Industrial Strength: Everyone pitched in to make DVD technology a hit in ’99.
DVD is now a household word – even if nobody’s sure what the letters stand for. While debate continued over whether the future of recorded video and music is a “digital video disc” or a “digital versatile disc,” DVD definitely made a name for itself as a home-entertainment device in 1999.
Sales growth was so impressive that the technology was hailed as the most successful consumer electronics product launch in history. Sales of stand-alone players (as opposed to the ones installed in computers and other products) more than tripled last year, accounting for $1 billion-plus in retail sales in North America, according to the DVD Entertainment Group, Los Angeles. The installed base surpassed five million in the U.S. and Canada and 8.5 million worldwide, according to various sources.
On the content side, sales of DVD movies and music videos passed $2 billion last year; nearly 100 million titles were sold, with half that figure coming in the fourth quarter. Title sales in 1997 and 1998, the first two years of DVD’s existence, were only about 30 million.
Getting DVD accepted as the next big thing has been an industry-wide effort almost from the start, says Ted Pine, president of Norwich, VT-based market researcher InfoTech, Inc. “The thing that made DVD different [from other electronic products] was that you really had the hardware and content people working together.”
Teamwork included promotions spearheaded by the DVD Entertainment Group, a nonprofit association comprised of just about every DVD manufacturer and the home video divisions of most Hollywood studios. An effort launched for the second half of ’99 dangled five free movies including Warner Bros.’ Lethal Weapon 4 and New Line Cinema’s Lost in Space with the purchase of a DVD from any of seven manufacturers. Everybody’s friend and co-worker Blockbuster Entertainment, Dallas, sweetened the deal with 13 free rentals.
Pine thinks DVD’s rapid acceptance has resulted primarily from quick price reductions – SRP has been halved from the original $700 to $1000, and cheap imports can be had for as little as $150 – and the speed with which studios have ramped up title production. (About 4,500 titles are currently available.) “The sheer number of titles has been phenomenal for a new format,” he says.
“The promotions certainly added to the value proposition for consumers,” says Pine. But their greatest asset was in winning over retailers – especially rental outlets – who initially had been skittish about jeopardizing sales of the good-old VHS format. “It gave them a way to launch the product,” he says.
Studios individually pushed DVD hard throughout the year, forming separate alliances with the hardware makers (Warner and Toshiba offered $50 off a player with the rental of any two titles on either DVD or VHS) and offering a variety of rebates. (Universal gave $10 rebates on The Mummy with the purchase of three “classic” titles.)
Expanded storage capabilities make DVDs their own promotional devices: Studios can jazz up the main attraction with additional footage, interviews, and the like. The software’s technological flexibility – pop it out of the player and into your PC – lets studios add posters, screen-savers, even connections to online events. Warner Bros. held an online screening of The Matrix and a chat with directors Andy and Larry Wachowski in November for the one million-odd consumers who had purchased the title.
The linguistics debate is over: This disc is versatile.
