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Holiday Sales Take Off

Recent studies by the International Recording Media Association and Consumer Electronics Manufacturing Association have revealed strong sales for home-theater products. DVD-player sales are up 179% over 1997, with over 1 million players sold this year vs. 400,000 last year, while sales of DVD discs jumped 22%. VCR sales are up 7.5% in 1998, with sales in the first 11 months of the year totaling 16.5 million units. Forty four television stations have already begun broadcasting digital TV, indicating a good start for the new format. Within five years, all 1600 stations in the US are required to be broadcasting in digital.

The strong demand for DVD players caused shortages at some retailers while manufacturers scrambled to supply the estimated 300,000 machines needed for the Christmas rush. "DVD-Video continues to be one of the hottest technology gift items this holiday season," says Paul Culberg, president of the DVD Video Group and executive vice president of Columbia TriStar Home Video. "We're thrilled to see the consumer embrace the digital format with so much enthusiasm."

"You've got a ton of support out there---you only had a few studios releasing titles on DVD last year," explains Toshiba spokesman Steve Nickerson. In addition, he says, "entry-level players are $200 less than last year, and video stores are now renting the hardware and software. It's shaping up to be a very good Christmas for electronics retailers."

Online DVD software sales have also jumped in 1998, with around $50 million (representing 15 million discs) this year vs. $15 million in 1997. According to analyst Ken Cassar, "DVD sales are proportionally larger online than in the brick-and-mortar world. Where DVDs account for 10% of video sales in stores, they account for a quarter of video sales online." Several online retailers are reporting record numbers of discs sold, with Reel.com claiming a thirteenfold increase since last year. Some expect software purchases to remain strong through the first few months of 1999 as gifts of DVD players drive subsequent movie and music video purchases.

Despite a lack of support from home-theater enthusiasts, Divx sales are said to be surprisingly strong. Launched in October, the format has roughly 10% of the titles available on DVD, or about 250 releases so far. According to a Reuters report, despite Divx's stronger-than-expected sales, a Divx spokesman declined to disclose how many Divx players or titles have been sold. The report also says that Circuit City salesmen receive as much as $100 in commission for every Divx player they sell.

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