DVDS SURGE IN POPULARITY FALLING PRICES LEAD TO 50% INCREASE IN PLAYER SALES.

Byline: Greg Hernandez Staff Writer

DVD players are now in more than 40 million households nationwide, and shipments of DVD titles hit 685 million units last year, an amazing leap from 5.5 million units six years ago, according to figures released Thursday by the DVD Entertainment Group.

Falling prices induced consumers to buy more than 25 million DVD players last year, a 50 percent increase from 2001. That amounts to more than $3.6 billion in sales of various DVD players, including set-top and portable DVD players as well as TV/DVD and DVD/VCR combination units.

``Consumers have made it clear: DVD is their favorite way to enjoy entertainment at home,'' said Emiel N. Petrone, chairman emeritus for the DVD Entertainment Group, a Los Angeles-based industry-funded nonprofit corporation.

There are now more than 250 different DVD player models marketed under 60 different brands as the format is now the focal point of the home video industry, with people transitioning from VHS tape to DVD at a rapid pace.

``By the end of 2003, DVD will be in more than half of U.S. homes, allowing even more consumers to experience the extraordinary video and audio quality DVD offers,'' Petrone predicted.

More than 10 million homes are now equipped with two or more players, and when DVD-ROM drives and DVD-capable video game machines are figured in, the total number of DVD playback devices is currently more than 95 million.

This success has resulted in home video sales - once considered an ancillary market of feature films - becoming the most popular entertainment medium in the U.S. with its overall record revenue of $20.3 billion in 2002 more than doubling the record $9.3 billion moviegoers spent at the box office last year.

Approximately 260 million copies of DVD titles were shipped to retailers during the fourth quarter of 2002, a 90 percent increase from the same quarter a year earlier. Since the launch of DVD in 1997, 1.36 billion units have been shipped, according to figures compiled by Ernst & Young.

DVD Entertainment Group President Bob Chapek said the ``tangible benefits'' of the DVD format has led to its growing mainstream popularity, especially among families who make up a sizable portion of the home video market.

But Chapek, who is president of Disney's Buena Vista Home Video division, said he and other industry leaders are stunned by the rate of the growth in recent years.

``I don't think that anybody could have predicted this,'' he said. ``I'm amazed.''

The 2002 sales surge is tied to the increasing affordability of DVD players, which can be found for as cheap as $50 at some retailers, as well as an ever-expanding number of titles. There are more than 20,000 titles available now, more than double the number two years ago.

Consumers now buy an average of 15 DVD titles per year, with the biggest sellers of 2002 being ``The Lord of the Rings: The Fellowship of the Ring,'' ``Spider-Man,'' ``Monsters, Inc.,'' ``Harry Potter and the Sorcerer's Stone'' and ``Star Wars: Episode II - Attack of the Clones.''

In all, DVD retail sales increased 61 percent to $8.7 billion with consumers spending an additional $2.9 billion on DVD rentals, double 2001's DVD rentals.

There are also more than 2,000 music video titles now available and a growing enthusiasm for the DVD-audio format, which now has approximately 300 titles available.

DVD-audio-capable players come in more than 50 different models from a dozen top manufacturers, ranging from set-top and portable players to car models and home theater systems.

CAPTION(S):

2 charts

Chart:

(1) DVD TITLE SALES

(2) DVD PLAYERS SALES

DVD Entertainment Group

Jon Gerung/Staff Artist