Just as next-generation DVD is about to enter the marketplace with a battle royale pending between its two incompatible formats, reports are starting to circulate that consumer spending for standard DVD disks is slowing for reasons that are not yet fully clear. (One reason may simply be the fact that the concentration of early adopters continues to be diluted year by year as three-quarters of all U.S. households now have DVD. Early adopters spend more than later adopters.)
When introduced a few years ago, DVD quickly evolved into the most successful consumer electronics rollout ever--prior to the iPod. Now industry stats indicate that spending through early July grew barely 1 percent, which would indicate a record low for DVDs.
Early adopters purchased nearly as many DVD disks annually as many households were renting from video stores. According to published reports, Fox Home Entertainment says "newer" DVD consumers currently are buying about seven disks per year; early adopters bought 14.
No doubt affecting the lower numbers this year were two widely anticipated computer-generated motion pictures that were box office successes. Pixar's "The Incredibles" and DreamWorks' "Shark Tale" both under-performed on disk.
They both sold quite well, however, and DVD sales could hardly be said to be in a slump. Overall consumer spending so far in 2005 is approaching $11.5 billion. Meanwhile, studios continue to rake in huge profits on virtually all big DVD titles. Several major motion pictures still earned more money annually on DVD than in the theater.
So what do slower DVD sales, relatively speaking, portend for the next generation of disks in the formats of HD DVD and Blu-ray, if anything? Too early to say, but the remaining sizeable amount of DVD-expendable dollars out there would appear to leave serious extra room for gradual HD disk penetration--if consumers continue to show increasing interest in purchasing less expensive HD sets. And, of course, if they are not totally baffled over two competing HD formats.
