Market Surveys of DVD and CDV Authoring Tools
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Market Surveys of DVD and CDV Authoring Tools
Background
The market for DVD and CDV is heavily dependent on the authoring tools available. This can be broken down into two distinct areas: ease of use, and quality of finished product. The first is largely a question of time spent authoring titles. According to DataQuest: "Profitability in the content business is defined in part by how long it takes the product to get to market, or how many person-hours are needed to develop a piece of content." Obviously, the easier the tool is to use, the faster the authoring process is which translates directly into fewer dollars spent on production.
The quality issue is consumer driven. Consumers expect a high quality product for a marginal price. So far, compression technology has been too expensive to provide the needed quality for an acceptable price. It is projected that this will change now that the standards have been agreed on and MPEG1 and MPEG2 are beginning to mature.
Surveys show that most people interested in interactive media, including DVD, are two parent, two children families with an annual income of $75k or more. Fewer than 1% were new computer users. About 55% considered themselves to be computer hobbyists.
Sales Volumes
The following is a chart of actual and projected sales of computer based authoring tools in thousands of units. This data is from DataQuest 1995.
ÿ
Year Units
1992 160
1993 226
1994 409
1995 541
1996 778
1997 924
Price Pointsÿ
The prices for low-end authoring software include Alligient SuperCard ($300), Adobe Photoshop ($695), MacroMedia Director ($1200), and Authorware Pro ($2100). Mid-range solutions for authoring software are virtually non-existent. High-end authoring software include offerings such as Softimage. ÿ
In the digital video venue, the low end is represented by PC/Mac based products such as Video Spigot and the Avid VideoShop ($395). Most run in the $600 to $1200 range. The low-mid-range is represented by Fast Electronics PC/Mac boards ($4000 to $12,000), NewTek¡s Video Toaster ($7,995), Data Translations¡s Vincent ($10,995) and Avid Media Suite Pro ($9,995) and Media Composer ($14,995). In the mid-to-high-end there is turnkey system ($40,000), Matrox¡s Personal Producer (starting at $26,000) and Fast¡s Studio Quad and Video Quad ($25,000; $35,000). High-end solutions are still available from Sony, Panasonic, Grass Valley Group (Saber: $50,000) and Scitex (Video Cube, starts at $42,500; Turbo Cube starts at $56,000).
ÿThe following is from the Piper Jaffray Research on digital media authoring tools, dated February 1995.
Facility Number of Users Estimated Size of Market (Millions of Dollars) Estimated Annual Expenditures Per User
Audio Only ÿ ÿ ÿ
Pro/Project Studios 40,000 1,150 $28,750
Graphics/Image Synthesis ÿ ÿ ÿ
Industrial Design 35,000 900 $25,750
Entertainment* ÿ 1,000 ÿ
Both Audio/Video ÿ ÿ ÿ
Radio and TV Studios 35,000 1,150 $32,857
Film/Video Post-production Studio 4,500 600 $133,333
In-house Corporate Studios 120,000 1,500 $13,000
Educational Media Facilities 25,000 80 $3,200
Multimedia Authoring 200,000 750 $3,750
Independent Post Professional 250,000 600 $2,400
ÿ ÿ ÿ ÿ
Total 709,000 7,730 $243,040
*The entertainment graphic segment does not include number of users and expenditures per user due to recent growth in the segment.
Projections
Industry
In its March 25, 1996 issue, DataQuest dubbed DVD as "The Big News" at the CES and reported on "the astonishingly fast introduction of digital video disc (DVD) players. DQ also noted that they "expect the technology to achieve rapid penetration into both living rooms and home computers, as well as into the business space." The commonality of format between TV and PC is considered to be an important feature that could finally connect the two. Examples of this marriage include complex, multi-player games that run on the computer, but display on the TV, and capture of news bites that can be shipped to the computer for inclusion in documents.
In an earlier report, DataQuest projected that DVD will not supplant the VCR until WORM or WMRM technology is available for DVD. It¡s demand will probably be similar to or somewhat better than that seen for LD technology. Also, acceptance is higher in the Pacific Rim (notably Japan) and Asian countries than it is in North America.
