Sony PlayStation2 seen to fuel Japan DVD market
news.cnet.com
By Reuters
Special to CNET News.com
February 22, 2000, 10:30 a.m. PT
TOKYO--Sony's launch of its new PlayStation2 video game console, the world's
first with a DVD player, should give Japan's struggling DVD market a chance to
finally take off, analysts said.
Japan's DVD (digital versatile disc) market has long suffered from weak turnover in both
hardware and software, a vicious cycle as poor sales in one undermine sales in the other.
"PlayStation2 will definitely open a new door for the DVD market," said Kazuharu Miura,
analyst at Daiwa Institute of Research. "People will become more familiar with DVDs, and
most importantly, we should see a wider range of software hitting the market."
Japanese consumers, usually quick to pick up the latest new gadgets, generally have
opted for traditional VHS video players over DVDs. Although DVDs boast superior audio
and visual quality to conventional VHS or CDs, and offer higher data storage capacity,
most Japanese have balked at the price for both the players and the discs themselves.
Sony could change that.
Despite being primarily a console for playing video games, PlayStation2 can also be used
as a conventional DVD player, playing movies or audio CDs.
Analysts reckon some buyers will be just as interested in using the console as a DVD
player as for the games, especially since its 39,800 yen ($357) price tag is about half the
price of most DVD players.
This means that from March 4, when PlayStation2 is launched in Japanese stores, the
country's DVD market will have an entirely new swathe of consumers.
Motoharu Sone, an analyst at Universal Securities, predicts
sales of DVD players should double over the next year.
"Domestic production capacity of DVD players should be
around 12 million for calendar year 2000, nearly double that
of 1999," he said. "The launch of PlayStation2 should play
a big part of that."
Analysts say the progression makes sense given the
inherent advantages of DVDs, from the high-quality
graphics in the format to their conveniently slim size.
But the current limited range of DVD software and high
prices for videos will likely constrain growth, particularly
since DVDs are not yet recordable, which means VHS
players will continue to play a key role in most modern living rooms for some time.
DVD videos normally cost around 8,000 yen ($70) per disc in Japan, while the selection of
movies has been limited. In other Asian countries and in the United States, the price is
generally far lower and the selection much wider.
The popularity of rental VHS videos has also marginalized DVDs in Japan, although most
industry experts say consumers could just as easily rent DVDs if players such as
PlayStation2 become an affordable alternative and DVD movie titles expand.
They cite the explosion of audio CDs over vinyl records and audio tapes in the late 1980s
and early 1990s as one recent model of how DVDs could eventually take shape.
In Japan alone, PlayStation2 is expected to sell nearly 22 million units over the next five
years.
The industry suffered a setback late last year when DVD makers in Japan were forced to
postpone the launch of new audio-visual DVD players after a European hacker posted
details on the Web on how to override the copyright protection of DVDs.
A marketing manager for Sony Computer Entertainment said the company expects the
launch of PlayStation2 to prompt the release of more software.
Although analysts expect it may take 15 years for the DVD market to grow to critical mass
and drive down prices of DVD videos to those of current VHS videos, PlayStation2 is seen
familiarizing consumers with the merits of DVD technology.
"We are expecting a wider range of DVD software to be released after PlayStation2...not
only games but also movie titles," the marketing manager said. "We don't have specific
targets, but such a trend should give consumers incentive to choose DVD players in
coming years." |
