Stymied by high prices and lack of titles, DVD players are set to pick up in coming years.(digital video disk)(Industry Trend or Event)
11/16/98
Electronic News
Page 34(1)
COPYRIGHT 1998 Cahners Publishing Company Copyright 1998 Information Access Company. All rights reserved.
san jose-So much for the year of DVD.
Well, at least on the player side. It's mid-November and it appears manufacturers are not going to be shipping the number of units they thought they would this year. According to In-Stat, a market research firm in Scottsdale, Ariz., the DVD player market will generate approximately $380 million this year. While this is an impressive number for an emerging technology and a new consumer application, vendors are disappointed that the technology has not become airborne yet.
Some of the problems with DVD players have been well documented: Lack of movie titles, too high of a cost and more recently multiple platforms that have confused the consumer. But while the player market has not lived up to expectations, DVD-ROMs for the PC have taken off and are now far exceeding DVD players in units shipped and revenues. Now, DVD player chipmakers, box manufacturers and content providers are all looking at ways to make this market take off so it can start living up to its billing as the next generation in video playback.
According to Simon Dolan, VP of marketing for the consumer division at LSI Logic, DVD players may take off initially beginning in China where the market is already primed for a natural progression to DVD because of the huge installed base of video CD players. For the U.S. and other markets, the key is "the availability of titles and increasing the rental DVD movies," said Mr. Dolan. "Players have had a strong take- off, not a disappointment in any sense, but on the other hand people were looking for extraordinary numbers and that hasn't happened."
Although the take-off of the players has not lived up to expectations, they still have a fighting chance to overtake DVD-ROMs and replace the VCR in the near future. In-Stat forecasts this will be three to four years down the road, but it will eventually happen. That is good news for all parties involved, who have invested significant amounts of money to make sure this is the next generation video player of the future.
Why have DVD-ROMs been more successful so far? The main reason can be attributed to Microsoft and Intel who have laid down in their PC'99 specifications that all PCs shipped must have a DVD-ROM player in them. Well in order to get the vaunted Microsoft seal, PC OEMs are placing DVD-ROMs into computers. Also, PCs are quicker to adopt emerging technologies and the users are willing to take chances, where in the consumer market people are more hesitant to buy something that has yet to be proven and costs a lot.
"The PC market in general embraces new technology faster than the consumer market because the CE market has to generate more inertia and may take a few years to transition itself rather than the PC market which moves to new technologies every one to two years," said Nicos Syrimis, GM for the optical products division of Cirrus Logic. Mr. Syrimis said that most of the DVD content is focused on DVD players but PCs have the most DVDs so that means many people are watching movies on their PCs. In order to take this business away from the PC space, manufacturers are going to have to drive the cost of these players to $200 to $300, get titles out at the same time as VHS tapes and cut down on the confusion in the market.
Divx Nixed
Some of this confusion in the DVD player market centers on the lack of uniformity in the upcoming recordable space and more currently the playback space. With Digital Video Express (Divx) entering the game in the last year-and- a-half, consumers were given another choice in the market. Consumers with a Divx player can rent a DVD movie from a vendor for a certain price then view it for two days. After that the disc can be thrown away, because it becomes encrypted after the two-day viewing period, without having to return it to the store.
Divx sent a message to consumers that there was a choice; however, the message that was received was one of confusion, says Jonathan Cassell, analyst at Dataquest. The Divx platform scared some people away because the price was higher than that of other DVD players and because it was different from the other players out there. This confused consumers and people held off buying players fearing another Beta/VHS fiasco, he said. This may be cleared up though because "Divx does not have much of a future," Mr. Cassell said. "It may not be obvious yet but it will be."
For all the negatives that have been associated with Divx-the confusion and the high prices-the platform has brought some positives to the DVD market. Positives that may move the market along further than it could do without the advent of Divx.
For one, it has increased the amount of titles being developed for the plain vanilla DVD players to approximately 1,500, with that number increasing to 2,000 titles by the end of the year. It has also moved the major rental chain stores to DVD quicker than they might have gone. With the threat of Divx on the horizon and in stores such as Circuit City and The Good Guys, heavyweight rental chains, such as Hollywood Video and Blockbuster, have stepped up their commitment to DVD and most are supporting a majority of the titles that are available. Divx has also opened up potential alternatives to standard DVD players with the theory of not having to return movies to the movie store. It appears this may be a reality in the near future, taking the Divx model and applying it to open standard DVD players.
The recordable space has been even worse to confuse the issue. There are two to three factions claiming to have the better approaches in the recordable space. Each faction is going their own way, either DVD-RAM or DVD-RW. In the U.S., where people are looking to replace their VCR with a DVD, this is a big selling point for DVD. However because of the in-fighting, both DVD-RW and DVD-RAM have been pushed back from their original delivery date, Mr. Cassell said. This hurts the entire CE market, let alone the DVD market as a whole.
Ball Not Rolling
While 2,000 titles are projected by the end of the year, the number of titles is getting up there. But many observers believe it is not enough to get the ball rolling.
"The availability of these titles in the market at the same time that VHS titles are released is extremely important," said Patrick Henry, C-Cube Microsystems, senior director of the PC codec division. "Once this, and the retail price points come down, playback players will have some acceleration in the market but they won't replace VCRs because they can't record." Only when the much maligned recordable market rolls out is when VCRs will get replaced, he noted.
In the meantime, while these issues are being sorted out, most agree DVD-ROMs are going to be the winner along with VHS players who continually are dropping the prices on players. But whether DVD playback players make it in the long run, is still a matter of discussion.
|
