05-Feb-03
DVD player base to increase five-fold in Asia-Pacific over the next four years: Total consumer spending on all video software forecast to reach $12.1bn by 2006; DVD will account for 70%

DVD is poised to sweep the video business in the Asia-Pacific region in the same way it is doing in the USA and Europe, according to a new study by Screen Digest. This is despite the fact that the digital format faces competition from another disc-based video format - Video CD - in much of South East Asia.

Helen Davis Jayalath, Screen Digest's senior home entertainment analyst, 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% of all TV households in the region."

New hardware obviously means additional software sales, and total consumer spending on DVD software is expected to increase by 165% over the same period, generating an estimated $8.2bn by 2006. This will be fuelled in part by an anticipated fall of 16% in the average retail price of a DVD during the same period. The expansion of the DVD sector will help boost total consumer spending on all video software (DVD, VCD and VHS) by over 40%. By the end of the forecast period, DVD will account for almost 70% of consumer spending, up from just over one-third in 2002.

The sheer size of the Japanese market means DVD will continue to dominate the Asia-Pacific video business, says David Scott, author of the report. "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, Australia and South Korea all also feature in the top dozen international video markets." According to the report, India - along with South Korea and the Philippines - is likely to be of particular interest to the US studios and other video distributors over the next few years; distributors' revenues from India are forecast to increase by almost 130% between 2001 and 2006 and those from the latter two countries by 75% each. This compares with growth of 46% across the region as a whole.

However, piracy 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 rightsholders 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. 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.

EDITORS' NOTES: An executive summary of the report is available to press only. The report contains detailed analysis of 14 territories and has 219 pages of text, charts and tables. Interviews with the authors of this report can be arranged on request.

this press release is about the report
Asia Pacific Video: Market Assessment & Forecast

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