Products' Popularity Continues To Grow At An Explosive Rate

March 12, 2000

DAYTON, Ohio The handwriting is on the wall, and so are the DVDs.

About 18 months ago, retail stores and video rental shops had shelf after
shelf of videotapes for sale or rent. If they carried DVDs at all, the ratio was
usually about 20 videotapes to every one DVD.

Now the shelf space ratio is down to about three-to-one in favor of
videotape. And don't be surprised if the margin tips in favor of DVD in another 18
months.

SALES SKYROCKET

Though DVD players have been on the market only three years, nearly 5
million people have DVD players in their homes, according to the Consumer
Electronics Association.

It is the most successful product introduction in electronics history, the
association said. In 1997, the first year DVD players came on the retail market,
349,000 of them were sold. The second year more than a million were sold, and
last year sales were 3.5 million.

By comparison, CD players, introduced in the early 1980s, sold 35,000 units
their first year and 1 million in their third.

VCR sales didn't take off as fast as DVD sales when VCRs were introduced,
but VCR sales still far outweigh DVD sales at this point. Nearly 23 million VCRs sold
last year, according to the Consumer Electronics Association.

The impact of DVDs in the marketplace is dramatic. The selection of DVD
players has exploded in the past year, prices are falling and they were one of the
hottest technology gift items last Christmas.

DVD prices are not falling nearly as fast as prices of competing formats. If you
haven't shopped for a VCR or CD player you may be shocked by the bargains
currently available.

Super VHS players, for example, are available for less than $300, about half
what they sold for a few years ago.

CD player prices are similarly depressed. As mentioned earlier, CD players were
introduced in the early 1980s, so many of the first- and second-generation players
are reaching the end of their lifespans.

But instead of buying new CD players, many consumers are opting for DVD
players. DVD players, whose prices are comparable to those of CD players a
couple years ago, not only play DVD movies, but also CDs. Replacing a CD player
with a DVD player provides extra entertainment options without spending much
extra money.

VCRs aren't going to go away completely any time soon, however. Nearly 23
million VCR decks sold last year, according to the Consumer Electronics
Association.

One drawback of DVD at this point is that you can't make your own DVD
recordings the way you can make recordings with your VCR. Recordable DVD may
show up someday, but that's not expected within the next few years.

Liz Greene, a spokeswoman for Blockbuster Entertainment said Blockbuster
expects to carry both formats for the foreseeable future.

Blockbuster stores started carrying DVDs last year, and Greene said the
average store in the chain carries about 200 DVD titles for rental and 50 for sale.

``Projections say that by the year 2007, VCRs will be in 90 million homes,''
Greene said. ``DVDs should be in 40 to 50 million homes by that time.

``There's no reason people shouldn't have both. DVD and videotape
complement each other.''

DVD BASICS

DVD originally stood for digital video disc, and a few marketing types for a
while tried to get consumers to call them digital versatile discs. But like VCR and
CD, the initials have become the name.

A DVD is a thin, rigid plastic disk about 4 inches wide, just like a CD or a
computer CD-ROM or a digital game system disc, but a DVD can be packed with
more information.

Information is stored digitally (as a numeric code) on the shiny surface of the
disc. A laser device scans the information, and a processor interprets the data as
video and audio signals.

DVD movies also often come with extra footage not seen in theatrical
releases, movie trailers, interviews and related music videos.

The overwhelming majority of DVDs are movies. They sell for about $10 to
$35, with most selling for about $19.99 and $24.99.

DVD player prices start at about $170 in local stores, and several high-end
models fall in the $2,000 to $5,000 range. A few models cost more than $25,000.
Most sell for $200 to $800, and prices are dropping.

If you're in the market for a DVD player you should be aware that DVD still is
a developing technology, and DVD players five years from now probably will be
completely different than those being sold now.

One big question is how DVD will interface with high-definition television. DVD
is a digital format that produces higher picture resolution than VHS videotape and
current broadcast television signals, but DVD players currently don't produce the
picture quality level needed to meet the official high-definition standard.

By the time basic television broadcasts are in high definition a few years down
the road, DVD players may also be capable of high-definition performance.

Another issue is networking. A major trend in home electronics is convergence
the linking of computers, home entertainment equipment and other home
appliances into a single network that allows all the electronic gear to work
together better.

Because a single standard for networking has yet to be widely adopted,
electronic components sold today may not connect easily to network-ready
components when they become available.

One strategy is to buy a moderately priced DVD player with the understanding
that it probably will be replaced within five years.

Cox News Service