DVD RECORDERS ARE STARTING TO DRIVE MARKET

Liza Casabona

SCOTTSDALE, Ariz. -- The end for VHS may finally be in sight following a study released by In-Stat here earlier this month.

DVD recorders are starting to drive the market for non-computer-connected DVD hardware, according to the study. The market for DVD recorders doubled in size in 2004 and is anticipated to grow 87% by 2009, the report said. In that time, worldwide unit shipments of DVD recorders are expected to increase from 9.4 million to 67.7 million.

"The DVD recorder has places to go," said Michelle Abraham, analyst for the market research firm.

One industry source said the rise of inexpensive DVD recorders could be "the final nail in the coffin of VHS," as they allow consumers to time shift, the last remaining reason for the tape format to exist.

As the market has expanded, the price for DVD recorders has started to drop, which also opens up retail opportunities for the new hardware, Abraham pointed out.

"For some of the retailers, the price coming down [on DVD recorders] will mean, just as with DVD players, that you will see them in more than just your consumer electronics retailer. You might see them in your supermarkets."

It's unlikely the machines would make an appearance as an everyday item in supermarkets, Abraham said, but if the price drops below $100, DVD recorders could be merchandised as a special item in nontraditional retail channels.

Sean Bersell, vice president of government affairs and member communications, Video Software Dealers Association, Encino, Calif., said that based on the patterns the industry saw with DVD players, channel proliferation is possible.

"It is likely that, when the price of DVD recorders falls below $100, a wide variety of retailers will begin offering them." That day, however, is still far in the future, he cautioned.

He also noted that consumers do not appear to be as concerned with recording programming as in the past. "Regardless of DVD recorders, VHS is approaching the end of its run as a medium for pre-recorded movies," he said. Last year, only 6% of video sales revenue and 29% of video rental revenue came from VHS, he said. So far in 2005, VHS rental represents less than 20% of the rental revenue, he added. "Interestingly, the displacement of VHS by DVD occurred even though most households did not, and still do not, have the ability to record television programs on DVD. This suggests that recordability, or the lack thereof, has little impact on the packaged home video market," Bersell said.

Abraham said the impact of the DVD recorders on other channels is probably "more a 2006" concern. In the short term, however, consumers have demonstrated interest in the new machines.

An online survey conducted by In-Stat last fall showed 12% of respondents said they planned to buy a DVD recorder in the next six months, and 20% planned to buy one in six months to a year from the survey date, Abraham said.