LA QUINTA, CALIF. — The U.S. market is adopting digital-versatile-disc technology at a rapid pace, but DVD hardware and software suppliers may not move fast enough to meet this year's expected demand. "Society is changing, and the consumer is quicker to adopt products," said Steven Nickerson, vice president for worldwide DVD marketing at Warner Home Video in Burbank, Calif. Warner Home Video is a unit of Time Warner Inc.
Nickerson was a keynote speaker at the International Recording Media Association forum, held March 15-19 in La Quinta.
Nickerson said last year's domestic shipment of four million DVD players outstripped forecasts and created product shortages in the fourth quarter. Some replicators imported European production to make up shortfalls.
Based on industry data from several months ago, the Consumer Electronics Association of Arlington, Va., forecast sales of 6.5 million players, and the DVD Entertainment Group of Los Angeles projected 8 million.
Nickerson said hardware sales in 2000's first nine weeks were at 200 percent vs. 1999 comparables. As a result, he expects 2000 sales of about 10 million DVD players.
"There is the possibility to ship twice as many discs this year as were shipped in the last three years combined," Nickerson said. "Is anybody in this room really planning for that?"
He estimated market demand of 20 discs for each new DVD machine and 10 discs for each installed machine. He didn't account for Sony Corp.'s fast-selling DVD-enabled PlayStation 2. Most PlayStation discs are CD-ROMs.
"Capacity to supply polycarbonate for this ever-expanding market would result in some tightness in the next year or two," Ramesh Pisipati, industry manager with Bayer Corp. in Pittsburgh. "For global players like GE and Bayer, we have to make our material available in all markets, and that has resulted in some tightness of supply."
Pisipati said projections for the United States and Europe look at double-digit growth and Far East market at much more.
DVD makers face competition for semiconductor chips from cellular phones, personal digital assistants and games manufacturers. Those fast-growing industries don't forecast conservatively, Nickerson said.
DVD is achieving a steep adoption curve and may exist in 10 percent of domestic homes by fall, Nickerson said. The format was introduced in 1997.
By contrast, color television sets needed 13 years to reach 10 percent penetration, videocassette recorders 11 years and compact disc players six years. Color TVs, VCRs and CDs each moved past 20 percent in an additional two years and became established products.
"A 10 percent penetration rate in the U.S. is very important," Nickerson said.
Potential DVD roadblocks exist. Future DVD formatting compatibility of recordable and high-definition products could confuse users.
"There could be a negative backlash, and we want to remove that wherever possible," he said. "If they are not backward compatible to 10 million or 15 million machines out there, then you are causing a problem."
Low title availability in the international market is another possible pothole.
About eight million homes in the United States have read-only-memory DVD now, he said, and that niche is growing fast.
The European market is about one year behind the United States in DVD hardware deliveries, and some global regions remain in launch or pre-launch mode.
