DVD-VIDEO HAILED AS MOST SUCCESSFUL CONSUMER ELECTRONICS PRODUCT LAUNCH EVER

Industry Calls Format "Medium of the Millennium"

LAS VEGAS - Jan. 6, 2000 - Enjoying even greater sales than expected in the all-important fourth quarter, DVD-Video was hailed as the most successful consumer electronics product launch ever. Figures compiled by the DVD Entertainment Group (formerly DVD Video Group) based on retail and manufacturer inventory levels announced today at CES estimate that hardware player sales sold through to consumers since the format launched have reached over five million players in North America (U.S. and Canada).

Industry executives named DVD-Video the "Medium of the Millennium" and boast that DVD-Video is the fastest growing new packaged media format launch in history with close to 5.4 million DVD-Video players shipped to retail since the format launched nationally in the U.S. in Fall 1997 (Consumer Electronics Association).

The outlook for next year is equally promising. The DVD Entertainment Group estimates that hardware shipments will double to eight million DVD-Video players in 2000. And, based on the success of the format exceeding all previous forecasts that number could be even higher. The group also estimates that the installed base will more than exceed 10 percent of US households, a benchmark of success for a consumer electronics product.

The surge in hardware sales is a positive boost for retailers. In 1999, DVD-Video hardware represented more than $1 billion in retail sales. This includes stand-alone players only and does not include DVD-ROM drives or other home theater products.

"With over five million players in consumer homes, DVD-Video has clearly reached mainstream acceptance," said Emiel N. Petrone, Chairman, DVD Entertainment Group and Executive Vice President - Worldwide, Philips Entertainment Group. "The future for home video is here. 'DVD is the Medium of the Millennium'."

There are now nearly 70 DVD Video player models marketed under 30 different consumer electronics brands. DVD Video players are widely available at mass merchants, electronics specialty stores, over the internet and many other locations throughout the U.S.

Mass Market Availability

In only its third year in the marketplace, DVD-Video player prices have declined significantly. According to Intelect ASW, the average price sold for a DVD-Video player was $298 in November, down 30 percent from $428 at the same time last year. Some players and models are available for less than $200 making the format accessible to the mass market.

"DVD sales exploded during the holiday season with stores reporting triple digit increases in both hardware and software," said Joe Pagano, Vice President - Merchandising, Best Buy. "These spectacular results can be attributed to enthusiastic acceptance by the consumer, reduction of hardware prices, the release of popular titles such as The Matrix, Saving Private Ryan and the Mummy, and the introduction of Disney Classics."

The nation's larget consumer electronics retailer, Circuit City, also had extremely favorable sales with DVD.

"Our December 1999 sales exceeded our expectations, nearly doubling last year's industry-leading volumes," said W. Alan McCollough, President and Chief Operating Officer, Circuit City Stores, Inc. "We were especially pleased by the strong enthusiasm among our customers for DVD changers and other highly featured models."

DVD-Video: A Huge Revenue Source for Studios and Labels

The DVD Entertainment Group estimates that DVD-Video brought in revenue of more than $2 billion for Hollywood studios and music labels in 1999. According to figures compiled by Ernst & Young on behalf of the DVD Entertainment Group, nearly 100 million DVD movies and music videos shipped in 1999. In the fourth quarter alone almost 50 million DVD movies and music videos shipped to retail. This figure represents virtually the same amount that shipped in the first nine months of 1999 and is a 400 percent growth over the same period in 1998.

Since the format's launch, software shipments have reached more than 130 million units, according to the DVD Entertainment Group. And, the DVD Entertainment Group expects the industry to double its 1999 sales by shipping at least 200 million DVD movies and music videos in 2000, representing $4 billion in revenue for the studios and music labels, approximately half of the total revenue generated from the VHS sell-through.

"This year we began to see initial shipments of one million software units," said Paul Culberg, president, DVD Entertainment Group and executive vice president - worldwide, Columbia TriStar Home Video. "Titles like Matrix (Warner Home Video), Titanic (Paramount Home Video), Saving Private Ryan (DreamWorks Home Entertainment), The Mummy (Universal Studios Home Video) and Austin Powers: The Spy Who Shagged Me (New Line Home Video) all had initial orders of one million units shipped to retail. Clearly, DVD-Video is here to stay."

With all the major movie studios and music labels supporting the DVD-Video format, there are more than 5,000 titles now available. The DVD Entertainment Group predicts that number to swell to more than 8,500 next year.

The DVD Entertainment Group is a Los Angeles-based, industry-funded nonprofit corporation that exists expressly to promote consumer awareness of the benefits of DVD-Video, DVD-Audio and DVD-ROM based games, and to provide updated information to the media and the retail trade about DVD-Video and DVD-Audio players, movies and music videos.

Regular members of the DVD Entertainment Group are Artisan Entertainment, BMG Entertainment, Buena Vista Home Entertainment, Columbia TriStar Home Video, DreamWorks Home Entertainment, EMI Recorded Music, Image Entertainment, MGM Home Entertainment, New Line Home Video, Panasonic Consumer Electronics Company, Paramount Home Video, Philips Consumer Electronics Company, Pioneer Electronics (USA), Sharp Electronics, Sony Electronics, Sony Music Entertainment, Sony Wonder, Thomson Consumer Electronics, Toshiba America Consumer Products, Twentieth Century Fox Home Entertainment, Universal Music Group, Universal Studios Home Video, USA Home Entertainment, Warner Home Video and Warner Music Group.

Associate members are Alpha Enterprises, Americ Disc, Cinram, California Video Center, Crest National, Disc Graphics, JVC Disc America, Panasonic Disc Services Corporation, Pioneer Video Manufacturing, Sony Disc Manufacturing, Sony Pictures DVD Center, Technicolor and Warner Advanced Media Operations.

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