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High-def DVDs critical for future growth, says analyst group

Erik Hanson

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.

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