DVD music video sales upbeat as format recognition grows

Discount Store News, April 5, 1999 by Robert Scally

One of the greatest advantages of DVD is its superior sound quality. This ability of DVD players to process multichannel sound complements the realism of films and adds a new dimension to music.

The marriage of DVD's superior quality video and digital audio capabilities is also helping to create a new market for music videos.

"DVD could help drive a music video sales surge, especially among younger consumers," said Paul Culberg, executive vp of Columbia TriStar Home Video and president of the DVD Video Group trade association.

Mass merchants, particularly Wal-Mart, have been able to capture a large share of audio CD sales, and that success could carry over to DVD music video titles.

As DVD becomes more of a mass market medium, the stage is set for DVD music video to capture a growing share of DVD sales.

"We see the opportunity for music video on DVD as an exciting one," said Joe Pagano, merchandise manager for Best Buy, during a presentation on DVD music video at last month's National Association of Recording Merchandisers convention.

About 5% of Best Buy's overall DVD sales have been music videos, Pagano said during the event, which was sponsored by the DVD Video Group.

Despite the superior quality of the audio portion of DVD video, many of the record companies outside of Warner and Sony, two early proponents of DVD, were slow to release DVD music video titles.

However, the rapid arc of DVD's initial sales has spurred more studios to release material for the new format.

"This is an opportunity for the record companies to breathe new life into their catalogs in a way that hasn't happened since the CD," Culberg said.

Overall awareness of DVD is growing rapidly among consumers, rising more than 45% from March 1996 to May of 1998, according to a survey conducted by the market research firm Soundata.

In a survey conducted in August 1998, prior to a publicity blitz that took place at the end of last year, Soundata found that 60% of consumers knew what DVD was.

When the DVD video format was introduced in March 1997, just 15% of consumers were aware of the new consumer electronic technology, according to Soundata. The majority of consumers in the new study were able to correctly describe the DVD format, indicating that their awareness of the technology was more than superficial, said Mike Shalett, president of Soundata.

Soundata, based in Hartsdale, N.Y., regularly conducts research on consumer behavior and trends as they affect music and other related entertainment products such as home video.

DVD's high name recognition could be seen as one sign that a diverse demographic of consumers is responding to the new format.

"What we're finding is that there is a demand for a variety of product out there," said Leslie Cohen, vp of business development for Columbia TriStar Home Video.

The appeal of DVD music video had already gone beyond the demographic of the typical early consumer electronics adopter, Cohen said.

"We found that it's not just males 35 to 40 who buy music video DVDs. It's really everybody," Cohen said.

A few DVD music video titles have amassed sales of 10,000 or more units, an impressive accomplishment given that the total installed base of DVD players was at about the one million unit mark at the beginning of 1999.

"James Taylor, Live at the Beacon Theater," the first music video shot for the DVD video format, has sold well for Columbia--as have "Gloria Estefan Don't Stop!" and "Stevie Ray Vaughn Live from Austin, Texas."

The growth of DVD awareness holds up across all demographic categories, but was especially strong among younger consumers, who tend to be heavy buyers of music, Shalett said.

More than 70% of respondents ages 18 to 24 also correctly identified DVD, Shalett said.

This bodes well for DVD music video sales, since it overlaps with two key age groups that also buy audio CDs and cassettes. Consumers between the ages of 15 to 19 and 20 to 24 purchased slightly more than 30% of all prerecorded music sold in 1997, according to statistics from the Recording Industry Association of America.

The surge that the sales of DVD-ROM drives for personal computers, which also play DVD video titles, will help fuel DVD music video sales, Cohen said.

"We've done a lot of releases lately going after the youth market," Cohen said. "We realized that with 7 million DVD-ROM drives out there, a lot of them are going to school."

Many students and other young people already use their computers to play audio CDs while they surf the Internet or use a word processing program.

"People are increasingly tying these two activities together," Shalett said.

With DVD-ROM drives in their new computers, young music buyers might also be more inclined to watch a music video on their computer monitors more readily than a two-hour feature film, Cohen said.

"It's a lot easier to see them doing that, rather than popping in a Rage Against the Machine video in the living room with the family," Cohen said. "By playing it on their computer in their room, they can have their own view of the world through DVD."