DVDS IN NEARLY HALF U.S. HOMES: RESEARCH

LOS ANGELES -- With 48 million U.S. households owning DVD players, the new format is fast approaching the halfway point to complete penetration, according to statistics issued by the Digital Entertainment Group here.

ccording to other studies.

It's also a time when the fourth-quarter selling season is getting into full swing.

"The fourth quarter of this year looks to be shaping up as one of the strongest in this industry's history," said Bob Chapek, president of Buena Vista Home Entertainment, Burbank, Calif., and president of DEG. "Not only has the hardware penetration grown beyond our expectations, the lineup and diversity of the software titles being offered will prove to make this year-end a phenomenal success."

Figures compiled by DEG based on data from the Consumer Electronics Association, Arlington, Va., show more than 6.4 million DVD players were sold to U.S. consumers in the third quarter of 2003, a 36.5% increase over the same quarter in 2002. More than 73 million DVD players have been sold to consumers since the launch of the format in 1997, DEG reported.

Adjusting for the 34% of DVD owners who now have more than one player because of combination TV/DVD players, DVD-audio/video players, and recordable, portable and car units, DEG estimates that 48 million U.S. households are now in the DVD market.

Software shipments are also keeping pace with this growth, DEG said. In the third quarter of this year, almost 215 million DVD software units shipped to retail, up 40% over the same period last year. The total number of units shipped in North America is now over 2 billion since the format's launch, according to numbers compiled by Ernst & Young, New York, for DEG.

"We are very excited about the sell-through business. DVD has been absolutely terrific for us," said Chuck Porter, director, Iggle entertainment and video, Giant Eagle, Pittsburgh.

Meanwhile, a study from IDC, Framingham, Mass., reports that the average selling price of DVD recorders is falling rapidly now, and projects that it will go from 2002's $699 to $126 in 2007. "Retail prices are falling rapidly across every DVD player category," said Susan Kevorkian, senior analyst with IDC's Consumer Devices and Technologies program.

"The DVD market will continue to exhibit strong growth through 2006 driven by falling costs, diverse form factors and widespread adoption of DVD recorders by consumers," said Kevorkian. "However, the market will not sustain this kind of growth indefinitely. In 2007, IDC expects total DVD player unit shipments to decline modestly for the first time due to growing saturation worldwide."

IDC's market forecast shows that worldwide shipments of DVD recorder decks will surpass DVD units with play-only capability in 2007, and revenues from the sale of recorder decks will surpass the players in 2005. IDC expects the worldwide unit shipments of recorder decks to grow at a 126% compound annual growth rate during the forecast period.