August 16, 2001
 

As DVD technology penetration continues to grow, so too does ownership of multiple DVD devices among DVD households.  Multiple ownership of a DVD playing device within a home has become even more prevalent as DVD adoption has taken new directions.

Currently, there are 25.6 million DVD capable households, which is 24.6 percent of all U.S. households.  A “capable household” is considered a home with at least one device that is capable of playing a DVD.  This includes DVD console, DVD-ROM PC, DVD-ROM laptop, PlayStation 2, or any other device capable of playing a DVD. What we have found is that as more homes become capable, previously capable homes are also adding another device.  Shipment numbers do not accurately portray the growth of households that have a DVD device.

Alexander & Associates began examining the relationship between DVD console and DVD-ROM ownership back in June of 2000 when we conducted our DVD Household Behavior Study.  At that time there were 11.2 million DVD capable households, a penetration rate of roughly 11 percent.  Of the 11.2 million capable households, 5 million had a console.  Of these 5 million homes, roughly 30 percent had another device (DVD-ROM PC or Laptop) in their household capable of playing DVDs.

Fast-forward almost 10 months to April 15, 2001.  Overall penetration was now at 23 percent, or about 25 million households.  Of that number, about 15 million had a DVD console.  And of those households, 35 percent had another kind of DVD device.  Whatever slack may have been caused by slowing PC sales (and thus a reduced number of PC/DVD-ROM devices) was more than offset by the launch of the PlayStation 2 in October of 2000.

As of August 15, the number of console homes that also contain some other device has crept up again, this time to 38 percent. Currently, there are 25.6 million households (24.6 percent) in the U.S. capable of playing DVDs.  The number of console homes has reached 17.5 million, with 6.7 million of these console homes containing some other device capable of playing DVDs.

When looking at overlap from another perspective, there are presently 12 million households that have a DVD-ROM device and 3.7 million that have PlayStation 2.  Of the DVD-ROM households, an incredible 50 percent own some other device that plays DVDs.  About 5.4 million of them have a console, and roughly 600,000 own some other device that plays DVDs, presumably a PlayStation 2 unit or stand-alone player with screen.

Alexander & Associates believes that overlapping ownership and ownership of platforms other than console DVD players is very important to the industry.  Overlapping ownership of multiple platforms in one household puts the pre-recorded entertainment decision in more people’s hands – Mom and Dad in the den on the big console player with surround sound (watching that instead of satellite); daughter Mary watching a movie in her bedroom on her PC instead of doing homework; and little Johnny catching some Tony Hawk Pro Skater 3 on his PlayStation 2.  Where once there was one household and one consumer, now there are three – and multiple platform ownership supports this expansion of the consumer base.

In addition, non-console platforms are used to watch movies.  Certainly not as frequently as console players are, but the incidence of movie watching is significant.  If there is an “effective console” concept, then our research suggests that non-console DVD capable devices are about equal (in the consumption of prerecorded entertainment) to about one-third of a console player.  There are households, especially college age and young adult households, where the PC/DVD-ROM is the key entertainment platform, and the non-console device expands the market for DVD based entertainment distribution.

Alexander & Associates recently forecasted DVD penetration numbers all the way out to 2005.  By year-end 2001, 28.3% of US households will have a device capable of playing DVDs, of which roughly 80% will have a console.  This will be an additional 6.1 million DVD console homes by year-end!
 

For further information on DVD penetration projections, as well as rental and sell-through volume projections, please email us at aainfo@alexassoc.com or phone 212.684.2333.