Video Source Components Advance
For nearly a decade, big-screen television sales have enjoyed considerable growth, thanks to the tremendous popularity of DVD optical disc players.

These components for the first time offered video signal sources with as many as 480 lines of resolution, higher than signals available from TV broadcasts, cable systems or VCRs. The players also offered true 5.1-channel surround sound and the ability to play other disc formats, such as audio CDs.

A true hybrid technology, DVDs were designed to deliver digital quality pictures and surround sound to analog television sets and audio receivers. However, with the introduction of DTV sets and monitors, the digital signals these players decode from optical discs are being displayed in their full potential on high-scan video screens.

The strength of the DVD format remains, although the Digital Entertainment Group (DEG) and CEA both predict sales volumes to decline slightly in 2005.

A growing DVD trend comes from the sale of DVD recorders. As entry prices drop below $300, more consumers are purchasing video recorders that use optical discs instead of magnetic tape to produce pictures with higher resolution and to preserve those recordings for longer periods of time.

Double-Digit DVD Gains
Retail-level DVD player sales grew 10 percent in 2004 to 37.1 million units following a 34 percent gain in 2003, a 50 percent gain in 2002, and a 69 percent gain in 2001, according to the Digital Entertainment Group (DEG). The sales gains brought DVD’s stunning video and audio potential to an installed base of more than 70 million households in January 2005 compared to only 15.2 million in 2000, DEG said. That's a remarkable achievement for a product available in the U.S. only since March 1997.

DVD sales gains are driven not just by the format’s superior picture and sound quality or by the format’s interactive features. Mass-market affordability also has driven acceptance. Low-end DVD players could be found as low as $29 during special promotions after only eight years on the market. Prices are so affordable that 75 percent of U.S. homes owned at least one DVD player in January 2005, less than eight years after the first DVD player was sold, a CEA consumer survey shows. That’s up from about only 25 percent in January 2002.

By the end of 2005, DEG projects that 80 percent of U.S. households will own a DVD player in one form or another. Those forms include component and portable DVD players and DVD-equipped HTiB systems, which package all of the audio-related components needed to create a surround sound experience into a single purchase. HTiBs incorporate speakers, surround sound decoder, amplification, and more often than not, a DVD player – everything but the TV

More than 1.5 Billion Sold

Strong hardware sales, in turn, have stimulated DVD software sales. In the U.S., movie studio shipments of DVD discs for sale or rent rose in 2004 by 48 percent to 1.52 billion following 2003’s 49 percent gain and 2002’s 88 percent gain, DEG said.

In addition, consumer spending to buy and rent DVDs rose 32 percent in 2004 to $21.2 billion following growth of 39 percent in 2003 and 71 percent in 2002. DVD software sales are so strong that in 2004, they accounted for 87 percent of all consumer spending on home video software (VHS tapes and DVD combined).

All told, the $21.2 billion spent by consumers on DVD software in 2004 easily exceeded the $9.21 billion that consumers spent in 2004 on movie tickets, according to Nielsen EDI, which captures box-office results from U.S. movie theaters. Add in another $3.3 billion in VHS sales and rentals in 2004, and the gap between home video and movie ticket sales grew wider.  

VCR Sales Give Way to DVD
For years, stereo VCR decks have been the main video source component in a home theater system, but DVD players are eroding that role. In 2005, VCR deck sales are expected to decline for the fifth consecutive year, this time hitting 1.4 million units, down more than 35 percent from sales of 2.2 million units in 2004. In 2005, virtually all deck sales will be stereo models, CEA reported. Meanwhile, average unit pricing is expected to drop to $51 from $58 in 2004.  

One of the first components to make possible the home theater experience was the VCR. These tape-based recording and playback devices generated a whole new industry for prepacked videocassettes that deliver all stripes of video entertainment – from feature films to exercise classes – on half-inch magnetic tapes conforming to the VHS standard. In addition to video, VCRs sold today offer hi-fi stereo sound that can be converted to surround sound entertainment by attached A/V receivers.
A big segment of the VCR market today combines VCRs with DVD recorders. These allow users to dub their old VHS tape collections to longer-lasting DVD discs. Another emerging VCR technology for the digital age, called D-VHS, allows consumers to record and play back standard and high-definition digital programming on special D-VHS cassettes.