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Study: DVD Sound Key to Home Theater Appeal

6 Aug, 2004 By: Erik Gruenwedel

The DVD format has acted as a successful catalyst to the burgeoning digital surround sound market, with the result that about 31 percent of DVD households currently own a home-theater-in-a-box system (HTIB), according to a new study by Jupiter Research in New York.

With 63 percent of U.S. households owning a stand-alone DVD player, 33 percent owning a big screen TV and 11 percent owning a high-definition-capable TV, market forces continue to push the price of some HTIB systems to less than $100, the study said.

“We think that DVD drives the overall home theater marketplace,” said Avi Greengart, senior analyst, home theater, at Jupiter. “It is really the first time consumers have had the opportunity to add digital surround sound into their homes. HDTV is still not a particularly huge factor as penetration rates are still below 10 percent.”

The study found that 53 percent of consumers looking to acquire surround sound systems in the next 12 months plan to spend more than $1,000 — with speakers driving wholesale markups of some systems up 40 percent. Why? Sound quality.

About 58 percent of respondents looking to acquire an HTIB system rated sound quality and room acoustics (36 percent) as primary features of importance compared to content format (21 percent) and cable quality (15 percent).

What about high-definition DVD?

Greengart, who said an analysis on the next-generation DVD format is in the works, believes that much of the high-def software market, like any new technology, will be affected by the ubiquitous supply, demand and the other factors.

“Hollywood is not keen on putting what they consider close- to-master-quality versions of their intellectual property out there,” said Greengart. “Some of [the studios] are admitting to being concerned about killing the DVD gravy train. The DVD market in some places is more profitable than the theatrical market.”

He says whether high-def DVD will expand or detract from that remains to be seen.

“Is it really better, or is this an opportunity to sell somebody the same thing they already own?” asked Greengart. “I assure you that someone who bought Lord of the Rings and the extended edition will buy the Rings HD edition should it become available. The same for the ‘Star Wars' franchise. But I don't know about other titles.”

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