Even though the high definition video discs are just around the corner, due to the high manufacturing costs of Blu-ray and HD DVD players and broad availability of conventional DVD devices and content, the market of traditional DVD will continue growing, according to research firm In-Stat.

DVD player and recorder units will have a combined market of 176.6 million units sold worldwide in 2010, up from 140.8 million units in 2005. The forecast for 2006 predicts that Europe will be the strongest region for DVD players and recorders with a combined total of 38.4 million units sold.

The significant growth of the traditional DVD market is predicted as a result of very high manufacturing costs of blue-laser players: with the servo chipset, optical pick-up, H.264 decoder and royalties making up the majority of the cost, the initial estimates for the bill of materials for blue-laser disc players is over $400, according to In-Stat. Most of the costs are forecasted to decline considerably by 2010, except for royalties.  The promise of the guaranteed premium royalty bounty is obviously at the heart the high definition DVD format wars.

“The future of this market though is all about high definition DVD players based on ‘blue laser’ technology; however, the future may be farther off than we would like. These players will enter the market at premium prices, and as there has been no compromise between the HD-DVD camp and the companies that sponsor Blu ray technology, a format battle seems inevitable. There will be some casualties, companies and consumers alike,” said Chris Kissel, In-Stat analyst.

It is generally believed that the HD DVD devices are less expensive to build than Blu-ray players, which seems to be correct, as the most affordable HD DVD announced so far is a $499 product from Toshiba, while the least expensive Blu-ray rival from Samsung costs $999. Nevertheless, as a result of cost-efficiency and availability, the market of DVD players and content will still have significant share.

“The DVD player market benefits from versatility in form factors. DVD players can be seen in portable renditions, or integrated with VCRs, or in the back panel seats of SUVs. While DVD recorders have come down in price, there is still delineation in the pricing of DVD players and DVD recorders- each represents a different value proposition,” said Mr. Kassel.

Traditional single-layer DVDs allow consumers to watch movies in 720x480 (NTSC) or 720x576 (PAL) resolution with Dolby Digital audio. The blue-laser discs will provide consumers 1920x1080 resolution as well as Dolby Digital Plus audio along with some additional interactive features.

Blu-ray and HD DVD formats compete for replacing the DVD standard. HD DVD discs can store up to 15GB on a single layer and up to 30GB on two layers. Its competitor, Blu-ray, can store up to 27GB per single layer and up to 50GB on two layers, but Blu-ray discs are more expensive to produce. The HD DVD is pushed aggressively by Toshiba and NEC as well as being standardized at the DVD Forum, which represents over 230 consumer electronics, information technology, and content companies worldwide. Blu-ray is backed by Sony and Panasonic, which are among the world’s largest makers of electronics. Among Hollywood studios HD is supported by Warner Bros. Studios, New Line Cinema, Paramount Pictures and Universal Pictures, whereas Sony Pictures, Walt Disney, Warner Bros. and Twentieth Century Fox endorse Blu-ray.