Speed and price are also a consideration. DVD is comparatively slow and units are currently priced between $499 and $800, considerably more expensive than VCRs. DVDs have not yet come down in price far enough to make media cost competitive with video tape. ÿ Despite these drawbacks, The Gartner Group, Inc. forecast that "DVD will dramatically impact several markets with a net revenue infusion on par with the impact felt from the PC, VCR and CD/CD-ROM." They give optimistic forecasts of availability of titles, projecting a .9 probability of full-length movies appearing in the 4th quarter of 1996 and PC titles based on DVD having a .8 probability of appearing by the second half of 1997.
DQ gives a more conservative forecast that DVD titles will start showing up in mid-1999 with a push for a big season for DVD for Christmas 1999. They foresee a single DVD server at the TV set with jacks on the back like a stereo component. With unified format, the server will make add on products, such as the Sony Playstation, less expensive than a stand-alone unit that incorporates its own DVD player. This will spur consumption of DVD based games. The March 4, 1996 DQ forecast states: "Further, a movie and a video game could be shipped on the same DVD, allowing finally for true synergies of brand-name licensing and game play." The following table is from the same DQ forecast.
ÿ Preliminary Worldwide DVD Shipment Forecast (Thousands of Units)
ÿ 1995 1996 1997 1998 1999 2000
DVD for Audio Players -
-
2
400
435
550
DVD for Television -
60
750
2,875
6,775
9,625
DVD for PCs -
-
850
2,700
6,250
9,108
Total DVD -
60
1,602
5,975
13,460
19,283
Other PC Optical (CD-ROM, CD-R, CD-E and HCCD) 40,000
45,400
48,150
53,650
55,000
55,700
Total WW Optical Shipments 40,000
45,460
49,752
59,625
68,460
74,983
Authoring Tools Specifically
With the expectation of greater demand for content, the need for authoring tools also increases. The main considerations in the choice of tools will be speed of use and image quality. It is expected that the film industry will increasingly use high-end digital solutions ($500K) and that the proliferation of special interest programs will spur the use of digital authoring tools in a mid-range price category ($50K to $100K). Low-end sales (around $5K) would be expected to go to industrial, educational, prosumer, and hobbyist markets.
Digital Video authoring tools are expected to drive the cost of editing down from the $500per hour range to $200-$300 per hour. It is also expected that development time will decrease due to improved productivity offered by digital authoring tools.
ÿ The next few years are expected to be a "shakeout" of digital authoring tools. Small companies are being supplanted by large companies such as Microsoft, Adobe, Sony and Autodesk. New small companies are also sprouting up with good products with better solutions than the existing ones. Sony¡s Destiny is expected to make a strong showing as is Microsoft¡s Digital Studio.
ÿ The Graphics/ Image Synethesis market is currently the fastest growing segment in the industry. It is anticipated that this segment will reach $1 to $2 billion. Sales to this market are currently growing 30% to 40% annually.
ÿ In a February 1995 report, Piper Jaffray listed Wavefront, Alias, Autodesk, and Softimage as the main players in the image synthesis arena. With the purchase of Softimage by Microsoft, the plans to make Softimage an all-in-one solution, and the commitment of Sega to the Softimage software, Piper Jaffray considers Softimage to be the main, and perhaps unbeatable, contender in this market. Softimage has 45% to 55% of the market share and is expected to gain a larger share with the list price reduction during CES.
ÿ Multimedia authoring is a segment that hasn¡t yet been pinned down. This segment has already embraced optical media and some start-up companies are entering the field based on CD ROM multimedia publishing and authoring. With a user base as large as 250,000, this is expected to offer the greatest upside potential as DVD authoring tools based on the new standards become available.
Digital audio authoring is already holding its own in the market. Penetration of the Digital Audio Workstation is currently at 26% and is projected to reach 57% by 1999.
ÿ The following table shows the 1994 DQ forecasts for demand for compression devices in the consumer market.
Year Thousands of Units Total Market
1993 47
550
1994 458
1,833
1995 2,243
6,434
1996 5,589
13,826
1997 9,054
23,550
When will the DVD market take off?
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