High-def DVDs critical for future growth, says analyst group
By Erik Hanson 
posted Oct 10th 2006 11:54AM
posted Oct 10th 2006 11:54AM
If you've been reading our fine site for any length of time now, you might want to sit down while you're reading this because Kagan Research has released the Eleventh Edition of their State of Home Video report, and it says that high-definition DVDs are the future. Pretty shocking stuff for our regular readers and listeners of the podcast. Now, we all knew that despite the many heated battles we've had between the two formats, that this wasn't going to happen overnight, and the Kagan analysts have some numbers to go with their predictions. For the time being, high-def will be a speck in the distance for home video sales, with less and a half of a percent (a mere 100 million or so) of the $16.9 billion to be had in one year. By 2009, they predict VHS will be all but gone -- as if it weren't now?? -- and HD will be $2.6 billion, up to around 15% of the total. That's still not exactly a huge amount, and it will take up to 2015 for it to be the majority at $18.3 billion.Of course, for video in general, the boom times are already on the way out, as consumers simply can't buy any more videos than they already are, so the rapid growth we've been seeing for the past five years will slow to a more manageable 1 - 2% a year. A slowing of rental revenues will also contribute, as customers begin to get more content through video on demand and streaming than renting at the local store or via Netflix. Online revenues have also grown 67% faster than physical store sales since 1997. Another number to note is that 491 titles were released on DVD in 2005, with 158 so far this year in high definition. Give a few more releases for the remainder of the year, and we can give a decent prediction of 238 by January, which means almost half of the number released on standard DVD. Not terrible for the launch year of two brand new formats, and considering the percentage of sales expected.
True, HD DVDs may be the future, but that by no means concludes that BRD or HD-DVD are those formats. We have higher than 1080p rez sets coming out now. So, in two years when one of the two HD DVD formats most likely wins, we'll be ready again for the next step up in rez. THere is no real end so I see it as steps. BRD may or may not win this current format war, but who's say someone isn't working on a higher than 1080p format DVD?
Not to mention, I think stored media is the future, not disks that degenerate, break, scratch and take up huge cabinet space.
True higher then 1080p sets are already 'here' but the truth is the 'masses' (and THEY drive the market, not 'us' who hang out on this site all day) will take MANY years JUST to get caught up on 1080i/1080p. Add to that the confusion consumers have regarding the competing formats I don't see HD DVDs hitting a major share until another 10 years (as mentioned in this report). It's the 'common person' that makes up the market - not 'us'.
The days of me buying movies are pretty much over. I found that I have a huge collection, many of which I only watch once.
Netflix is a much better fit for me.
And even though I have a HDTV, I don't have any immediate plans to purchase an HD player. I receive HDTV channels, and they're noticably better. But there's nothing wrong with my current DVD player. And I've never had a problem watching DVD movies.
To think everyone is going to run out and immediately convert everything to HD is being optimistic.
I think HD players really need to hit the sweet spot of sub $300 before that becomes mainstream.