Consumer electronics industry predicts $1B market within a year
Major consumer electronics marketers and their movie studio partners are betting a record $150 million-plus in marketing on the new Digital Video Disk.
At the Consumer Electronics Show in Las Vegas, Thomson Consumer Electronics, Sony Electronics Corp., Philips Consumer Electronics, Toshiba America and Panasonic Corp. all announced plans for major introductions, with ad support beginning this summer or fall. In addition, Warner Home Video will have its own $10 million campaign and other studios are expected to get into the swing.
All this activity comes little more than a month after final agreement on a standard for a 5-inch CD-like disk that can play up to 4-1/2 hours of movies, holds up to 16 times the information on a computer CD-ROM and also plays current audio CDs and computer CD-ROMs. Now the race is on to brand the product considered by many to be the next great consumer electronics innovation.
"It's Gable meeting Lombard all over again," said Warren Lieberfarb, president of Warner Home Video. "For major studios, the opportunity is dramatic, it's Hollywood's godsend."
"Any consumer electronics company that doesn't use this is missing the edge," said Philips Senior VP Ed Volkwein.
Some consumer electronics companies predict up to 2 million of the $499 retail players could be sold between September 1996 and August 1997, and the resulting nearly $1 billion market doesn't include movies and software that will retail at $20 and up.
Conversely, LaserDisc players, at twice the price, are in just 2 million homes, despite being on the market a number of years.
"The fundamental reason LaserDisc took so long is it didn't have industry support and there was limited software available," said Larry Pesce, DVD product manager for Thomson Consumer Electronics. This time, he said, not only will hardware manufacturers all be on board, but so will movie companies.
Thomson is planning a worldwide launch of the product and will be marketing in the U.S. under its RCA, GE and ProScan brands. The company is predicting that retail promotion alone for DVD from a variety of manufacturers and movie companies will approach $75 million to $100 million.
Mr. Pesce said Thomson will have a DVD ad campaign this summer from Ammirati & Puris/Lintas, New York; budget hasn't yet been determined.
Toshiba, which helped develop the DVD standard, will also be advertising, via FerrellCalvillo Communications, New York.
"We want to maximize our investment and increase consumer awareness of our leadership with an aggressive ad campaign," said Craig Eggers, marketing manager-new products for Toshiba America Consumer Products.
Philips, too, is expected to be advertising under the Magnavox brand, via Ammirati, New York.
Copyright January 1996 Crain Communications Inc.