DVD DOLLARS HIT NEW HIGH BOUGHT OR RENTED, THEY EARN BILLIONS.

Byline: Greg Hernandez Staff Writer

Consumers in the U.S. spent a record $21.2 billion renting and buying DVDs in 2004, the Digital Entertainment Group announced Thursday at the International Consumer Electronics Show in Las Vegas.

DVD retail sales grew to $15.5 billion during the year, representing a 33 percent increase over 2003. Rentals of DVDs amounted to $5.7 billion. When including VHS sales and rental, the dollars spent on home video was up 9 percent over last year, to $24.5 billion.

``DVD is the focal point of the home theater for Americans and the numbers continue to underscore that,'' said DEG Executive Director Amy Jo Smith. ``People love the DVD player. They are collecting, renting, and they are buying.''

According to the industry trade group, in the fourth quarter of 2004 alone, nearly 530 million DVDs were shipped for retail - a 39 percent increase over the same period in 2003.

In all, more than 1.5 billion software units shipped throughout the year, to bring the total number since the launch of the technology to nearly 4 billion discs with some 29,000 DVD titles available.

``From the studios' standpoint, aside from the hard dollars and cents, the DVD phenomenon has reignited interest in catalog titles, enabled theatrical hits to sell at unprecedented levels, changed consumers' buying behavior so that they buy all genres of movies and exploded the TV category that never really existed before,'' said DEG President Bob Chapek, the president of Disney's Buena Vista Home Entertainment.

According to DEG data from retailers and manufacturers, 37 million DVD players were sold in 2004, a 10 percent increase over the year before, with more than 17 million players sold in the fourth quarter alone.

``The software has really driven the hardware sales,'' said Jodi Sally, vice president of marketing for Toshiba America Consumer Products. ``Next year, we'll see a lot of the growth in DVD recorders. We hit 1.3 million units this year, and we think that will double in size for 2005 as it becomes easier to record.''

More than 127 million of various types of DVD players have sold, bringing the number of DVD households to 70 million since 45 percent of households have more than one player.

The DEG estimates that more than 80 percent of U.S. households will have at least one DVD player by year-end 2005.

Much focus at the Vegas convention this year is on the high-stakes battle between Hollywood's leading studios over two competing formats of high-definition DVD, which is high-resolution video and audio technology representing a clear quality improvement over the standard DVD.

The high-definition Blu-ray disc, developed by Sony, is backed by its own home entertainment division, the soon-to-be Sony-owned MGM Home Entertainment, and Disney. Rival studios Warner Bros., Paramount and Universal back HD DVD, developed by Toshiba Corp., NEC and Sanyo.

The two technologies are incompatible with each other, and there are fears that the entertainment industry could be in for a battle akin to the 1980s showdown between VHS and Betamax.

Both sides had product presentations at the convention Thursday. Although Disney has backed Blu-ray, Chapek urged some kind of compromise between the two sides.

``Much has been made about the plans to forge ahead with the different formats for the next-generation high definition technology,'' Chapek said during an address at the convention Thursday evening. ``I think it's safe to say that nobody really wants a format war. It's just a question of what the respective parties are willing to concede in order to make such a war a moot point before it ever gets started.''

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com