Table of Contents

• Executive Summary
  
• Methodology
  
  • Multimedia Forecasting Experience Since 1991
    
  • Experienced Team Of Analysts
    
  • Methodology
    
    • Previously Issued Reports That Provide Useful Information
      
• The Retail Video Sales Market
  
  • Hollywood's Symbiotic Relationship With Consumer Electronics Manufacturers
    
    • The "Network Effect"-DVD Player Sales Pull Forward DVD Title Sales and Create Accelerating Growth
      
    • US and International Hollywood DVD Title Sales Value
      
    • How Movies Get Released Into Multiple Markets
      
      • Territorial Rights Are the Rule of Thumb
        
        • Territorial Release Into Cinemas By Region
          
        • Territorial Release for PPV or VOD By Region
          
        • Territorial Release On Tape & DVD By Region
          
      • The Progressive Release-Cinema to Pay-Per-View To DVD
        
        • Distribution to Video Rental Stores
          
        • Movie Rentals Bring In About $10 Billion Worldwide
          
        • Pay-Per-View, or VOD, Via Satellite or Cable TV
          
        • Pay-Per-View and VOD Over The Internet to Personal Computers
          
      • DVD Premier Bypasses the Cinema and Helps Build Franchises
        
      • Multiple Versions of the Same Movie Are Now the Norm
        
        • Changes to the Content to Add Interest or Update the Marketing
          
        • Changes to the Format to Address Personal Viewing Tastes
          
      • Changes Coming to the Idea of Release Windows
        
        • Day & Date Release at the Cinema
          
        • Day & Date Release for DVDs
          Mark Cuban's HDNET Challenges "Release Windows"
          
        • Comcast Ups the Ante to Change Pay-Per-View "Windows" While Offering to Protect DVD Sales
          
      • The Six Major Markets Are Becoming Mature and the New Markets Won't Grow As Fast for Hollywood Content
        
      • Two Options-Acquire Off-Shore Studios or Introduce New Ways to Gain Legal Access to Movie Content
        
• Three Major Issues That the Studios Must Deal With In a Next-Generation Optical Disc Format Approach
  
  • High Definition Video Won't Be Enough By Itself
    
    • Educating the Public About the Benefits of HDTV
      
      • Fox Television's Finest HDTV Standard
        
      • Does Surround Sound Mean High Definition, Too?
        
    • A Need for More HDTV Content
      
      • Today's HDTV Consumers Are Using High-End Standard Definition DVD Players
        
      • Delivering HDTV Programming to the Largest Possible Audience May Include Pushing HDTV Content Out to Set Top Boxes Equipped with Hard Disk Drives
        
      • Local Over-the-Air Digital HDTV Broadcasts Are Vital
        
      • Personal Computers with HDTV Media Adapters May Become Very Popular
        
      • Apple's New iMac G5 With Front Row Also Expands this Market Segment
        
      • HDTV Interactive Program Guides-IPGs-Will Be A Glitch In The US Market
        
      • Europe Will Take Years to Develop As a Market for HDTV Services
        
      • Europe Represents 30% of Today's Worldwide DVD Sales Value
        
      • Europe Will Still See Brisk Sales of Wide Screen HDTV-Capable Displays
        
  • Interactivity and Extended Features Will Become Important, Over and Above Support for HDTV
    
    • HD-DVD's iHD for Interactivity Developed By Microsoft and Disney
      
    • Blu-Ray's HDMV Mode Provides Simple Upgrades Over DVD
      
    • Blu-Ray's BD-J(tm) Toolset Is Based On Java and Is Compatible With the Multimedia Home Platform (MHP) and OCAP
      
      • Blu-Ray Is a Complete Consumer Platform, and Supports More Than Movies
        
    • Interactivity Features Provide Flexibility and Differentiation To Help Increase Sales, but Also Increase Complexity
      
  • Version Control Will Increase Complexity and Keep a Movie Title Active for Many Years
    
