Throughout the holidays, it has become clear that DVD has made a remarkable impact on the consumer electronics industry, topping both hardware and software sales in the fourth quarter.
As we move into 2001, DVD-Audio will become an increasingly important factor in the marketplace, both benefiting from and building on the momentum established by DVD-Video.
Designed through the collaboration of music companies and CE manufacturers, DVD-Audio offers dramatically superior sound quality that is readily appreciated by all who hear it.
The new format gives artists tremendous creative flexibility, not only with the ability to provide surround-sound mixes, but also the option to include unique visual content such as onscreen photos, credits and discography-all viewable during the advanced-resolution music playback.
Some DVD-Video, such as a music video, artist interviews or archival footage, can also be included.
It is important to emphasize that the key difference from DVD-Video is that the capacity of DVD-which is seven times greater than CD-is used primarily for uncompressed advanced-resolution sound on a DVD-Audio disc. This provides a listening experience far more faithful to the original recording and much closer to the artist's original vision.
In addition, a DVD-Video-compatible mix can be included on the same disc to enable playback on existing DVD-Video-only players. Long term, we anticipate that virtually all DVD players will play advanced-resolution DVD-Audio in addition to DVD-Video discs.
We have seen the happy expressions of consumers when they learn that all these DVD players play their CDs-making the DVD combination players the ultimate playback device for the home theater.
From the music-company perspective, we are very pleased by the great support DVD-Audio is receiving from the hardware community, including such leading companies as Denon, JVC, Kenwood, Onkyo, Panasonic/Technics, Pioneer and Toshiba.
The range of player models is unprecedented for the first year of a new audio format. In addition to the single-disc home decks, consumers will be encouraged by the opportunity to upgrade a number of their CD players to enjoy CD/DVD-Audio playback in all the locations where they currently listen to CDs. This includes combination DVD-Audio/Video single-play and carousel players for home theater rooms, minisystems for the office and bedrooms, portables and car units.
We are already seeing positive responses in the marketplace from the initial releases of two DVD Entertainment Group companies-Warner Music Group and 5.1 Entertainment Group-which have the first DVD-Audio titles in U.S. retail stores.
A positive press response is not only appearing in trade publications, but also in consumer media outlets such as the leading audio-specialty magazines, ABC News online, USA Today , and major market newspapers throughout the United States.
Throughout the past year the recording-industry infrastructure has been gearing up to accommodate the new demands and opportunities created by DVD-Audio. This involves a significant number of businesses-ranging from independent recording and mastering studios, to graphics houses and record labels-working together to prepare titles for release in 2001.
The buzz in the creative community is building rapidly as the excitement and enthusiasm from the initial artists involved in DVD-Audio is communicated worldwide.
And as the learning curve for the new creative tools continues to shorten, the range of new releases will expand dramatically.
That is why we believe 2001 is the year DVD-Audio will establish exciting new consumer benefits to fuel the DVD momentum in the marketplace.
This is great news for retailers, who will see a ripple effect stimulating sales from discs and players and driving a growing population of products-including audio/video amplifier/ receivers, home theater surround systems, speakers of all sizes for a variety of locations, and large-screen/high-quality TV monitors.
It is clear that successful introductions require significant consumer education. To that end, the recently completed DVD Entertainment Group DVD-Audio consumer brochure will be launched in Las Vegas at CES and VSDA. This is just the first element of support for DVD-Audio.
In coming months, the DVD Entertainment Group will play a critical role in ongoing consumer education and promotion efforts that will link the addition of high-quality audio playback to the full range of DVD-based products and related peripheral devices.
We have a rare opportunity to offer a new product that has such an excellent foundation to build upon. And the benefits delivered by DVD-Audio are genuine and available to everyone-artists, music companies, hardware companies, retailers, and most importantly, consumers.