Video products got simultaneously bigger and smaller in 2005 with big-screen HDTV and tiny screen mobile devices sharing the spotlight.

DTV, led by high-definition (85 percent of the total), paced the industry with a sales increase of 60 percent to some $17 million in 2005, while the growing popularity of flat-panel display technologies, most notably plasma and LCD contributed to the phenomenon. The venerable cathode ray tube, the stalwart of the TV business since its inception six decades ago, has met its match in the digital age, as LCD and plasma displays accounted for 40 percent of DTV sales last year.

One of the final building blocks of the DTV transition was put in place with the adoption by Congress of a date for the shut-off of analog TV broadcasts and the return of the analog spectrum. In early 2006, President Bush signed the legislation into law that sets the cut-off date at February 17, 2009.

Perhaps the most profound development in the onset of DTV is the increased adoption of digital video recorders (DVRs) that let viewers create their own personal prime time to watch their favorite programs at their convenience. Add to this the growing use of DVD recorders, and the product that launched the home video revolution nearly three decades ago, the video cassette recorder (VCR), seems to have reached its sunset years. However, consumers still purchased more than a million VCRs in 2005, many in combination with DVD players or recorders to accommodate their existing library of cassettes and the new generation of DVDs. The combined sales of DVD recorders and DVRs approached four million units in 2005 and should pass 6.5 million units in 2006.

Mobile DVRs also became popular in 2005, especially after the category got a media boost with the introduction of the Video iPod. Multiple-use digital players that can store thousands of songs, pictures and hours of movies and television programs have yet to achieve widespread use, so there is a big upside for the fledgling category.

Even more radical innovations in the video realm came in the form of the SlingBox from SlingMedia and Sony's 3Location Free TV, two space-and-time-shifting devices that let the user transfer home TV or DVR-stored programs to a laptop or other screen virtually anywhere.

In addition, 2005 marked the launch of  the next-generation of sophisticated video game consoles which, boosted by the handheld portables that do much more than just play games,  should push the game market to $14 billion in 2006 an increase of $2 billion over 2005.   

Video continues to be one of the hottest product categories with total revenues exceeding $21 billion fueled by the transition to high-definition television (HDTV) and the public's fascination with new digital display technologies.

CE products often capture the imagination of the American public, but the flat-screen TV, a holy grail of the industry since the early black-and-white days, rapidly is becoming a singular phenomenon. We saw the future at the 2005 International CES in Las Vegas where flat screens dominated. It's a scene now proliferating in retail stores and soon will become prevalent in homes during the next several years.

Sales of plasma displays more than doubled to some 800,000 units with expectations that those figures will nearly double again in '05. Liquid crystal display (LCD) models have long been strong in small screens, but are growing more popular in home theater sizes, competing with plasma in the "hang-on-the-wall” HDTV market.

Other digital video products also are taking hold in American households, especially digital video recorders (DVRs), which approached two million unit sales in 2004, including those built into cable and satellite systems. Although much of the attention in the transition to digital television (DTV) has focused on high-definition pictures and superior surround sound, the capability of the DVR to let the consumer become the programmer represents the most profound impact of this new medium.

The digital transition for watching Hollywood movies at home is nearly complete. Sales of stand-alone digital video disc (DVD) players have reached a two-year plateau above 21 million units, as VCR sales fell back to just over two million in 2004, down from a peak of 23 million in 2000. DVD recorders are beginning to take hold too, including combination units that include a VCR and disc recorder in one for increased simplicity. And DVD is still a young technology. In the coming year, we can look forward to the opportunities presented by the next generation of high-definition DVDs.

DVD capability is built into the newest video game players, a reflection of the sophistication of the product and the maturation of the market. Video games aren't just for kids anymore. Generations that grew up playing video games continue to enjoy them as adults, creating an $11 billion market for game consoles and software. Handheld game players are expected to get a big boost in '05 as a new platform adds competition in the portable market.

Digital America 2006