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To: Johnny Canuck who wrote (35760)	1/4/2002 3:41:08 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69438

Thursday January 3, 4:14 pm Eastern Time FEATURE-Hot-selling DVD players dim VCR's once bright star By Ellis Mnyandu NEW YORK, Jan 3 (Reuters) - By industry accounts, DVD players closed 2001 as the hottest-selling holiday item and spelled the death of the once popular videocassette recorder. Last year marked the biggest price decline for DVD players since the gadgets debuted in 1997 for about $500. And 2002 may prove to be another bumper year despite worries about the U.S. economy, analysts said. ADVERTISEMENT The appeal of DVD players is quickly eroding the grip VCRs once had on the home entertainment front. The decline of video tape will not be missed by many consumers, who find DVD's compatibility on computers and gaming consoles more versatile. ``I really don't feel sorry for video tapes,'' said college student Albert Shew as he browsed the Virgin Megastore in New York's busy Times Square. ``They've got to go as DVDs are much better. They've got excellent quality, features and are getting cheaper.'' The surging interest in digital video disc technology, or DVD, has been fueled by retailers and movie studios, which make more money on DVDs than videos as they carry higher margins. Retailers like Wal-Mart Stores Inc. (NYSE:WMT - news), Best Buy Co. Inc. (NYSE:BBY - news), Circuit City Stores Inc. (NYSE:CC - news) and movie rental chain Blockbuster Inc. (NYSE:BBI - news) are expected to have cashed in big from their offers of DVD players, many priced below $100. The DVDs also have benefited from a desire by many Americans to stay closer to home since the Sept. 11 attacks on New York and Washington. HOUSEHOLDS GO DVD The penetration of all DVD players, including those on personal computers, is expected to have reached about 36 percent of U.S households by at the end of 2001, according to Tom Adams, president and senior analyst at entertainment research and consulting firm Adams Media Research. For 2002, Adams estimates the DVD prevalence at U.S. homes to have climbed to 54.5 percent. ``The really more profound thing is not so much the penetration, but the fact that half of revenues from sales of movies to consumers in 2001 came from DVDs,'' he said. In 2000, DVDs accounted for about 32 percent of home movie sales in the United States, Adams said. As for the price, the average cost of a DVD player in 2001 dropped to $158.88 from $202 a year earlier, according to estimates from eBrain Market Research. For 2002, eBrain forecasts the average price for a DVD player to fall to $146.49, with the cost likely to drop by about $10 dollars through to 2005. But with the latest sales, the price seems to be dropping faster than anticipated. Analysts attribute much of the price decline to a surge in DVD penetration, which in turn is helping lower the unit costs for manufacturers. GOING, GOING, GONE In one big show of how the DVD craze is taking root, Blockbuster has planned to rid itself of about 25 percent of its tape library to make room for the fast-growing DVD discs. Karen Raskopf, a spokeswoman for Dallas-based Blockbuster said the rental chain had even ventured out to sell DVD players priced at $99 over the holidays, going head-to-head with other low-priced offers from big electronics retailers. ``Our sales of DVD players were beyond our expectations,'' Raskopf told Reuters. She said Blockbuster, a subsidiary of media firm Viacom Inc. (NYSE:VIA - news), may even consider selling more home entertainment products led by the lure of DVDs. The company, the largest movie rental chain with nearly 7,900 stores worldwide, has also been giving away free Philips DVD players to those who buy a $199 DVD rental card. Currently, DVDs account for about 30 percent of rentals at Blockbuster, with the rest still coming from VHS tapes. But by 2003, the chain expects DVDs to account for half of rentals. The shiny discs are also fast becoming a big marketing tool for retailers and movie studios alike, thus helping sales of the hardware. For example, a two-disc commemorative DVD set for Pearl Harbor from Walt Disney Co.'s (NYSE:DIS - news) Touchstone Pictures carries $3-off coupons for other DVD movies from the studio, and an offer for a replica watch of the era. Not everyone hopes tapes just die a sudden death. Ruth Tavel said she has a large library of classic tapes that she plans to keep. ``If I buy DVDs, the technology is just going to keep getting changed. Who knows, the DVDs may one day go the way of the vinyl records. I like my tapes,'' she said. Email this