Family Market Next Growth Phase for DVD1 Jul, 2002 By: Kurt Indvik
By Kurt IndvikDVD is expected to sustain profound and exponential growth over the next several years, both in the United States, where by 2006 70 million U.S. households are expected to have DVD players (57 million households will have DVD-enabled PC/game units), and in Western Europe and Japan, where another 70 million households will adopt DVD.
These were just some of the projections issued during a special opening session at the DVD at 5 conference in Los Angeles, produced by Video Store Magazine with the DVD Entertainment Group (DEG) and the DVD Forum.
DVD's meteoric rise in acceptance makes it the fastest-growing consumer electronic technology ever, noted Bob Chapek, president of Buena Vista Home Entertainment as well as the newly elected president of the DEG. He cited Hollywood aftermarket figures from Adams Media Research that show 37 million DVD console households (and 23 million DVD-enabled PC/game units) are helping to drive more than 50 percent of the $23 billion U.S. home video industry.
Looking at the industry from a five-year perspective, “even the most aggressive prognosticator would have looked conservative, given what has actually transpired,” Chapek said. “And the ride isn't over yet,” he added, citing Adams figures that by 2006 DVD will account for about 80 percent of a $30 billion home video business.
Chapek said DVD has entered the consumer mainstream, growing from an “early-adopter” entertainment platform to one where now families are buying as many DVD software units as non-family households. Disney's own research, he noted, indicates that 58 percent of those parent purchases of DVD are being made for children, “a true sign we have hit the mainstream.” That mainstream will be what propels the industry forward, he said.
Chapek added DVD captured the imagination of the public with its “clean and simple” benefits of better sound and picture quality, and that the industry needs to work together to continue to ensure the benefits of DVD continue to be clearly communicated. “What we do as an industry over the next several years will determine whether the next iteration of [DVD] technology will have the benefit of such clarity and, as a result, whether we can all continue on our wild ride of success.”
Indeed, the “family” and “children's nontheatrical” genres offer the greatest potential for growth in DVD purchasing, acknowledged Judith McCourt, market research director of Video Store Magazine, who was on hand to present findings from the magazine's recent consumer survey of 1,000 U.S. households (500 of which owned DVD players).
While genres such as action/adventure, drama and comedies already have reached the point where 75 percent of all software purchases are in DVD, the format accounts for just a little more than 50 percent of family genre purchases and of non-theatrical kids genre sales, only 22 percent is generated by DVD, McCourt noted.
In households that don't own DVD players and plan to buy next year, 40 percent of those households have children under the age of 12, she added.
Of the DVD software purchases from households that have owned their DVD players six months or less, 25 percent have been in children's product, compared to 18 percent for households that have owned their DVDs for more than two years.
Even as DVD has transformed the U.S. home video market, it has had just as big an impact on the international market, though player penetration rates internationally are still significantly less than in the United States, said Adrian Alperovich, EVP of international sales and worldwide business development for Columbia TriStar Home Entertainment.
In his presentation, Alperovich said that by midyear 2005, 56 million DVD players are expected to be in use in Europe, while almost 15 million will be in use in Japan, according to a study by Understanding & Solutions. That translates into a 35 percent household penetration for Western Europe and 31 percent for Japan.
But Alperovich noted that “DVD didn't effectively get started internationally until 18 months to two years after it was launched in the United States. Thus, he added, it makes sense to compare U.S. numbers for 2003 with international numbers for 2005, “and that starts to show parity,” he said.