DVD, the fastest growing consumer electronics technology in history, has created a dynamic product pyramid and unprecedented opportunities for retailers this holiday season.

Resellers who look at product sales charts and analyst projections when planning their holiday strategy will see video

emerging as the “”killer app”” in the DVD pyramid. The pyramid has expanded quickly from DVD players to digital cameras and camcorders.

In the pyramid, every product increases demand for the others. Sales of DVD players have steadily increased since 1997. This year, DVD player sales are projected to surpass sales of VCRs and the worldwide installed base of DVD players will reach nearly 200 million units.

The installed base of camcorders (especially DV camcorders) has grown steadily since 1997.

With digital camcorders now available for $275, prices have dropped to the point where sales of digital cameras took off. Camcorders, which are expected to reach a household penetration of nearly 40 percent this year, are driving the market for PC video editing and authoring software.

Sales of video editing solutions are rising because today’s digital savvy consumers realize that just plugging the camcorder into the back of a TV and watching unedited video loses its appeal after a while.

The basic software that comes with today’s digital capture devices generally does little more than let the user capture their photos and video. As a result, all of the people who buy (or have recently bought) a digital camera or camcorder are prime candidates for video editing software that will maximize the benefits of their new purchase. Software that will allow them to quickly edit and burn their stills and videos to CDs or DVDs that play on DVD players.

The growing demand for consumer video editing solutions has inspired software firms to take the complexity out of selling and using video editing software. Products are now available that meet the requirements of consumers with varying levels of video editing experience–from novice to professional.

For less than $50, basic programs like Pinnacle Expression provide digital camera owners with a cost-effective way of making the transition from digital photos to interactive slide shows and video, and from VHS tape to long-lasting CDs and DVDs. Users can organize their digital pictures and have them automatically compiled into photo slide shows, complete with background music. Then, when they purchase a camcorder, they can use the same program to delete unwanted scenes from their videos and can add Hollywood-style transitions and effects simply by dragging and dropping.

In addition to generating new opportunities for product bundles and add-on sales, video editing applications generate after-market sales. After experiencing success, home video enthusiasts usually want to upgrade to a software solution like Studio 8 that offers more editing effects and direct output to CDs, DVDs and the Internet.

By offering a choice in output for slide shows and videos, software developers provide prospective buyers with compelling reasons to buy now, rather waiting until they purchase a DVD burner. Consumers who don’t have a DVD burner can record DVD-quality video on a CD that can be played on virtually any DVD-ROM drive or DVD player as well as computer-based CD-ROM drives.

Lee Sherwood is the channel marketing manager for Pinnacle Systems Inc. He can be contacted at lsherwood@pinnaclesys.com.

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