Firms profiting from DVD's popularity

The growing popularity of the DVD format is spawning a new array of consumer-electronics products, a leading tech market research firm reported on Tuesday. US-based In-Stat/MDR says that manufacturers are incorporating DVD playback units into a range of consumer-electronics products -- including TV sets, video cassette recorders, cars, home-theater systems, cable set-top boxes and personal video recorders, the report said.

"DVD-player shipments have increased again in 2002, growing by 61 percent" says Michelle Abraham, a senior analyst with In-Stat/MDR. "The increased [number of types of DVD appliances] and low prices are keeping interest in purchasing DVD players up, though the DVD-player market is maturing and the worldwide shipment growth rate is slowing." The global DVD market is expected to reach 84 million units by 2006, Abraham said.

These new combination products are expected to expand the DVD-player market, and Taiwan's DVD chip designers and makers are poised to reap the rewards. "The increase in traditional DVD-player sales and the rise in integrated consumer DVD-player products will be good for Taiwanese chip designers and makers next year," said Arthur Hsieh, a chip-industry analyst at ABN-AMRO in Taipei. However, Hsieh does not expect them to have any real impact on Taiwan's DVD chip industry until the end of next year. "These products will not be a key catalyst to [2003] growth," he said.

Consumers are hungry for DVD players in general. In 2002, 55 million people bought traditional DVD players. Jason Moody, a 30-year-old Canadian working in a trading company in Taipei, was one of those millions. "I bought a DVD player as the selection of DVD titles available is much better than VCDs and the quality of the picture is much improved."

Moody says the old format, VHS, "has been consigned to the museum."

Next year Hsieh estimates the DVD-player market will increase by another 36 percent to top 75 million.

DVDs, or digital video disks, can store a whole movie on one disk and have replaced video cassettes for the most part.

Alternatively, Video CDs or VCDs are being phased out as their storage capacity is limited when compared to DVDs.

One of the biggest beneficiaries of the increase in DVD-player sales is Taiwan's largest designer of DVD-player chips, MediaTek Inc (聯發科技). Recently, MediaTek combined two of the chips that were previously required to make a DVD player into a single chip, reducing the player's size and making it easier to integrate DVD players into other products. Hsieh said the company now controls 100 percent of the DVD single-chip market globally. Single chips from Taiwanese rivals ALi Corp (揚智科技) , formerly Acer Laboratories Inc, and VIA Technologies Inc (威盛電子) have yet to hit the market.

MediaTek's spokesperson, Yu Ming-to (喻銘鐸), has also seen little impact from combination DVD products, but welcomes the trend. "This will help us to gain more market share," he said yesterday. The company has gained most of its sales from traditional DVD players, Yu revealed. Last year MediaTek reported US$455 million in sales, and Yu expects that figure to increase by 80 percent this year. Next year will see a more modest 20- to 25-percent rise, he said.