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Screen Digest's senior home entertainment analyst, Helen Davis
Jayalath explains, "In the shorter term, the VCD player will continue
to prove popular with many Asia-Pacific consumers due to its low
cost and the widespread availability of cheap VCD software. However,
DVD is already becoming the format of choice in the mature markets
of Japan, Australia and New Zealand. In the longer term, the DVD
Video player will become increasingly important throughout the region;
our forecasts indicate that by the end of 2006 139m Asia-Pacific
homes will have a DVD Video player or recorder - more than five
times as many at the end of 2002 and almost 20 per cent of all TV
households in the region."
According to the report, India, South Korea and the Philippines
are likely to be of particular interest to the US studios and other
video distributors over the next few years. The distributors' revenues
from India, is expected to to increase by almost 130 per cent between
2001 and 2006.
The study however reveals that, new hardware indicates additional
software sales and simultaneously total consumer spending on DVD
software to increase by 165 per cent over the same period, thus
generating an estimated $8.2bn by 2006. This will be fuelled in
part by an anticipated fall of 16 per cent in the average retail
price of a DVD during the same period.
Interestingly, the expansion of the DVD sector will help boost
total consumer spending on all video software (DVD, VCD and VHS)
by over 40 per cent, the report says. By the end of the forecast
period, DVDs will account for almost 70 per cent of consumer spending,
up from just over one-third in 2002.
According to the author of the report, David Scott, the sheer size
of the Japanese market means DVD will continue to dominate the Asia-Pacific
video business. "Japan remains the world's second largest single
territory video market after the US, and the third largest (after
the UK) for Hollywood product. However, China and India boast two
of the largest potential consumer markets worldwide and demand for
legitimate video product is growing in these territories".
Piracy, however continues to pose a major threat to the potential
of the Asia-Pacific business. The lack of copy protection on VCDs
ensures that vast numbers of counterfeit discs flood the market
at rock-bottom prices, making it impossible for rights holders to
raise the price of legitimate discs. Meanwhile the availability
of DVDs offers criminals a perfect digital master for copying, ensuring
that the quality of counterfeit products is improving, adds the
report.
The bottom line is that ultimately, the DVD will replace both VHS
and VCD. The speed at which this occurs in each country will depend
on how quickly DVD hardware and software prices decline, combined
with the effectiveness of efforts to combat the trade in counterfeit
discs.
Equally important, however, will be the rate at which consumers
in the region become more discerning in their attitudes toward software
quality. As a result, Screen Digest foresees a period of co-existence
between both disc-based formats before DVD eventually predominates
across the whole Asia-Pacific region.
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