Declaring that VHS is still the 800-pound gorilla of the industry and that “reports of its demise have been greatly exaggerated,” the International Recording Media Association announced an upcoming promotional effort aimed to retailers, software marketers and duplicators that will stress the format’s ongoing viability.
The announcement came at a media briefing, where IRMA also released some of the findings of its Worldwide VHS and 8mm Videotape Market Intelligence Report.
Scheduled to start later this year, the campaign is designed “to remind people that VHS is not a dead format,” said Fuji Photo VP Stan Bauer, who is an IRMA director and co-chairman of the VHS Coalition, which is co-sponsoring the campaign. “Regardless of how big VHS is and how long it has been around, we want to make sure that VHS will be here a long time and we intend to support it aggressively.”
Commenting on the need for the campaign, Bauer said “all the hype being given to DVD sends the signal that VHS is a dead format.” But retailers have to remember that they still have customers, coming to buy both blank and prerecorded video cassettes. Yes, he said, dealers do have to expand their DVD departments, “but there is still a growth opportunity in VHS,” hardware and software.
In software, Bauer added, that growth potential extends well beyond movies and other entertainment and instructional programming. VHS is now being utilized by direct marketers, and IRMA is launching the first-ever study to determine how effective a sales tool it is.
IRMA president Charles Van Horn noted that as VHS approaches its 25th anniversary, both hardware and software sales are robust, despite the arrival of DVD. “It shouldn’t be an either/or decision,” he said. “VHS is here to stay, and the industry should support both formats.”
Van Horn acknowledged that the blank tape industry missed the boat when it came to supporting the market for audio cassettes right after CD appeared on the scene. He said both retailers and the music markets were too quick to start walking away from the cassette, which in turn forced consumers to switch over sooner than they probably would have.
Van Horn pointed out that despite VHS decks having a 93% penetration of U.S. TV homes, sales continue to set records because the trend is to have a deck for every TV.
“Ten years ago, only one in ten families owned more than one VCR,” while today 53% have two or more, he said. High rates of multiple-VCR household ownership also showed up in other countries, such as Japan, which was at 45% in 1999, and in Europe, where the rate is 32%.
IRMA’s recent report also indicated that the industry generated $11.8 billion in program supplier revenue in North America. Worldwide VHS supplier revenues are projected to reach $78.3 billion over the next five years, Van Horn said, with North America accounting for nearly $47 billion in total revenue.
IRMA statistics showed that worldwide factory revenue of duplicated VHS video cassettes remained steady at $20 billion last year. In addition, worldwide T-120 equivalents accounted for 1.4 billion units in 1999, comparable to 1997’s figures, and unit sales in the North American home video program market reached 1.1 billion units, a modest increase over 1998. Worldwide units totaled 1.8 billion in 1999, Van Horn said.
In conclusion, he said IRMA estimates that DVD sales will continue surging this year, and by the end of 2000 they will be in 15 million households worldwide. But, he pointed out, that compares to more than 400 million VHS households owning some 600 million VCRs.
“It would be a disservice if retailers converted too quickly to DVD,” Van Horn stated. “We don’t want to disappoint consumers who are looking for VHS.”
