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HIVE EXCLUSIVE: DVD Player Unit Prices: It’s All Downhill

29 Jun, 2001 By: John Jimenez

How low can you go? That’s not a question reserved strictly for luaus anymore. Lately, anyone interested in the DVD market has been asking it as hardware prices continue their downward trend.

“The average price [for DVD players] has dropped tremendously,” says analyst Tom Edwards of NPD Intelect. Data from the Consumer Electronics Association (CEA) shows that in 1997, the average price for a DVD player was $490. That steadily declined to an average of $202 in 2000. CEA’s manager ofcommunications Jenny Miller expects the 2001 average to be $193. And Edwards expects by year’s end the average price will have come down to about $175.

“As the market’s expanding, you’re seeing the median price get lower,” says Amy Jo Donner, executive director for the DVD Entertainment Group.

Many industry insiders think the price drop is nearing its end. “In three years, they’ve gone from over $1,000 to under $200. I don’t know if they’ll go much lower,” says Panasonic’s public relations strategist Jeff Samuels.

Still, signs are that average prices can get even lower. “This year I expect to see a lot more activity by the mass merchant, who typically sells by price rather than value,” Edwards says. Price varies by the channel of distribution, he says, adding at discount retailers, DVD player pricesaverage $143, while at video specialty retailers, they average $286.

The difference between the floor and the ceiling is still wide, as well. DVDforgrab.com recently advertised a player for $79.99, while Edwards saysthe cheapest bare-bones players are easy to find for about $88. At the other end, prices can exceed $3,000 for top-of-the line players.

The price difference depends somewhat on brand and very much on features. Miller says anything with more than a dual-disc capacity is going to show a jump in price. Other price-pushing features are progressive scan, MP3capability, DVD Audio capability and NUON enhancements.

Still, Best Buy is selling a JVC player with progressive scan and an MP3 player for $249.99. A three-disc JVC player is selling for $199.99 and a Toshiba NUON-enhanced player is selling for $249.99 — not exactly off thecharts. At the lower end, an APEX player with MP3 capability is selling for$129.99, and a single-disc bare-bones Oritron is just $119.99.

It is true, however, that consumers looking for $1,000 players can still find them. The market has been split between technophiles looking for the highest quality and the average Joe looking for the best deal. But someevidence suggests the simpler-yet-cheaper players will only gain popularity.

A 2000 study by the CEA showed that 92% of DVD owners most valued the superior picture quality of DVD, and 87% the superior sound. That’scompared to 22% who rated extra features important. “To the average consumer… pricing plays an important role in the decision process,” statedSara Bradford, an industry analyst with Frost & Sullivan.

Reasons for the rapid drop in player prices seem to be many, including the natural evolution of consumer electronics and mass production. But if anincreased consumer base helped drive prices down, lower prices only serve toexpand the base even more, Samuels says.

Year-to-date sales for DVD players through June 8 came to more than 3.8 million units, an increase of 68.4% from last year, according to CEA data. And a CENTRIS study shows that over the past two years, the DVD playerinstalled base has grown 873%, faster than any other home entertainment product.

The logical loser in all this would seem to be VCR. But “VCRs had a recordyear last year,” Edwards says. “The highest volume at the lowest price. If your old model VCR breaks down, it’s like a toaster. You go out and buy a replacement... The VCR I don’t think will ever die. The American male willstack boxes as high as he can,” he says.

VCR prices have also gone done, Miller says. She notes the average VCR sells for $73, and the machines are regularly available for $50. Although CEA data shows year-to-date VCR sales are down 29.3% from last year, Miller believes the format remains popular, adding the high cost of recordable DVD players keeps VCRs in style. Also, consumers have builtlibraries of cassettes.

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