On 20th June 2002, Circuit City (second-largest electronics retailer in the US), announced they would no longer sell new movies on VHS tape. Instead, the chain of 400 stores will carry only DVD titles. Yes, they'll still sell VCRs and blank VHS tapes, but if you want to watch a movie, you've got to make the electronic paradigm shift over to DVD.

DVDs, which are called both Digital Video Discs and Digital Versatile Discs, have many advantages over their VHS counterparts. They never have to be rewound or fastforwarded, and the available space is so abundant that producers often include several language versions of the movies, along with deleted scenes, outtakes, and Director's comments. Never mind that the picture and sound quality are awesome (especially when run through a home theater system), and the fact that you can jump to any scene or extra conent with a remote control as if surfing a web page.

But Circuit City's move has left some people scratching their heads. Over 95 million US households have a VCR (about 85% market penetration), while only 30 million have a DVD player. Plus, industry data report that people still rent three times as many VHS titles as DVDs.

So is Circuit City's move premature? Best Buy, the formidable top dog in electronics retailing, has not yet totally delisted VHS titles, opting instead to hang on to a few for the time being.

I doubt CC is making a mistake, though. They are merely practicing forward thinking. VCRs will eventually fade away, much like turntables and LP records. You cannot make 95 million VCRs vanish overnight, but you can rejoice in the fact that sales of DVD players surpassed those of VCR players in September 2001. In other words, the writing is on the wall, and CC wants to be a leader, not a laggard, in this profitable segment.

It is almost ironic that CC has made the first move here. A few years ago, they had their own proprietary version of DVDs called DIVX, which proved to be a monumental flop. The special players used discs that worked for 48 hours (upon actually loading the disc into the player), and the discs could be renewed via telephone and credit card transaction, and even purchased for lifetime enjoyment. The idea was to provide digital movies at a low price (usually about $5), and take stock of the fact that most people don't watch movies more than once. And if they do, they could recharge their disc as needed.

The big obstacle for DVDs is that they are not nearly as versatile as VCRs when it comes to recording. While there are plenty of digital camcorders and iLink hookups to PCs for computer editing, unless you're willing to shell out $700 or more for a DVD recordable unit, you have strictly a playback device. A few PCs now have built-in DVD recorders, but prices on these models start at about $1600.

As analysts correctly point out, when recording on DVD is nearly as cheap as it is on a VCR, that's when VCRs will breathe their last breath. Still, we can see the outcome of the race from here. In the few short years that DVDs have been available in the US, they have far outpaced original sales of VCR units in the 1970s and 1980s. We don't need to be sold on the concept, because we have already embraced it for audio and software CDs.

But on the other hand, many families still have dusty old 8-track players, reel-to-reel recorders, and turntables perched high atop dark closet shelves, a veritable museum of obsolete electronics. While most folks love the new technology, they are none too interested in adding to their collection of products put out to pasture.

©2002 R. Nicholas Gerlich