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.