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Toshiba: DVD Still To Grow

Based on historic sales trends of established consumer electronics categories and current sales patterns of DVD video players, the industry has a new must-have product that will see significantly larger sales numbers at least over the next two years, and probably well beyond.

That was the assessment of Steve Nickerson, Toshiba America marketing VP, who delivered an annual year-end state-of-the-industry address to members of the CE trade press at the company’s Wayne, N.J., headquarters.

Nickerson said total sell-in volume for DVD video players in 1999 should hit 3.8 million to 4 million units, which will lead to a total penetration of 4.5 million homes since the category’s inception three years ago.

“Year 2000 will be pivotal for DVD. That’s when we will take the category out of the realm of a new product, and into the realm of an established product, and a growing product,” he said.

By the end of next year, the DVD category should sell more than 5.5 million players and hit more than 10 million homes, for a 10 percent penetration of total U.S. households.

Nickerson called the 10 percent household barrier a magic threshold to long-term acceptance of a CE category. He cited the precedent of historic sales patterns showing established categories hitting the 10 percent mark and then going on to enjoy long-term mass market acceptance.

Color television hit 10 percent after 13 years, VCRs hit 10 percent after 11 years, and CD players hit 10 percent after six years. In each case, the category eclipsed the 20 percent mark exactly two years later, Nickerson said — while predicting the same scenario for DVD after next year, when he expects full-year sell-in numbers of 5.5 million players or better.

“Once a product got to 10 percent and became considered a well-established product, all of a sudden we saw the hockey-stick effect for total sales, and it became a must-have product,” Nickerson said. After 20 percent, other products “took between four to six years to reach the 50 percent mark.”

He stopped short of estimating the time to the 50 percent barrier but did use historical patterns to predict DVD eclipsing the 20 percent mark by 2003.