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Replicators Rail At Forrester Report

17 Sep, 2003 By: Holly J. Wagner

A report from analyst firm Forrester Research proclaiming that hard storage media is on the fast track to a comparatively short product life cycle is drawing fire from the International Recording Media Association (IRMA).

The trade organization, which represents replicators, cites numerous “misleading conclusions” in Forrester principal analyst Josh Bernoff's report, "From Discs to Downloads."

"We don't understand how a reputable firm can issue a report built on questionable theories and assumptions that are so easily dismissed," said Charles Van Horn, president of Princeton-based IRMA. "What's unfortunate is that Forrester does itself a disservice with this report, choosing to interpret their findings in a way that misrepresents the realities of the industry, reaching conclusions that are sensational rather than reflective of the behavior of mass-market consumers. What's even more surprising is that Forrester admits its previous predictions for this market have been wrong. And we think it will be proven wrong again."

IRMA concluded Bernoff's report goes too far too fast by:

  • assuming the simple downloading of individual, short-form, audio-only music tracks will translate directly into widespread downloading of full-length, media-rich motion pictures;

  • overlooking the cable, Internet and movie industries' disappointment in the slow growth of movies on demand;

  • failing to grasp that the vast majority of digital consumers favor removable media such as discs over non-removable PC and portable drives, as the most convenient and versatile ways to collect prerecorded and downloaded content; and

  • not understanding the concept of market segmentation, where various technologies simultaneously serve distinct market applications.

By contrast, IRMA's market intelligence report shows a trend line supporting continued growth of DVD player and disc sales. From the current annual level of 2.7 billion discs produced worldwide, IRMA forecasts that by 2008, annual factory shipments of DVDs globally will approach 7 billion units.

"Our statistics and those of Adams Media Research clearly indicate the DVD locomotive is not slowing down. On the contrary, DVD is a growth engine for the foreseeable future,” Van Horn said. “It may be old news, but the facts haven't changed -- even if some folks haven't yet come to grips with the Internet bubble bursting several years ago."

Adams Media Research projects DVD players will be in 91 percent of U.S. homes by 2008, with U.S. DVD disc shipments in 2003 at 1 billion units, returning $10 billion to rights holders. By contrast, for every video-on-demand (VOD) transaction, a studio makes a fraction of the revenue that it receives from the sale of a packaged DVD.

"It's no wonder our members are disturbed by the unwarranted feeding frenzy Forrester's free-form conclusions have created of late in the news media," Van Horn said. “The home entertainment market is a powerful $25 billion industry driven by DVDs, not downloads. As a leading industry association and world authority on recorded media, IRMA believes that many have been misled by headline-grabbing, specious conclusions."

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