DVD Players Rule Retail

DVD, the most successful consumer electronics format ever, shows no signs of slowing down. Almost 11 million DVD players were shipped to dealers through the end of November, according to recent statistics from the Consumer Electronics Association.

Market penetration for DVD players is approaching 30% only four years after the format debuted, and may reach 50% before the end of next year, if current trends continue. There is no reason to believe they won't, as prices for basic players have dropped below $100 just in time for the winter holidays. Chinese-made DVD machines from companies such as Apex Digital, Inc. and Mintek Digital, Inc. can now be found as low as $70, making them very attractive gift purchases. Affordable DVD promises to brighten the holidays for electronics retailers. Thomson Multimedia's Dave Arland puts it this way: "If ever there was a DVD Christmas, this is it."

Apex Digital now has a 13% share of the US DVD market, according to research firm NPD Intelect. Sony still dominates with a 22% share, but doesn't make machines for the low end of the market. Apex products are sold in "big box" chains such as Circuit City, Best Buy, Wal-Mart, and Kmart.

Entry-level DVD players are now cheaper than most videocassette recorders, whose prices have reached an all-time low. (Four-head hi-fi stereo VCRs can now be found at mass-market retailers for $89, or less—basic models for as little as $50.) Equipment in this price range appeals to folks who want to try the technology without making a big investment. The public's big rush to the new format has been boosted by the movie industry, which now has approximately 12,000 titles available on DVD.

The DVD market is self-perpetuating. Once consumers have seen how good movies on DVD can look, they are unlikely to go back to video tape, because the cheapest DVD players offer vastly better picture and sound than do VCRs. Components priced below $100 are widely considered disposable commodities; they are much more likely to be replaced rather than repaired if they break down. Sub-$100 DVD players now account for about 20% of all DVD sales.

High resolution video is also becoming more affordable, with progressive scan players now priced as low as $200. This trend is certain to continue, as is the growth of multi-format, multi-channel compatibility. Pre–Consumer Electronics Show publicity from many manufacturers promises that early next year will see plenty of players equipped for all optical disc formats: CD, DVD-Video, DVD-Audio, and SACD—in addition to being able to play CD-Rs and CD-RWs. Such hybrid players will be retailing in the $300 range.

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