Tech on Deck: The Decline of the DVD Player

Nov. 5, 2007 — -- After the compact disc ushered in the first digital music revolution, there were questions about whether the digital versatile disc (DVD) would have a similar impact. It did.

The DVD has become one of the most successful consumer electronics products ever in the decade since it was first test-marketed in seven American cities. About 80 percent of U.S. consumers have a DVD player in their homes; that's more than PCs, VCRs, cable television or even analog televisions for which DVDs were designed. The DVD accelerated home video purchases, and Netflix carries about 85,000 DVD titles.

Much like the CD before it, DVD players have become so ubiquitous that electronics companies are finding them a formidable forebear. At the end of the '90s, two higher-quality music disc formats failed to unseat the CD. Similarly, today's rival Blu-ray and HD-DVD camps are both struggling to compete with cheap DVD players, particularly those that can "upconvert" or "upscale" movies, providing a "near-high-definition" experience.

But the golden age of the DVD player is behind us. While they are still well in excess of 10 million units per year, DVD player sales declined 15 percent for the 12 months ending September 2007; that's coming off a decline of 24 percent the year before. The average price has sunk to just over $60.

Sales of DVD recorders, which were cursed with an extended gestation, high complexity and a format war, were also down 15 percent during the year ending September 2007, crashing after nearly 50 percent growth during the same time period a year ago. And even portable DVD players -- those LCD-equipped baby sitters -- were slightly down in the year ending September 2007, even after their average price came down to just $119 after being at $190 two years ago.

Of course, DVD movies will be with us for many years to come. In addition to the massive installed base of hundreds of millions of DVD players, both Blu-ray and HD-DVD players are backward-compatible with DVDs. Some HD-DVD movies, in fact, come with a regular DVD on one side of the disc so it can be played in a standard DVD player.

There are even some bright spots in the DVD picture. DVD camcorders continue to grow as do "upconverting" or "upscaling" DVD players, which have had a significant price advantage versus high-definition disc players.

But the recent availability of the Toshiba HD-A2 HD DVD player at retailers such as Wal-Mart and Best Buy for less than $100 represents a milestone toward closing the gap between high-definition formats and their predecessors. As more of the market turns to HDTV, paying a small premium to take advantage of all that your television has to offer as well as new levels of interactivity will seem worthwhile to more consumers.

Whether one of the new formats prevails or broadband delivery of movies eventually takes hold, the DVD player story is creeping toward its final chapter.

Ross Rubin is director of industry analysis for consumer technology at the NPD Group.