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DVD Group Challenges NPD Sales Report For 2000

2/12/2001 02:00:00 AM Eastern

Apparently, more is spinning lately in the DVD industry than optical discs. The DVD Entertainment Group (DEG), a promotional association of DVD video and audio hardware and software marketers, has publicly criticized a market research firm's DVD player sales report for 2000, saying it was more than 3.2 million units low.

"Last week, NPD Intelect released its DVD unit sale figures for calendar 2000, which show DVD sales figures of 6,625,617," the DEG said in a prepared statement. "Although this reflects an increase of 115 percent above their 1999 levels, these numbers are significantly lower than most other DVD reporting services."

For its part, the DEG estimated sales of DVD players topped 9.8 million units, a total that was just 200,000 units short of NPD Intelect's originally published sales forecast for the year 2000.

The DEG postulated that the discrepancy resulted because "NPD Intelect's figures do not reflect information from all distribution channels and fail to capture data from online e-tailers, mail-order companies and home shopping networks. Also, NPD Intelect does not sample a broad number of mass-market merchants and independent specialty outlets. Moreover, they fail to report any figures from Circuit City, one of the nation's largest consumer electronics retailers."

In response, NPD senior analyst Tom Edwards defended the report and corrected the DEG's assessment of NPD's panel of reporting retail sources.

"Circuit [City] is in our panel and we estimate our coverage of mass merchants at 94 percent," Edwards said. "We miss Price/Costco & BJs."

Edwards acknowledged that data from Intelect is reported and projected for retail sales from stores, but misses e-commerce, catalog, telemarketing, direct mail, institutional, educational, commercial, B2B and military base distribution. Still, he said the total accounts for only an additional 10 percent, at best. Intelect also didn't consider mobile players, navigation products and video game consoles that play DVD movies-all of which represented comparatively small numbers in 2000.

"The economy had a slight effect on sales" beginning in August, but was only a small factor in the drop from expected sales, said Edwards. The main reason for the shortfall from NPD Intelect's original estimate was probably "the fear factor" [of a new technology] on the part of mass-merchant buyers.

"DVD was expected to be the strong Christmas 2000 gift item, with as much as 75 percent of the year's sales expected in the last two months," he said. "November and December actually represented only 50 percent of the year's DVD sales. The mass merchants' share of the volume grew to only 25 percent of DVD sales, compared to 57 percent in VCR."

According to Edwards, "Retailers may have been concerned that their vendors did not have DVD and Macrovision licensing for their low-priced, promotional product, and feared they may be held liable for these costs."

As for 2001, NPD Intelect is forecasting sales of 12 million units over the 12-month period. NPD said its forecast for average unit pricing was accurate at $187.50 in November and $198.15 in December. "We don't even want to think about the average price in December 2001," Edwards added.

Meanwhile, the DEG said its sales figures were based on unit shipments released by the Consumer Electronics Association, as well as sales projections derived from data compiled by leading retailers and manufacturers. "As such, the DEG believes that its figures represent a more accurate picture of the entire DVD market place" the statement read.

CEA estimated the volume of factory sales-to-dealers for 2000 at 8.258 million players.