LONDON: After having claimed dominance in the US and European markets, the DVD (Digital Video Player) is now poised to sweep the video business in the Asia-Pacific region as well.
In South East Asia, the only competition that the digital format faces is the disc-based video format - Video CD, states a study by Screen Digest.
Screen Digest's senior home entertainment analyst, Helen Davis Jayalath explains, "In the shorter term, the VCD player will continue to prove popular with many Asia-Pacific consumers due to its low cost and the widespread availability of cheap VCD software. However, DVD is already becoming the format of choice in the mature markets of Japan, Australia and New Zealand. In the longer term, the DVD Video player will become increasingly important throughout the region; our forecasts indicate that by the end of 2006 139m Asia-Pacific homes will have a DVD Video player or recorder - more than five times as many at the end of 2002 and almost 20 per cent of all TV households in the region."
According to the report, India, South Korea and the Philippines are likely to be of particular interest to the US studios and other video distributors over the next few years. The distributors' revenues from India, is expected to to increase by almost 130 per cent between 2001 and 2006.
The study however reveals that, new hardware indicates additional software sales and simultaneously total consumer spending on DVD software to increase by 165 per cent over the same period, thus generating an estimated $8.2bn by 2006. This will be fuelled in part by an anticipated fall of 16 per cent in the average retail price of a DVD during the same period.
Interestingly, the expansion of the DVD sector will help boost total consumer spending on all video software (DVD, VCD and VHS) by over 40 per cent, the report says. By the end of the forecast period, DVDs will account for almost 70 per cent of consumer spending, up from just over one-third in 2002.
According to the author of the report, David Scott, the sheer size of the Japanese market means DVD will continue to dominate the Asia-Pacific video business. "Japan remains the world's second largest single territory video market after the US, and the third largest (after the UK) for Hollywood product. However, China and India boast two of the largest potential consumer markets worldwide and demand for legitimate video product is growing in these territories".
Piracy, however continues to pose a major threat to the potential of the Asia-Pacific business. The lack of copy protection on VCDs ensures that vast numbers of counterfeit discs flood the market at rock-bottom prices, making it impossible for rights holders to raise the price of legitimate discs. Meanwhile the availability of DVDs offers criminals a perfect digital master for copying, ensuring that the quality of counterfeit products is improving, adds the report.
The bottom line is that ultimately, the DVD will replace both VHS and VCD. The speed at which this occurs in each country will depend on how quickly DVD hardware and software prices decline, combined with the effectiveness of efforts to combat the trade in counterfeit discs.
Equally important, however, will be the rate at which consumers in the region become more discerning in their attitudes toward software quality. As a result, Screen Digest foresees a period of co-existence between both disc-based formats before DVD eventually predominates across the whole Asia-Pacific region.