• The Startling Rise of HDTV-Capable TV Households Around the World
  
  • Regional Number of Total TV Households
    
  • Four Key Items That Pertain to Wide-Screen HDTV-Capable Display Devices
    
    • TV Households Likely to Have a Wide-Screen HDTV Display
      
    • TV Households With a Pay-TV HDTV Service
      
    • TV Households With an HDTV Display but No Pay-TV Service
      
    • Households With Broadband Internet Connections
      
      • Apple's iTunes With Video Service Appears to Foreshadow HDTV Delivery
        
      • Microsoft's Recent Settlement With Real Networks Looks Similar
        
      • BT (British Telecom) Group Launching a Broadband VOD Service In 2006
        
      • BT Service Expects to Sell a Set Top Box With a Hard Disk Drive
        
  • North American Households With HDTV
    
  • European Households With HDTV
    
  • Asia-Pacific Households With HDTV
    
  • Japanese Households With HDTV
    
    • Japan May Experience an Over Abundance of HDTV Content
      
    • Japan Will Foretell the Future of High Definition TV Content
      
  • Worldwide Households With HDTV
    
  • Households With HDTV By Region
    
• Personal Computers May Offer Some Key Interim Revenue Opportunities
  
  • The Connected Digital Home Is Coming
    
    • Intel's Viiv™ Entertainment PC Architecture
      
    • Apple's iMac Line Morphing Onto Intel Platform
      
    • Microsoft MediaCenter Edition Adding Adapters and HDTV
      
    • Built In Support for Content Protection & High Definition Content
      
      • Microsoft's Digital Rights Management (DRM) and HDCP
        
    • Built-In Support For Broadband Internet Connections
      
      • Providing High-Speed Download Delivery Services
        
        • Broadband Connection Speeds Keep Going Up
          
        • Improving Compression Techniques Make Files Smaller
          
        • Trickle Downloading Can Move Very Large Files Transparently
          
      • Providing Two-Way Connections for In-Depth Market Research
        
        • Movielink, CinemaNow, and Other Internet Movie Sites Are Already Doing This
          
    • Innovative Interactivity Features
      
      • Low-Cost Platform to "Test Drive" Interactivity Features
        
      • Interactive Features Can Be Delivered to Non-HDTV Households
        
• Five Scenarios For Next-Generation Optical Disc Formats
  
  • Hollywood Has Already Caught the Trend for Wide Screen Viewing
    
    • "Letterbox" Movies Morph Into "Wide Screen"
      
    • Full Screen DVD Releases Are Being Replaced With Wide Screen DVD Releases
      
    • Today's Wide Screen DVD Releases May Usurp the Market for Tomorrow's Next-Generation Products if High Definition Video Is the Only Benefit
      
    • Forward Compatibility Is Being Built Into Next-Generation Disc Formats
      
  • The Key Ingredient Is Not the Technology-It's Help Growing New Revenue Streams
    
    • The Growing Middle Classes Might Be Attracted to a Next-Gen Disc Format
      
    • China's Middle Class Families Could Be Worth Billions
      
    • India, Malaysia, and Other Asia-Pacific Countries Could Also Grow
      
    • Latin America and Eastern Europe Could Provide Growth, Too
      
    • The Three Technology Items-Discs, Interactivity, Broadband
      
  • Scenario 1
    
  • Scenario 2
    
  • Scenario 3
    
  • Scenario 4
    
  • Scenario 5
    
    • Sony Pictures Entertainment is Firmly Committed to Blu-Ray's Success
      
    • The HD-DVD Camp Will Have to Demonstrate a Business Model
      
• Parent Companies of the Major Hollywood Studios
  
  • All Six of "The Majors" Have Re-Structured During the Past 12 Months
    
  • Owning A Movie Studio Provides Some Unique Benefits
    
  • Sony Corporation
    
    • Sony Will Drive Blu-Ray to Success As a Consumer Electronics Platform
      
  • The Walt Disney Company
    
    • Disney Becoming a Pioneer for Alternative Video Delivery Methods
      
  • News Corporation
    
    • The Eyes of the World Are On News Corp.
      
  • Time-Warner
    
    • Warner Bros. Entertainment Has Over 69,000 Pieces Of Content
      
  • NBC-Universal-Part Of General Electric
    
  • Viacom
    
    • What Viacom and CBS Corporation Might Look Like Next Year
      
    • Paramount Studios Has Over 1,100 Titles Including Star Trek
      
• Forecasts for Hollywood Video Content Sales By Region
  
  • Four Categories of Movie Products for Sale at Retail
    
    • Traditional DVD Optical Discs
      
    • Portable Player Movie Products
      
    • Next-Generation Optical Disc Products
      
    • Movie & TV Downloads
      
  • North America By Category
    
  • Europe By Category
    
  • Asia By Category
    
  • ROW By Category
    
  • Worldwide Summaries By Category
    
  • Regional Summaries-All Categories Combined
    
• Our Final Thoughts
  
  • Sony Will Have to Win Big
    
  • Microsoft & Intel Will Drive their Vision Forward
    
  • Apple Will Also Play an Important Role In Digital Entertainment
    
  • Consumers Will Have a Lot of Options
    
  • The Hollywood Studios Will Adjust and Thrive
    

List of Tables

• Table 1. Worldwide Annual Value of Hollywood Movie Products Sold At Retail (US$ in Billions, Annual Growth Percentage, Compound Annual Growth Rate)
  
• Table 2. Annual US DVD Sales & Rentals for Major Hollywood Studios—2004 (Annual Sales US$M, Annual Rentals US$M, Annual Total US$M)
  
• Table 3. Annual International Sales Of DVDs For Major Hollywood Studios—2004 (Annual Sales US$M, Percent of Worldwide Total, Cumulative Percent)
  
• Table 4. Households With a Wide-Screen HDTV-Capable Display—North America (Households in Millions, Annual Growth Rate, Percent of All TV Households, CAGR)
  
