DVD Title Wave Driving Low Player Prices

Though still a relatively small market with roughly 2 million DVD-Video players installed in U.S. homes now, the title wave of new DVDs such as ""Titanic,"" ""The Matrix,"" ""The Prince Of Egypt,"" ""The Mummy,"" ""Austin Powers: The Spy Who Shagged Me,"" ""Saving Private Ryan,"" and the upcoming slate of Disney animation classics (though with a limited 60-day release) is beginning to drive DVD-Video player prices down to below $200 at major retailers. The rapid movement to below $200 price points for DVD-Video players is key to the format realizing the latest projections of 4 million DVD-Video players by the end of the year.Best Buy, the leading DVD retailer, reports that the chain has already expanded the display space dedicated to DVD software by 35 percent and acknowledges that DVD revenue has surpassed VHS revenue at the chain. In late August the chain began advertising a DVD-Video player below $200 for the first time. The basic models are manufactured by Oritron and KLH. Players from major, recognizable brands are expected to be offered toward the beginning of the holiday season and thereafter. Other chains too are offering no-name players below $200. With the major manufacturers introducing an increasing number of basic models priced below $200, major retailers are increasingly committed to promoting DVD front and center, making DVD the must-have electronic toy of 1999.Another indicator of the growing mainstream acceptance of DVD is the commitment this summer of Target and Wal-Mart, who have increased their display space allocated to DVD. As the trend continues at major retailers, this in turn will further drive player even lower. Perhaps by Christmas basic models will be advertised for $149. Prices now range generally from $299 to more than $1,000 depending on features and build quality.E-tailers also are driving down the cost of DVD-Video players with low-cost title pricing. Generally as a group they are expecting this yearís holiday season to be at least 200 to 300 percent bigger than 1998. Last year online retailers sold about 3 million discs, about one-third the number sold through traditional brick-and-mortar outlets. With such dramatic growth projections online retailers are rapidly expanding their operations, service, and distribution facilities to accommodate the anticipated growth. DVD Express has moved from an 8,000-square foot warehouse to a 66,000-square foot space. DVD Wave has quintupled its programming and fulfillment staff to 17 people and moved to larger quarters. And both Reel.com and Amazon.com are making efficiency improvements to their distribution centers. Amazon.com has distribution centers in Nevada, Georgia, Delaware, Kansas, Kentucky and Washington. According to Emil Petrone, Chairman of the DVD Video Group and also Executive Vice President of Philips Entertainment Group, ""Historically what happens in a marketplace thatís as explosive as DVD-Video systems is that youíre going to find there are a lot of new manufacturers that want to jump into the marketplace and take advantage of the demand among consumers."" Among the newest manufacturers that have already announced below $200 player pricing is Konka of China. Reportedly Circuit City will be carrying the Konka brand. Then too the studios are forming all sorts of joint promotional relationships with player manufacturers to further drive the growth of DVD. All this is sure to propel the format toward achieving the end result that is projected.