THE MORNING BUZZ: VHS' Analog Lifespan In A ‘Digital Decade'10 Jan, 2002 By: Kurt Indvik
This week at the Consumer Electronics Show, Microsoft chairman Bill Gates in his keynote referred to 2001 and the beginning of the "digital decade." And while digital technology has been around for decades already, I think his moniker for the ‘00s may be timely. DVD, our most flexible digital platform to date, has become the fastest ever consumer electronic product to reach 25 percent household penetration in the U.S.
The CD paved the way for consumers to become comfortable with the small disc format, and DVD is simply a variation of media on the same platform (please forgive my layman's oversimplification, but you get the point.) The CD's analog sibling, audiocassette, has become a poor relation. Indeed as the home video industry struggles with the looming issue of VHS cassette viability in a DVD world (despite VHS' 96 million households), a front page story in the December issue of entertainment media manufacturing magazine medialine covers the continued flight of major duplicators out of the audiocassette business completely to go CD 100 percent…as the tape format faces the end of its usefulness as a music carrier."
Doubtless, home audio centers and portable players likely are almost wholly CD now, so it's likely been the automobile that has kept the audiocassette format a financial viability for publishers and duplicators to this point, and now even that "usefulness" has been removed. Consider that 2001 holiday sales for radio/cassette players fell by about 52 percent from 2000 levels, according to NPDTechworld's "early indicator panel."
VCR player sales fell more than 23 percent in that same period. An ominous foreshadowing of things to come?
Whatever numbers we look at for VHS—which posted rental revenues of $8.53 billion in 2001 to DVD's $1.5 billion, according to Video Store Magazine market research -- it'll be the "usefulness" factor that truly determines VHS' analog lifespan in this coming digital decade. The recording aspect has been a time-shifting mainstay of usefulness for VHS since its introduction, but that is coming under attack.
Coming out of CES this week was a good deal of news on DVD player/recorders, including word from Philips that its DVDR-985 will reach retail shelves in February or March at a first-ever $999 price tag. Other buzz included a possible DVD recorder/player coming from low-end manufacturer Apex at a sub-$500 price by this coming holiday selling season. Obviously, these prices will continue to fall and fall quickly, making recording on DVD accessible to mainstream consumers in the not-too-distant future.
The dual use of DVD and VHS in the home will continue for a number of years to come, no doubt, as VHS is relegated to perhaps the den, playroom or kids bedroom televisions and out of the family room…along with the second or third DVD player. VHS collections built at a rate of 6 or so per household per year,will be more speedily replaced by DVD collections that are still averaging about 17 per DVD household per year and, at some point, the usefulness of VHS will, in fact, reach its point of no return. Some consumers, as our own intrepid executive editor Stephanie Prange noted in her column this week, have already reached that point. Early adopter that Stephanie is, she acknowledges she is well ahead of the curve.
I know the curve is out there, and we're approaching it faster than audio cassettes/CD scenario. The question is how fast? Meanwhile, in my own home, both the DVD and VHS are humming away nights and weekends, thank you.