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DVD Still Undiscovered Territory in Many Global Regions

22 Aug, 2002 By: Jessica Wolf

DVD is still undiscovered territory in many regions outside the United States as market potential for DVD software and hardware remains untapped.

But DVD is the industry's global mover and shaker, according to recent reports from media tracking company Screen Digest that look back at 2001 -- DVD's growth year -- and forward to even more explosive worldwide growth.

Hard Numbers on Hardware
Global DVD hardware penetration stood at 5.7 percent at the end of 2001, with 56 million players worldwide, Screen Digest found. Hardware penetration was varied, with North America clocking in at 24 percent, Europe at 9 percent, Japan at 7 percent and Latin America at 1 percent.These low penetration levels outside North America leave massive room for DVD growth, said Screen Digest executive editor and director Ben Keen, presenting the data earlier this summer in Los Angeles at the “DVD at 5” conference.

Outside North America, most DVD players are in Europe and the Asia Pacific region, according to Screen Digest research. The company estimates that, at the close of 2001, there were 27 million DVD players in North America, 13 million in Western Europe, 600,000 in Central/Eastern Europe, 9 million in Asia and 3 million in Japan. Meanwhile, there were only 1 million DVD players in Latin America, 1 million in Australia and New Zealand combined, 500,000 in the Middle East and only 150,000 in Africa.

Screen Digest predicts DVD players will be in 265 million homes in Europe and the Asia Pacific region by 2006.

DVD Driving Software Spending
DVD drove global software spending in 2001, according to Screen Digest, which reported a 10 percent increase in worldwide consumer video spending, to $39 billion, last year. VHS spending dropped 9 percent, while DVD experienced a skyrocketing 80 percent increase, to $13 billion. Spending on VCD (video compact disc) software -- which is more popular in the Asia Pacific region -- increased by 11 percent.

Screen Digest's global market analysis found 43 percent ($17 billion) of 2001's $39 billion in software spending came from outside North America. But Screen Digest found that DVD households outside North America buy and rent fewer discs than their U.S. counterparts.

Screen Digest attributes growth of the global software market to DVD's increasing share and predicts VHS spending will continue to shrink, though VCD will hang on in some regions.

Global DVD spending will surpass VHS as early as 2003, the Screen Digest report predicts, and by 2006, DVD will account for 77 percent of all video software spending.

Western Europe Embracing DVD
Screen Digest's new study, “European Video: Market Assessment & Forecasts 2001-2006,” estimates that DVD sales in Western Europe will overcome VHS as early as 2003, but that DVD rentals will not generate more revenue than VHS until 2005. DVD should make up 85 percent of total software spending in Western Europe by 2006.

The author of the study, John Miller, attributed the DVD software spending increase to the existence of more affordable DVD players in more European markets. By 2003, nearly 50 million Western European households will own one DVD player, and by 2006 DVD hardware will be in 100 million homes in the region, reaching 62 percent penetration, Miller said. Add in other platforms that have DVD capabilities, like gaming systems, and the projected number of DVD-enabled homes in Western Europe by 2006 becomes 125 million, the study found.

The report also predicts VHS will remain a viable part of Western Europe's video software market, representing about $3 billion in rental and sellthrough revenue in 2006.

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