VCD in Europe. Ha Ha Ha, Can you say set top box? Price points are still too high. Bring on the Satellite/Cable guys....................
asiansources.com
Asian Sources Electronics
October 1997
VCD market dead in Western Europe
<Picture>VCD STANDALONE players are dead and gone in the European consumer market. Despite Philips' support via its CD-i format, sales for VCD hardwarein the EU were negligible throughout the product's short life-span and are now virtually non-existent.
There are many reasons for VCD's dismal failure in Europe -- most significant of which is software manufacturers' reluctance to get behind the product. VCD failed to take off even in Germany, where some 100 titles were available.
"Consumers didn't like the idea of using two discs to view a film, rather than one tape," said Nick Thomas, spokesman for Philips. "With some 10,000 titles available on VHS and a shortage of VCD titles, marketing VCD was always going to be a tough proposition."
In Europe, makers have declared it a lost cause in the consumer market -- although some vendors report stirrings of interest in Eastern Europe.
Philips, however, dismisses any suggestion of this area providing a market in the future, except perhaps in encyclopedias and training management applications, where the VCD can be used interactively. The one possible opportunity for the VCDs, Thomas said, is in computer applications. VCDs can be played in most CD-ROM drives if the right MPEG card is available.
VCD provides springboard for DVD players
Philips credits VCD with paving the way for other disc-based media such as DVD. The firm points out that much of the original R&D work that went into VCD, such as the technology for storing pictures on a disc, has been taken forward and improved to create DVD.
DVD extends the CD family with a format that offers tremendous data capability, superb picture quality and multi-channel digital sound.
VCD is also acknowledged as playing a role in gaining acceptance of DVD-ROM in the computer industry.
"Manufacturers looking to persuade the OEM computer business to fit DVD drives early will be using the availability of VCD software to support their argument," said Philip Gallagher, managing editor of DVD and Future CD newsletter.
"They will be pointing out the benefit of future-proofing their products with a DVD drive, stressing that VCD/DVD compatibility means that software titles are available for use in the short-term."
Backward compatibility is always an important feature in the success of any product, with consumers proving more willing to replace their hardware than their software. Their initial resistance to audio CD was largely based on an unwillingness to render their old LP records useless.
Manufacturers cite this argument as a reason for confidence in the success of DVD. CDs and VCDs can both be played on the new DVD players. However, the main DVD manufacturers acknowledge that it will be "some years" before this format makes any significant dent in the CD market.
Initially, sales are expected to be held back because the first players will offer replay only. Recordable versions are expected to appear on the European market within a year.
"The success of DVD, as with all other formats, is dependent on how much software is available," said one manufacturer. However, Warner, Universal and other major players have already made a commitment to the format, so there is good reason for optimism.
"With hardware selling for around $500 and discs for $20, DVD's will initially sell into the top end of the market. Eventually, as with all new products, prices will drop and the market will grow.
"The computer industry is always looking for more capacity, so DVD's success in this area is also almost guaranteed. However, it will be a while before VCD's role in this sector becomes something of the past," the source said.
STBs challenge VCD, DVD
The set-top box market, fueled by the growth of digital broadcast technologies and the increase in interactive services, will experience rapid growth into the next century according to "The World-wide Market for Set-Top Boxes" a new report by Intex Management Services (IMS). Cable delivery of movies, karaoke and other services is predicted to ultimately challenge home video players for market share.
Worldwide, the number of homes receiving cable and satellite programming is forecast to rise from 234 million households at the beginning of 1996 to 409 million by the end of 2001, when a further 17 million homes are forecast to be receiving digital terrestrial programming.
The great majority of these households will require a set-top box for reception of the broadcasts, and world-wide revenues from shipments of set-top boxes is forecast to rise from $4.52 billion in 1996 (total shipments of 27.5 million units), to $11.01 billion in 2001 (shipments of 48.0 million units).
Digital set-top boxes will take the lion's share of the rise in revenues -- jumping from 40.1 percent in 1996 to 88.1 percent in 2001. This shift is due to the switch from analog to digital broadcasts by satellite, cable, and later in the forecast period, terrestrial broadcasters, coupled with the introduction of interactive services such as video-on-demand, Internet access and home shopping, which will be accessed via the set-top box.
Western Europe and the Asia Pacific region will experience the greatest growth in set-top box revenues. Growth in the North American market, where cable TV penetration is already high, is expected to be slower, and growth will be largely dependent upon the rate of replacement of existing cable networks with the advanced interactive systems. |
