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Kagan Research recently published their future view of pre-recorded media. They note with certainty that the halcyon days of double digit growth in rentals of DVD disks is over and the luxury of sell-through is likely past. Kagan characterizes the two high-definition DVD formats (HD DVD and Blu ray) as the only contest in town, but other technologies threaten to zip right past these old dowagers. One might be the likes of holographic technology.

"Holography breaks through the density limits of conventional storage by going beyond recording only on the surface, to recording through the full depth of the medium. Unlike other technologies that record one data bit at a time, holography allows a million bits of data to be written and read in parallel with a single flash of light. This enables transfer rates significantly higher than current optical storage devices." For more information: http://www.inphase-technologies.com/technology/index.html

Combining high storage and fast transfer rates from a nearly indestructible medium makes holography poised to become a compelling choice for next-generation storage and content distribution. When talking to the principals behind the curtain they still bemoan the cost for their media ($100 per disk). But listen up children of the corn, when the original CD was in development at Philips the first lasers, now costing mere pennies, were $1000 each (and that was years ago when money was real). What if you just bought one holographic disc a year and, as you often do with computer software, buy a "key" online when you want to see or own a specific movie (buying or renting) encoded on it. In the mid 80s the legendary engineer from Sony, Mori Morizono, predicted that all known entertainment content could and would be stored in a one inch cube and "unlocked" through some business arrangement with the seller. Watch out high-def DVD guys, you may be out of business if you don't put your houses in order and stop asking the consumer to make costly decisions for you. The 800 lb. technical gorilla may be just around your corner. For some in the professional ranks it is already here. In the mean time we will listen to what Kagan has to say._Dale Cripps

HD-DVD Key to Home Video Revenue Growth, Says Kagan Research

October 09, 2006 -- A new study from Kagan Research, THE STATE OF HOME VIDEO (11TH EDITION), reports that the mix of sell-through revenue is set to change as high-definition DVD takes hold of the marketplace.

"In 2006, the bulk of the $16.9 bil. revenue will come from standard-definition DVD ($16.8 bil.)," said Wade Holden, Kagan analyst. "By 2009, VHS will be virtually extinct and high-definition DVD revenue should grow to more than $2.6 bil. as the format war works itself out, either via one winning format or a combination HD DVD/Blu-ray player being introduced to the market. By 2015, VHS will be history and high-definition DVD will be the major-market shareholder with $18.3 bil. in revenue."

THE STATE OF HOME VIDEO reports that the boom times are gone for the home video industry and the situation may become worse in the wake of a high-definition DVD format war. Kagan estimates revenue will drop again in 2006, off 0.4% to $24.1 bil. The dip will come from the decline in rental revenues, off 8.3% to $7.2 bil. Sell-through revenue is estimated to grow 3.4% thanks to DVD revenue hitting $16.8 bil.

Other key findings and projections from THE STATE OF HOME VIDEO include:

-- Kagan expects rental revenue will continue to decline throughout the next decade as VOD technologies gain a larger following. Total rental revenue is estimated to be $4.2 bil. in 2015, posting a negative 5.8% CAGR for the decade.

-- Online revenue has been steadily increasing its share of the market, grabbing 17.2% in 2005, or nearly $2.8 bil. Online revenue has posted a 182% CAGR since 1997, a larger growth rate than the bricks-and-mortar growth of 115%.

-- In 2005, Kagan tracked 491 titles released on DVD and estimates they made $9.2 bil. in wholesale revenue for the studios. The average wholesale price of a DVD grew 3.9% to $16.70 from $16.08 in 2004.

THE STATE OF HOME VIDEO charts revenue growth and the changing economics of the dynamic home video market, examining the progression of VHS, DVD, HD-DVD and VOD. Kagan's authoritative 10-year projections for both rental and sell-through sectors are offered as a digital package with a bookmarked PDF of analyst commentary, Excel-based data tables and a companion print databook.

For table of contents and more information on THE STATE OF HOME VIDEO (11TH EDITION) go to www.kagan.com/SHV-11

Aditional information on holographic storage.

Posted by Dale Cripps, October 9, 2006 11:55 AM

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About Dale Cripps

Dale Cripps is a professional journalist who has focused two thirds of his career on the subject of high-definition television. Upon completing his education in business and service in the military he formed Cripps and Associates, South Pasadena, California, in 1964, which operated as a market-development company for aerospace services. In 1983 he turned to television and began what has become a 20 year campaign to pioneer HDTV. For fifteen of those years he published the well-regarded HDTV Newsletter (an international monthly written for television professionals). During much of this same time he also served as the HDTV-Technical Editor for "Widescreen Review Magazine." On November 16, 1998 he launched the Internet distributed HDTV Magazine, which remains the only consumer publication devoted exclusively to high-definition television. In April of 2002 he co-founded with Tedson Meyers of Coudert Bros, the High-definition Television Association of America, which is presently based in Washington DC. Cripps is the president of this organization. Mr. Cripps is a charter member of the Academy of Digital Television Pioneers and honored by that organization with the DTV Press Leadership Award of 2002. He makes his home in Oregon.