VIDEO killed the radio star — now it’s about to get its come-uppance.DVD, currently the fastest-growing consumer electronics product on earth, enjoyed booming sales of both players and movies over the holidays — further proof that the days of VHS are numbered.
DVD players alone blew estimates for 1999 out of the water. The Consumer Electronics Association, organizers of a huge electronics show opening in Las Vegas today, originally predicted that sales would hit 1.8 million. Actual sales are estimated at 4 million.
Industry analysts predict more than 6 million DVD players and 25 million DVD movie titles will be sold in 2000.
“By the fourth quarter of this year, sales of DVDs will have completely overtaken those of video,” says Reed Hastings, CEO of the online movie-rental company Netflix.com.
The growing popularity of DVDs, which allow high-capacity storage and offer greatly enhanced picture and sound quality, is forcing the major Hollywood studios to go digital to keep up with demand.
Not only do most studios now offer all new releases on both DVD and traditional VHS format, they are gearing up to release thousands of previous titles on DVD.
“They are going through their back catalogs now,” Hastings says. “We’ll see the same thing as happened with CDs, when record companies released more and more from their back catalogs each year.”
Studios have embraced DVD to the extent that now nearly every title released to video is also released to DVD. Typically, of the top 25 movie rentals each week as gauged by Video Store magazine, only the occasional art-house film is not on DVD.
Hastings says that on Amazon.com, a barometer for the movie sales industry, DVD sales are exceeding those of VHS.
“We saw it with the music industry — CDs broke through and suddenly it was hard to find vinyl and that’s the point we’re at this year,” Hastings says.
“By the end of 2000, retailers will devote very little shelf space to VHS.”
Best Buy, which at one time stocked as many as 12,000 VHS movies, has been clearing space for DVD titles. The Minneapolis-based retailer now stocks about 2,000 VHS movies, compared with 1,500 DVD titles, and they expect to make more room for DVDs.
“It looks as if DVDs are here to stay,” says the Motion Picture Association of America’s Rich Taylor. “It’s one of the most popular new electronic products ever introduced, and it stands to reason that studios must rise to meet the thirst for titles.”
Taylor calls the DVD revolution “an exciting new time in the motion picture industry.
“The clarity of sound and picture that DVDs provide brings audiences closer to what the creative talent involved in the project imagined,” he says.
Many of the major Hollywood studios have come on board within the last 12 months, and together they now release about 100 new DVD titles a week.
Warner Bros. is widely considered to have been at the forefront of the DVD revolution, with the studio releasing dozens of titles a month since the launch of the DVD format in 1997.
“There are over 5,000 titles on DVD in the market today, and Warner has more than 500 of them,” says Mark Horak, senior VP of marketing for Warner.
Horak expects that revenue from DVD sales will overtake that from VHS sales within the next few years.
“The word on the street is that DVD is the most successful consumer electronics product ever launched,” he says.
Even Disney, initially reluctant to enter a market whose users were typically young males looking for action flicks, has embraced the new technology.
As the demographic for DVD users widens to include families, the studio is releasing its classic animation films on DVD, starting with “Pinocchio” in October last year.
An industry insider says the studios were concerned at first about protecting their digital product, but those fears have been largely allayed.
“Because in the digital world, the one millionth copy is as perfect as the first, there’s a strong need to respect and maintain the integrity of the encryption embedded in DVDs when they go out,” the source says.
Besides the availability of new titles, the plummeting price of DVD players has fueled the DVD frenzy.
Players initially cost $500 but are now priced in the $150 to $200 range, and analysts predict they may drop to $99 by next Christmas.
DVD’s growth isn’t just reserved for the entertainment sphere. Analysts say DVD-ROM drives will surpass CD-ROM drives in computers by 2001.
Still, DVD may not completely kill video.
“VHS will linger in the same way that floppy discs and cassettes have not died with the introduction of CD-ROMs and CDs,” Hastings says.
“There’s almost a 100 percent saturation of the VCR market already, so people will keep them around. But, within the next few years, all new purchases will be on DVD.”