News

17/9/2003

Have No Fear, DVDs Are Here...To Stay

Trade Group of Media Makers Dismisses Claims Contained in Widely Distributed Report on Downloads

Members of the International Recording Media Association (IRMA) are sharply criticizing a recent report that hypes digital downloads of music and movies as the logical replacement for DVDs and CDs.

The trade organization cites numerous misleading conclusions made by the August 2003 report, titled "From Discs to Downloads," from Forrester Research, Inc.

IRMA says Forrester's fumbles include: 1) assuming the simple downloading of individual, short-form, audio-only music tracks will translate directly into widespread downloading of full-length, media-rich motion pictures; 2) overlooking the cable, online and movie industries' disappointment in the slow growth of movies on demand; 3) failing to grasp that removable media such as discs, in contrast to non-removable PC and portable drives, are favored by the vast majority of digital consumers as the most convenient and versatile ways to collect both pre-recorded and downloaded content; 4) not understanding the concept of market segmentation, where various technologies simultaneously serve distinct market applications.

IRMA's own Market Intelligence Report shows an unmistakable trend line supporting continued growth of DVD player and disc sales. From the current annual level of 2.7 billion discs produced worldwide, IRMA forecasts that by 2008, annual factory shipments of DVDs globally will approach 7 billion units. Adams Media Research projects DVD players in 91% of U.S. homes by 2008, with U.S. DVD disc shipments in 2003 at 1 billion units, returning $10 billion to rights holders. By contrast, for every video-on-demand transaction, a studio makes a fraction of the revenue that it receives from the sale of a packaged DVD.

On the basis of this empirical evidence, "We don't understand how a reputable firm can issue a report built on questionable theories and assumptions that are so easily dismissed," says Charles Van Horn, president of Princeton-based IRMA.

"What's unfortunate is that Forrester does itself a disservice with this report," he adds, "choosing to interpret their findings in a way that misrepresents the realities of the industry, reaching conclusions that are sensational rather than reflective of the behavior of mass-market consumers. What's even more surprising is that Forrester admits its previous predictions for this market have been wrong. And, we think it will be proven wrong again."

Van Horn goes on to say that the report makes a quantum leap in logic, by implying that many file sharers have a distaste for corporate America, namely record and movie companies, and by extension have no interest in using those firms' content formats of choice, DVD and CD. "Nothing could be further from the reality of today's, and tomorrow's, marketplace for digital entertainment. It's no wonder our members are disturbed by the unwarranted feeding frenzy Forrester's free-form conclusions have created of late in the news media."

The home entertainment market is a powerful $25 billion industry driven by DVDs, not downloads. As a leading industry association and world authority on recorded media, IRMA believes that many have been misled by "headline-grabbing, specious conclusions."

"Our statistics and those of Adams Media Research clearly indicate the DVD locomotive is not slowing down. On the contrary, DVD is a growth engine for the foreseeable future. It may be old news, but the facts haven't changed -- even if some folks haven't yet come to grips with the Internet bubble bursting several years ago."

www.recordingmedia.org