"people will think of DVDs as a replacement for their CD players"...
Industry Outlook: INFORMATION: FOCUS: DIGITAL VIDEODISKS
MIXED SIGNALS ON DVDs
By Sebastian Moffett in Tokyo
01/12/98
Business Week
Page 89
(Copyright 1998 McGraw-Hill, Inc.)
Japan's consumer-electronics giants think digital videodisks (DVDs) will be a smash hit. They are like audio CDs but store entire movies. Their sound and graphics are tops for ordinary TV. A version of DVD designed for computer storage has begun to replace CD-ROM drives on high-end PCs.
The trouble is, shoppers aren't snapping up DVD players. The Electronics Industry Association of Japan predicted sales of 600,000 units in 1997. But only half that many were sold, and U.S. sales are also slower than expected.
Does anybody really need a DVD ? Some consumer-electronics analysts in Japan are skeptical. ''The only good point is that sound and picture quality is better [than on VHS]'', says Masami Fujino, a senior analyst at the Tokyo office of Jardine Fleming Securities Ltd.
In fact, the technology has three marks against it: First of all, the players don't record. So videophiles can't swap out their current VCRs. Second, the selection of films is limited. Movie studios say there are 500 titles out. But not all new films are released on DVD . Third, there's a problem with standards. In the U.S., an alliance that includes Circuit City Stores, Matsushita Electric Industrial, Thomson, and several film studios is pushing a rival DVD format called Divx, which stands for digital video express. These disks, which could go on sale next summer, will be only partly compatible with DVD .
Toshiba Corp., DVDs' biggest promoter, says it's not worried. Koji Hase, head of Toshiba's DVD division, notes that it took audio CDs three years to reach the sales level that DVD achieved in less than a year. Compared with past consumer-electronics launches, he says, '' DVD sales are very promising.''
Hase blames the DVD problems on weak marketing. Now, manufacturers are planning a TV ad blitz. And both Toshiba and Matsushita--owner of the Panasonic brand--will soon place DVD products in Japan's largest network of video and CD rental stores. Eventually, Hase says, ordinary DVDs could go rental in the U.S. as well.
Sooner or later, analysts say, DVDs will catch on. ''When the price comes down far enough,'' says Reinier Dobbelman, an analyst at SBC Warburg Dillon Read Inc. in Tokyo, ''people will think of DVDs as a replacement for their CD players.''
But didn't I just buy one of those? |
