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DVD Market: Players, Recorders, Media, and Future

Posted: 02.10.03

FEBRUARY 10, 2003 • TIBURON, CA—The DVD market is huge, and getting larger; very rapidly. No longer limited to home entertainment playback boxes, it is being combined with increasing numbers of consumer electronics products; computers, portable devices, appliances and industrial systems—DVD is everywhere.

This report discusses all of these form factors plus the new integrated combo systems with DVDs in them, and offers four-year forecasts and market trends for home entertainment systems, computers, portable DVD, vehicle DVD, and DVD recorders. We include a discussion of DVD semiconductor components, their suppliers, and the software decoders and editing systems.

The study is a supply-side report primarily focused on drive shipments and subsequently on products with DVD drives in them. There is also a discussion on the semiconductors used in DVD systems, the media, the end user software, and the technology including some discussion on copy protection.

The report covers the companies, and some of the suppliers' products.

There is also a look into the future both in market forecasts and technology.

Executive Summary

This 2003—2006 DVD market study found the total market for all types of DVD systems (players, recorders, set-tops, PCs, etc) will be over 420 million units in 2006—a CAGR of 31.4% combined, and 271% for recorders.

In the report we cover the market size and forecast for five platforms plus semiconductors, software, new technology, the eDVD, licensing, and copy protection.

The media production for DVDs will exceed 1.6 billion discs in 2006, a CAGR of 159%.

Semiconductors are one of the major benefactor of this phenomenal growth, enjoying a 44% CAGR of 44% by 2006.

Software decoders, editors, and encoders also benefit from the explosion of the DVD market.

Since the introduction of the DVD in 1996 and as an entertainment device, DVD is enjoying very fast growth, as evidenced by meteoric U.S. sales since mass-market introduction only six years ago.

DVD players first started shipping in Japan in 1996 and the count for shipments of consumer DVD starts in 1997 as supply rises and titles start coming out. The first title published on DVD was A Hard DayÕs Night. Since then, DVD has enjoyed the most rapid rise of any consumer electronics technology ever introduced.

The technology has caught the imagination and interest of consumers. DVD set-top box players have boomed in sales due to the price-elasticity of this segment driven by the reduction in the average selling price The average selling price fell from $504 in July 1998 to $129 in major retail outlets as of December 2002 with some units going for as low as $39.

DVD STB players have been a CE segment enhancer producing a ripple effect in the home theater category as consumers upgraded their TVs and their sound systems, as well as digital TVs and DVR/PVRs (Digital/Personal Video Recorders).

This report provides a discussion on the Technology and basic Definitions, as well as market sizing information.

Recordable Formats

There are five recordable formats for the DVD disc: DVD Audio, DVD+R, DVD-R, DVD-RAM, and DVD-ROM, where DVD-ROM is mass produced for movies, games, and computer programs, and DVD+R, -R, and RAM may be produced by consumers. DVD audio is mass produced for music.

Two organizations exist, the DVD+RW Alliance (+R), and the DVD Forum (-R, and RAM). Multi-function drives are being offered that will write in most if not all of the formats, hopefully putting an end to the confusion.

We have entered the era of Digital Darwinism where any combination of features and functions can be built. This is yielding systems that have DVD and VHS, DVD with web searching capability, DVD and TV, DVD and PVR and satellite, etc. These are marketing experiments and many if not most of them will, as with any experimental species, die

Copy protection and Digital Rights Management exists in the form of the Content Scrambling System (CSS), and regional coding. Hollywood wants more aggressive copy-protection, especially when the DVD player can output the information in digital form. This is a highly controversial issue right now

We define the market as having five platforms that employ DVD drives:

Stand alone CE devices (set top boxes) which includes Stand-alone Consumer Electronics Players (CE-Ps), and Stand-alone Consumer Electronics Recorders (CE‑Rs).

Integrated CE (TV, DVR, A/V systems and others) which includes game consoles and Integrated Consumer Electronic Players (ICE-Ps), and Integrated Consumer Electronic Recorder (ICE‑Rs)

Computer, which is comprised of desktop PCs, mobile computers, and workstations and includes Computer-based Stand-alone External Players (C‑Ps) and Computer-based Stand-alone External Recorders (C-Rs)

Automotive, which includes entertainment and other systems.

Personal mobile, which includes players and camcorders.

Summary of market size

The combined numbers for players and recorders is shown in the following diagram

total dvd

Figure 1. Total DVD Player/Recorder market size

The data indicates a very robust and good growth rate for the DVD drive market, its associated semiconductors, and the platforms and boxes they are installed in.