July 2005

Digital Media Make Their Mark

More than 50 percent of all U.S. households now have a DVD player, wireless phone, and Internet access. But only 25 percent have broadband.

By Stacy Lawrence

Three digital-media technologies crossed a threshold last year; more than half of U.S. households now have a DVD player, a wireless phone, and Internet access. Still, only about one-quarter of homes have broadband; this limitation is impeding the proliferation of digital media. One technology that has been a pariah for music-industry types may soon be a darling: digital audio, long blamed for eroded revenues, is expected to substantially contribute to music labels' top lines this year in the form of paid downloads. This could help create the first growth in revenue for the sector in five years. One business sees nothing but blue skies: video-game revenue is expected to continue its outrageous climb, bolstered over the next few years by the release of next-generation consoles that will likely have enhanced online capabilities. But what will make the biggest mark on the industry in the coming years? Digital video recorders, predict media executives.