movies and music videos shipped to retail, the same number that shipped during the first nine months of 1999, a 400% surge over the same period in 1998.

Big year expected

At least 200 million DVD movies and musicvideos are expected to ship in 2000, representing $4 billion in revenue for the studios and music labels, half the total revenue generated from VHS sell-through.

With all the major movie studios and music labels supporting the DVD-Video format, there are more than 5,000 titles now available. The DVD Entertainment Group, which is now trying to promote DVD-Audio, predicts that number to swell to more than 8,500 next year.

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