It's touted as "the next big thing" for consumer electronics, a single disk that delivers movies, music, or computer information. But before rushing to put a DVD player under the Christmas tree, some caution.
The digital versatile disk - DVD - shows movies more sharply, plays music more clearly, even delivers computer data more abundantly than ever. And, a year after the promised delivery, it's finally here.
But for now, DVD looks less versatile, and more vulnerable, than expected.
Instead of conquering three markets - movies, music, and personal computers - the optical disk looks like a hit only in PCs.
Movie buffs and music lovers should probably wait awhile, analysts say, for prices to fall, title selection to grow, and an industry battle over recording standards to settle.
"These people [in the industry] have created a real jungle," says Jim Porter, president of Disk/Trend Inc., a Mountain View, Calif., research firm.
As early as next year, however, computer users can start making the switch.
The new optical disks are the same size as CD-ROMs - about five inches across - but can hold four to (eventually) 30 times the information. That should be a boon to software companies, which could use the extra storage.
Shifting power balance
"The PC will get DVD immediately, but the video and music industries will not," concludes a recent report by Forrester Research in Cambridge, Mass. "This will shift the balance of power away from the entertainment and consumer-electronics industries and toward the PC industry."
Since it only debuted this year, sales of DVD drives remain modest. Only about 200,000 DVD video players have been sold this year, Forrester finds. They're selling for $399 and up.
Although film buffs might prefer the clearer sound and pictures from movies recorded on DVDs, most consumers are cool to the technology. Forrester expects only 5 million DVD video players installed by 2002.
Some analysts are more upbeat, but the initial hurdles seem high.
One reason for the slow growth is the lack of disks to play on the drives. "There aren't enough movies and very little software available," says Ken Wirt, vice president of corporate marketing at Diamond Multimedia Systems in San Jose, Calif.
That situation should improve for PC users next year as software companies, anxious to pack more video and audio onto a single disk, move to the new format called DVD-ROM.
"Shipments have been nominal so far," says Mr. Porter of Disk/Trend. But "we're looking for a significant year next year."
Since the drives will also play today's CD-ROM disks, they'll be readily adopted by users, he adds. By 2000, Mr. Porter predicts more computers will come with DVD-ROM than CD-ROM drives.
For video, DVD faces a tougher future. Ideally, consumers should be able to record movies onto DVDs, if manufacturers hope to compete with today's videocassette.
But manufacturers can't agree on a standard for recordable DVD. People who want to tape a TV program will still need to do it on a VCR.
Confusing the market
A similar battle is brewing for computers. While DVD-ROM can deliver software content, companies are pushing three competing standards for "rewritable" disks, so users can add or alter content.
Even the manufacturers agree their infighting could slow DVD's advance.
"Unfortunately, it's going to confuse the market," says Sony spokeswoman Julie Steckmest.
Analysts say the industry could still rally behind one technology and avoid a costly battle over standards. "It's a real wet blanket," says Porter of Disk/Trend. "Hopefully, they'll all sober up and decide to get together."
If DVD is slow coming to video, it's progress in music is glacial. The industry, already digital with the compact disc, isn't eager to push another change.
Forrester doesn't see sales of audio DVD players hitting the 1 million mark until 2002.
That leaves the PC to capture DVD technology, and consumers, and perhaps create a new platform for the entertainment industry.
Some analysts think DVDs will become so popular on PCs that the machines could steal some thunder from traditional entertainment equipment, such as TVs and CD players.
Forrester sees the advent of new content: hybrid videos and games as well as teaser disks of movie trailers and TV pilots given away free in magazines and airline seat pockets to entice consumers.
"It's becoming increasingly clear that the computer industry is going to drive the development of DVD in 1998, '99, and beyond," says Martin Levine, editor of Digital Technology Report, an industry newsletter published in Forest Hills, N.Y.
* Staff writer Mark Trumbull contributed to this story.