• Table 5. Households With a Wide-Screen HDTV-Capable Display—Europe (Households in Millions, Annual Growth Rate, Percent of All TV Households, CAGR)
  
• Table 6. Households With a Wide-Screen HDTV-Capable Display—Asia-Pacific (Households in Millions, Annual Growth Rate, Percent of All TV Households, CAGR)
  
• Table 7. Households With a Wide-Screen HDTV-Capable Display—Japan (Households in Millions, Annual Growth Rate, Percent of All TV Households, CAGR)
  
• Table 8. Households With a Wide-Screen HDTV-Capable Display—Worldwide (Households in Millions, Annual Growth Rate, Percent of All TV Households, CAGR)
  
• Table 9. TV Households With at Least One Wide Screen HDTV-Capable Display Device by Region (Number of TV Households in Millions, Annual Growth Rate, Percent of Worldwide Total, Compound Annual Growth Rate)
  
• Table 10. Typical Download Speeds For Full Length Movie Files (Speed of Connection in Mb/s, Size of File, Time in Minutes, Time in Hours)
  
• Table 11. Major Assets And Businesses Of Sony Corporation—Owner Of Sony Pictures Entertainment And MGM
  
• Table 12. Sony’s Worldwide Revenue Breakout For 2004 (Annual Revenues by Segment, US$ Billions, Percent of Total)
  
• Table 13. Major Assets and Businesses of the Walt Disney Company—Owner Of Buena Vista Entertainment
  
• Table 14. Disney’s Worldwide Revenue Breakout for 2004 (Annual Revenues by Segment, US$ Billions, Percent of Total)
  
• Table 15. Major Assets and Businesses of News Corp.—Owner of Twentieth Century Fox
  
• Table 16. News Corp. Worldwide Revenue Breakout for Fiscal 2005 (Annual Revenues by Segment, US$ Billions, Percent of Total)
  
• Table 17. Major Assets and Businesses of Time-Warner—Owner of Warner Brothers Studios
  
• Table 18. Time-Warner Worldwide Revenue Breakout for 2004 (Annual Revenues by Segment, US$ Billions, Percent of Total)
  
• Table 19. Major Assets and Businesses of NBC Universal—Owner of Universal Studios
  
• Table 20. Major Assets and Businesses of Viacom—Owner of Paramount Studios
  
• Table 21. Re-Structured Media Assets of Proposed Viacom Entity
  
• Table 22. Re-Structured Media Assets of Proposed CBS Corporation Entity
  
• Table 23. Viacom Worldwide Revenue Breakout for 2004 (Annual Revenues by Segment, US$ Billions, Percent of Total)
  
• Table 24. Annual Retail Sales Value of Hollywood Video Products By Category—North America (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)
  
• Table 25. Annual Retail Sales Value of Hollywood Video Products By Category—Europe (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)
  
• Table 26. Annual Retail Sales Value of Hollywood Video Products By Category—Asia (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)
  
• Table 27. Annual Retail Sales Value of Hollywood Video Products By Category—ROW (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)
  
• Table 28. Annual Retail Sales Value of Hollywood Video Products By Category—Worldwide (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)
  
• Table 29. Annual Retail Sales Value Of All Hollywood Video Products By Region (Annual Sales Value, US$ Billions, Annual Growth Rate, Percent of Total, CAGR)

List of Figures

• Figure 1. Annual Worldwide Unit Shipments of Line-Powered DVD-Playback Capable Consumer Electronics Products (Annual Unit Shipments in Millions)
  
• Figure 2. Households With a Wide-Screen HDTV-Capable Display-North America (Households in Millions)
  
• Figure 3. Households With a Wide-Screen HDTV-Capable Display-Europe (Households in Millions)
  
• Figure 4. Households With a Wide-Screen HDTV-Capable Display-Asia-Pacific (Households in Millions)
  
• Figure 5. Households With a Wide-Screen HDTV-Capable Display-Japan (Households in Millions)
  
• Figure 6. Households With a Wide-Screen HDTV-Capable Display-Worldwide (Households in Millions)
  
• Figure 7. TV Households With At Least One Wide Screen HDTV-Capable Display Device by Region (Number of TV Households in Millions)
  
• Figure 8. Annual Retail Sales Value of Hollywood Video Products By Category- North America (Annual Sales Value, US$ Billions)
  
• Figure 9. Annual Retail Sales Value of Hollywood Video Products By Category-Europe (Annual Sales Value, US$ Billions)
  
• Figure 10. Annual Retail Sales Value of Hollywood Video Products By Category-Asia (Annual Sales Value, US$ Billions)
  
• Figure 11. Annual Retail Sales Value of Hollywood Video Products By Category-ROW (Annual Sales Value, US$ Billions)
  
• Figure 12. Annual Retail Sales Value of Hollywood Video Products By Category-Worldwide (Annual Sales Value, US$ Billions)
  
• Figure 13. Annual Retail Sales Value of All Hollywood Video Products By Region (Annual Sales Value, US$ Billions)