DVD majors to drop prices by 40% to fuel demand

Industry sources say a DVD-video player, which currently costs Rs 10,000 upwards, would be available in the range of Rs 6,000 within a year. And this dip in prices will fuel the demand for DVD players from the current 30,000 units to 4 million units by year 2005.

The DVD segment is already on a growth curve. Growth during the fiscal 2002-03 is expected to be around 66 per cent, fuelled primarily by aggressive marketing of the home theatre concept and concurrent price erosion.

But the price curve is expected to witness a sharp decline when local manufacturers begin importing DVD kits and locally assemble the hardware player. While the locally assembled players will provide competition to existing players like Sony, Philips, Samsung, LG which target the premium consumer segment, economies of scale will be achieved as volumes swell.

In fact, compared to 2001, prices have already dropped by nearly Rs 2,000 in year 2002. The focus, echo most, has to be towards making the product competitively priced so that a consumer opts for a DVD player if he is looking for a home theatre effect.

Prices are, in fact, expected to further drop to as low as Rs 6,000, one year down the line, Suresh Khanna, secretary general, Cetma says. "DVD players are expected to take off in a big way. The effect will trickle down to the software titles which will subsequently become affordable," he points out.

But the path is not as smooth as it looks. As the major hampering factor that companies would face is using the DVD logo which is a patent with the DVD forum based in Japan. The DVD forum is an association of all the patent holders of DVD technology.

On one hand, says Khanna, that the best solution would be to give the product a different logo as China has done by calling them as AVDs (Advanced Video Disc) or EVDs (Enhanced Video Disc).

On the other other hand, leading players in the category like Sony, Philips, Samsung, LG who are importing the products as of now feel that it would not be viable to go in for production until volumes pick up. Says LG's Vijay Narayanan, deputy general manager: "DVD is a new segment, the momentum is picking up and there is definitely a positive feel to it."

Khanna says that DVDs are already popular in countries like US and China because of the quality of sound and picture they offer. Also storage capacity is much higher as one DVD disc can store 10-11 hours of video film on it. Here these cost approximately Rs 3,000 (much lower to that in India). The prices are further expected to drop.

Says R. Zutshi, vice president - sales & marketing, Samsung India: "With companies increasing focus on DVDs, the range will expand in two directions. As players would launch both low-end as well as high-end, feature-rich products to tap larger consumer segments." The penetration of DVDs is about two per cent today. Samsung is in the process of initiating a separate marketing programme to promote DVDs and other high-end products. Samsung is eyeing a 40 per cent market share based on its enhanced DVD line-up and various advertising/promotional activities.

"The potential lies in the consumers who will replace the VCD and VCR by DVD. This segment will be followed by the so-called Audio target group-people who replace their CD players with a DVD Combi-player," says an industry official. DVD, currently is aimed mainly at the tech savvy and quality-oriented consumers.

Prices apart, one of the major shortcomings of purchasing a DVD is that  software libraries with DVD software are few and in selected areas only.

Also, in India there are other relative issues like piracy and availability of software for hindi films.

Agree most players, that for the sector to grow, the improvement in availability of DVD software in India is key as only then will the market boom. "Software is improving across major cities. And prices too have already crashed in the branded segment. The prices are likely to go down further impacted by the international market where prices have crashed from $ 500 to $ 120," adds Narayanan.