DVD Players a Hard Sell in Japan


Monday, July 3rd 2000, 12:00 am
By: News On 6


TOKYO (AP) — It's got all the markings of a hit in Japan.

First, it's a high-tech gadget, and the Japanese love gadgets. Second, it delivers crisp movie images and sound directly into the living room, and Japan adores the movies.

But will digital video disk players — the latest must-have product in the United States — be the next home electronics bonanza here? The picture is still fuzzy.

Although Japanese DVD manufacturers are bursting into the U.S. market, they must struggle for buyers back home, where cramped housing and a slow economy crimp demand for pricey home theaters built around DVDs.

The DVD story is an unusual twist to the globalization trend, where most companies score in home markets first and expand abroad later. Instead, Japanese makers are trying to duplicate their U.S. success in Japan.

DVD players, which went on sale in late 1996 in Japan and the following year in the United States, can play feature-length movies, about two hours of viewing, from a disk that looks like a CD.

Hooked to a 36-inch TV monitor or an even larger flat-panel screen, a DVD player can show movies with the vivid, clear imagery and encompassing sound effects of cinema.

That has made them a hit in the United States, where sales more than quadrupled last year to about 3 million from nearly 700,000 in 1998, according to NPD Intelect, a Port Washington, N.Y. market researcher.

But in Japan, only 388,000 DVD players were sold last year, though up a healthy 62 percent from 1998, says the Electronic Industries Association of Japan.

The reasons for the lag are uniquely Japanese. One problem is tiny apartments in Japan.

Like many Japanese, Fuminori Nakaya, 44, already has his share of electronic gadgets, so much so that his suburban Tokyo home is full of stuff.

``I live in an apartment,'' said Nakaya, whose living room, at 15 feet by 12 feet, is large by Japanese standards. ``There's no space to set up a DVD.''

Another problem is the economy.

While the United States is on a roll, Japan is struggling to recover from an anemic economy that has greatly slowed consumer spending. Persuading people to go out and buy a luxury item is no easy chore.

A DVD player costs roughly $380 in Japan, more than three times what VCRs start at. The bill for related home theater equipment can quickly add up, with an amplifier going for about $1,700 and the latest flat-screen technology $3,800 or more.

Then there's software. While DVD players here cost the same as in the United States, the video disks are twice the U.S. price at around $50. Software makers are reluctant to cheapen them without a larger audience.

While most DVD movies sold in Japan are from Hollywood, they must be modified for the Japanese market.

``In Japan, DVDs are still for the minority — those who're so crazy about movies they're willing to pay for the latest technology,'' said Junichi Nishikawa, a manager Pioneer manager.

Still, the potential is clearly there.

VCRs are extremely popular in Japanese homes. Video rental shops are just about everywhere. And DVDs seem an attractive alternative to the steep cost of a movie ticket in Japan — about $16 — and long waits in line that can accompany a night out at the cinema.

Even so, the appetite for movie entertainment in the United States is hard to match.

Ten times more Americans went to movies than Japanese last year, according to the Motion Pictures Producers Association of Japan in Tokyo, although the American population is only about double Japan's.

America's greater passion for movies translates well to home theater, some industry officials say.

``The idea of the home theater was easily accepted in the United States,'' said Hitoshi Hitokoto, manager of Sony's DVD product planning. ``It appealed to only a small part of the Japanese population.''

Like so many electronics goods, most DVD players are produced by Japanese companies, with Sony topping U.S. market share at 30 percent, followed by Pioneer and Toshiba, NPD Intelect says.

Producers are hardly writing the market off. Instead, they are trying to adapt — and are making some significant headway.

The market got a big boost this year from sales of Sony's PlayStation 2 video-game machine, which can also play DVDs. The PlayStation 2, set to go on sale in the United States this fall, has sold 2 million in Japan since hitting stores in March.

Another hit is the portable DVD machine, which looks like a laptop computer — a plus for Japanese who don't have space for a home theater.

Answering another concern, manufacturers such as Pioneer and Matsushita Electric Industrial are coming out with DVD machines in Japan that can record TV programs just like VCRs.

Both companies plan to sell the models in the United States, although a date has not been set.

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