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DVD On the Go

22 Mar, 2002 By: Holly J. Wagner


When VCRs first came on the scene, form definitely followed function. The VCR was an anchor to the living room, partly because it weighed just slightly less than a potbellied stove, but also because it gave viewers greater flexibility and made movie watching a family experience again -- without the expense of movie tickets and $5 Milk Duds.

As DVD matures those cassettes are starting to look ungainly against their svelte counterparts. VHS is becoming the Big Chief pencil of video: the large format for small hands. Meanwhile DVD us breaking out of the living room to become the go-anywhere movie experience. The captive audience on the road is a prime target, naturally.

"By this time next year, I think you'll see nearly all SUVs and minivans have these rear-seat DVD consoles," crows Bob Schumacher, head of mobile mulitmedia at Delphi Automotive Systems, the largest American auto parts maker.

Delphi offers a line of onboard DVD players as well as after-market console players for autos, filling an increasingly popular niche. Although the $1,500 to $2,000 price tag discourages some folks, Honda has found DVD players a more popular accessory on its Odyssey minivan, at 18 percent, than the 5 percent demand for global positioning systems, said Honda spokesman Kevin Bynoe. Apparently people would rather have their cars entertain them in traffic than suggest alternate routes.

As auto-based players prove, DVD players are making captive audiences feel less captive. Many airlines offer DVD players in first class and at least one service rents players to air travelers. To make donating blood and blood components more attractive, Baxter Health Care even developed the "e-chair" so donors can watch a DVD or surf the Internet on an access device built into the chair where they give blood.

Analyst Greg Durkin of Alexander & Associates declined to break out figures for DVD-enabled devices like game consoles and computer-based players, but said TV-connected devices were at 3 percent of U.S. households in 1999, 8.8 percent in 2000 and up to 25 percent by the end of last year.

"There's some overlap. More than 32 million ROM playback devices have been sold for sure by the end of 2001," he said. "The early adopter might have upgraded their computer and have bought a set-top. Entertainment is consumed in multiple locations inside the home so you might have homes with more than one device."

"The type that you can buy for $100 is the one that will penetrate the mass market and make a significant impact on this penetration figure," Durkin said, but he's predicting recordable DVD formats will be the next to ride the wave of popularity.

"Now that it's been agreed that there should be a single format for that, it's going to be a consumer product," he said. "It will enter through the PC market first, then make its way to the television-connected device."

Pioneer Home Electronics is adding MP3 capacity and a few consumer usability improvements to its next generation of recordable DVD devices.

"The next killer app is the current killer app: DVD recording," said Aaron Levine, spokesman for Pioneer. "The sales have steadily been increasing. We ship, they sell."

The immediate future of DVD is recordable, smaller and more portable, he said, although consumers are also asking for TVs with built-in DVD players.

Best Buy's senior buyer for video James Koestler agrees that price is the barrier and, as that barrier comes down, recordable is the next big thing.

"Recorders are showing similar sales gains as DVD players experienced in the first couple of years, only at this point starting from a lower [household penetration] number" because of high cost until recently, Koestler said. "We expect the growth rate to follow a similar path as DVD players once the retail price goes below $500 next year."

Electronics manufacturers and retailers already consider DVD a staple, as its inclusion in game consoles like PlayStation 2 and Microsoft Xbox attest.

"The game units chose the DVD format, the format didn't choose them," Durkin said. "It's not something they said ‘let's throw it in for the hell of it.' They're for consumers who were considering one and not even thinking about the other -- the casual gamer or the casual movie consumer."

But manufacturers and retailers are watching consumer habits and requests closely.

"We are starting to see DVD with Internet capability, DVD with hard disc drives built in and DVD with flash memory capabilities," said Koestler. "These are all products from the manufacturers, not necessarily what the customer is asking for and some will win and some will lose."

While not everyone agrees on the next place DVD will turn up, most manufacturers are scrambling for niches, racing to refine their devices for a variety of tastes and budgets.

Sony is going after Generation Y with the Psyc line of portable players, which will be available in June for $149 SRP.

Along with an accessible price, Psyc features a customizable faceplate that lets the owner make a personal statement with inserts. While they must be plugged into an external power source the Psyc players' compact size and computer compatibility pretty much scream "dormitory."

"The reason we started going in that direction is to expand what was already a hot marketplace," said Bruce Tripido, Sony Electronics' national marketing manager for DVD products. "When the installed base started reaching 15 and 20 percent, we decided we wanted to look at second room solutions and places to expand the use of DVD."

Sony also offers a sleek console with second-player appeal because it can lay flat or stand on its side where it's out of view, a $500 DVD/CD jukebox and a $299 player with progressive scan, which Tripido said is gaining popularity.

"The driving force this year will be progressive scan," he said, noting consumers "are asking for something that is usable in what they are used to in the VHS format. DVD is a higher quality video and audio. It's just a format where you can really see and hear the difference. As the TV marketplace migrates toward high definition, DVD has emerged as a great thing because it can drive a high resolution."

The transition from other media to DVD is in full swing and nobody wants to be left behind. While some manufacturers chase the mobile generation, others are bridging the old living room to the new media room.

Go Video and Panasonic sell DVD-VHS combo consoles in the $300 range. Pioneer offers a DVD-laserdisc combination player for $1,200.

"We still make it, so it's popular enough to make it year after year," Levine said

"At this point with penetration still only at about 25 percent, most customers are simply hooking up their DVD player to their TV, putting a disc in and hitting play," said Koestler. "They love the exceptional picture, sound and special features. Progressive scan will be the next big feature for all of those who are buying or will buy a digital TV."

Even though DVD is cropping up everywhere, analysts and manufacturers agree it's too soon to write off VHS. Just last week RCA made a play for the family market with an aftermarket VHS player for cars. Besides newfound portability, the $500 price may appeal to families that hesitate to spend three or four times that amount for DVD in the car.

Wherever DVD goes next, it won't be going it alone for a while.

"VHS may seem large and clunking to the sci-fi action adventure male of 24 to 38," Durkin said, but children have no trouble with it."


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