DVD replication: the other millennial dilemma

Emedia Professional, June, 1998 by Lee Hollman

Forecasts for the DVD marketplace have in the past been optimistic, if not overstated. Though market research firms and manufacturers predicted in 1996 that DVD hardware and titles should have reached critical mass by now, neither has won widespread popularity among consumers of digital media. The convenient and relatively inexpensive CD-ROM format is still I the medium of choice for businesses and home users alike, though how long it Will maintain its lead position remains to be seen.

The current consensus on DVD-ROM drives is that they'll begin to edge out their CD-ROM predecessors by the year 2000. If the coming of the next century marks a shift toward the new platform among computer enthusiasts and professionals, replicators will need to keep up with a sudden high-volume demand for DVD titles. This presents them with their millennial dilemma: how soon should they upgrade their facilities to meet the impending DVD boom? Many of the leaders in the replication field have already prepared for it, but also concede that they're waiting to see how quickly the number of available DVD-ROM titles will increase in the next two or three years.

WHAT THE ANALYSTS SAY

Computer industry analysts are anticipating a rapid, almost immediate rise in the amount of DVD-ROM titles that will begin shipping. "This year the hardware market will grow, but by 1999 you'll start seeing a lot more DVD-ROM titles released," explains Julie Schwerin, President of Woodstock, Vermont-based market analyst InfoTech.

Schwerin estimates that the initial push to market DVD-ROM drives will happen, during second quarter 1998, and anticipates that 46.7 million of them will be sold by the year 2000. Continued production of the drives will motivate software publishers to further their DVD-ROM output, so replicators will need to accommodate large orders for that format. Most are already prepared to do so.

"I'd say that 80 to 90 percent of the replicators that we've been in contact with now have DVD-ROM capacity," says Jennifer Doyle, Editor of Simba Information's Multimedia, Entertainment, and Technology Reports. "Close to 100 percent will by the end of 1998." Most of the machinery used in replicating CD-ROMs will still be applicable to the DVD format, so that upgrading it won't require too much effort. "It's the same basic form of media," asserts Marc Hardie, Senior Analyst, Entertainment and Technology Strategies for Forrester Research. "The difference is the higher quality silicon on DVD discs, and a more precise laser implementation for writing. You simply have to narrow the laser to make the conversion to DVD." This has proved convenient for replicators, as their clients are gradually entering the DVD marketplace.

Though 1997 marked the successful premiere of DVD-Video releases, the DVD-ROM market was far less active. That's changing in 1998. "There are 300 to 400 DVD-Video titles available now, but only a little more than 300 DVD-ROM software releases at most," says Hardie. "Of that 300 or so, about 25 to 30 percent of them are just CD-ROM titles transferred to a new format. They don't utilize the DVD platform to its fullest potential." Replicators are waiting for software publishers to create more content that will do exactly that, and would require at least the minimum 4.7GB capacity of a single-sided, single-layer DVD disc. Development of high-powered DVD-ROM titles is progressing slowly, but some are projected to arrive at retail outlets during second quarter 1998.

WHAT THE REPLICATORS SAY

Whatever the latest projections, replicators are still playing a waiting game to see how soon they can profit from the costly conversion to DVD media. Many view their situation with pragmatic optimism. "When our customers release more DVD titles, we'll be ready," says Susan Tyson, Marketing Manager at Quebecor. "There's not a big push from them yet. But we can be ready for DVD replication in a matter of days." Tyson's view of the nascent DVD-ROM market is typical of her competitors, who are also awaiting a necessary upswing in new releases.

Though many replicators have begun producing DVD discs, some are only now beginning to expand their facilities to accommodate the new medium, given the sluggish early growth of the title market. "Right now there's not enough drives, and there's not enough software," contends Jeff Giger, National Sales Manager, Multimedia Division, Maxell. "But more companies are making the move to create content in the DVD arena. The content needs to push the envelope of the format's capacity before the market can take off." Nevertheless, Maxell replicated over a half-million DVD discs in 1997, and plans to double the replication capacity of its Santa Clara facility while also expanding its branch in Dublin, Ireland. Giger's forecast is that reference titles will lead the push for new product, and will help spark the widespread breakthrough for the DVD market that he predicts will occur by the year 2000. Many replicators agree with him on both points.