HIVE EXCLUSIVE: DVD Player Estimates May Be Off the Mark

31 Aug, 2001 By: Ralph Tribbey

No one expected any lightning and thunder out of the DVD hardware panel at the DVD Entertainment 2001 Conference and Showcase in Los Angeles.But a bolt of lightning is what the industry got from Colton Manley, Apex Digital's director of media.

After waiting quietly while representatives of industry hardware heavyweights Tohiba and Sony presented their latest player lines, Manleyannounced that Ontario, Calif.-based Apex Digital owned a 22% market share in DVD players, was third in dollar volume, and dominated awhopping 90% of the under-$100 DVD player market domestically.

Put on the spot, Sean Wargo — the panel host and senior industry analyst for the Consumer Electronics Association (CEA) — acknowledged that ApexDigital was not counted in monthly industry shipment estimates, but pointed to the trade organization's models that take into accountnonmember player shipments to retail. “We (CEA) may be 8% to 10% off” as a result of Apex's aggressive pricing policies, Wargo conceded.Through Aug. 17 of this year, CEA reports DVD player shipments to retail at 5,518,946 units. If the numbers are 10% off, there may be as many as 550,000 DVD players unaccounted for thus far in 2001, with the heavier shipment months still on the horizon.

“We are also still predicting 12.5 million units sold this year,” Wargo said. “This includes our estimate of any nonparticipants in the dataprogram. The best I can say is that we are looking into the situation with Apex and if any revisions are warranted we will make them. Right now we stand behind the numbers as they are.”

According to Apex's Manley, “We have orders for 4.7 million (players) this year. Our three factories can produce 8 million next year.”Citing NPD Intellect report sources, Manley pointed to Apex Digital as having “10.3%” of the dollar volume, ranking third behind Sony (23%) and Toshiba (13%), respectively.

The company's players are evident in major retailers. Apex's retailer clients include Circuit City Stores, K-mart Stores, Wal-Mart, Best Buy, Sam's Club, J&R Music and Navy Exchange. Best Buy and Circuit City both sell the Apex AD-1500, the only under-$100 player they currently stock.

A Circuit City spokesman says he cannot provide sales figures for the player. A sales associate at a Southern California Best Buy, however,says the Apex unit is popular with consumers, who snap up 30 to 40 units every three weeks or so. “They fly out the door,” the sales associatesays.

It's not just underreporting the low-priced players that may point to a healthier household penetration rate for the format, but as CEA's Wargo pointed out, “DVD as a component of another medium” may also be disguising penetration rates. “We may be 5% higher than currentestimates,” he concluded. The use of DVD-ROM and PlayStation 2 devices as a DVD viewing medium will be the subject of a forthcoming CEA research project, Wargo said.

DVD Entertainment Group executive director Amy Jo Donner confirmed thatorganization's earlier estimate of 15 million players shipping to retailthis year.