NAICS: 33-4613 Magnetic and Optical Recording Media Manufacturing
SIC: 3695 Magnetic and Optical Recording Media Manufacturing
NAICS-Based Product Codes: 33-461301 through 33-46130213, and 33-46130615
A DVD is a disc measuring 4.72 inches in diameter that is used to store digitized information. The DVD was introduced in the 1990s as an optical storage medium and, ultimately, as a replacement for compact discs (CD). The abbreviation DVD is used to stand for both Digital Video Disc and Digital Versatile Disc. Those who use the latter term argue that the abbreviation should stand for Digital Versatile Disc because of the media's many non-video applications.
The design of the DVD is an advancement on the design of the earlier CD. These two types of optical storage media share the same dimensions and are created in much the same way. An optical disc has millions of bumps or pits, depending on which side of the disc from which they are viewed, arranged in one long line that spirals from the center of the disc out. These bumps are arranged into tracks. Each track is separated by 1.5 microns (millionth of a meter) of space. The areas between the bumps are known as lands. The lands and bumps represent the zeros and ones of digital information. A laser in the CD or DVD player deciphers the digital information on the disc. The laser light reflects off the bumps differently than it does off the lands. Sensors in the disc player detect these differences and are thus able to read the information stored on the disc.
The primary difference between the CD and the DVD has to do with their different storage capacities. By reducing the size of the bumps and lands on the surface of an optical storage disc more data can be placed on the same physical surface area. As laser and material technology improved, the bumps and lands on the CD were reduced in size and the DVD was developed. On a CD a bump measures 0.83 microns long and 125 nanometers (billionths of a meter) high. On a DVD the bump length is 0.4 microns allowing for a much greater density of information on a single disc. A single sided DVD holds approximately seven times the capacity of a CD. A double-sided, double-layer version can store 24 times as much information as a standard CD. As the DVD format became popular in the late 1990s, it generated numerous new and competing formats for how data are stored on this high density, optical storage media.
The Creation of the DVD Format
The DVD was the result of competing technologies in the early 1990s. Philips and Sony backed the MultiMedia Compact Disc (MMCD) data formatting technology. Toshiba, Time-Warner, Matsushita Electric, Pioneer, Thomson, and JVC supported the Super Density Disc data formatting technology. In order for disc drives or players to be able to read from a CD or DVD, the information on the disc must be organized by a standard known to the disc drive. In a sense, they must speak the same language. Thus, they must share a data formatting technology. The president of IBM, Lou Gertsner, brought these two technology camps together, hoping to avoid a protracted battle like the one that occurred during the introduction of the video cassette recorder (VCR) between supporters of the Betamax format and supports of the VHS format. Philips and Sony abandoned the MMCD and the companies agreed upon a new standardized technology. The DVD specification Version 1.5 was announced in 1995 and was finalized a year later. In May 1997 the first DVDs and DVD players appeared on the market.
|Frequency of Writing Capacity
|Storage Capacities Single Sided
|Supporting Industry Group
|SL stands for single layer
|DL stands for double layer
|GB stands for gigabyte or a thousand million bytes
|Writable a single time
|DVD Random Access Memory
|Rewritable 100,000 times
|Rewritable 1,000 times
|Rewritable 1,000 times
|Writable a single time
That same year the DVD Forum was created. The DVD Forum is a group of consumer electronics and computer equipment manufacturers that work to standardize DVD formats. They are a trade organization and do not set official policy. The DVD+RW Alliance was also formed in 1997. It includes leading electronics manufacturers such as Hewlett-Packard, Dell, Microsoft, Yamaha, and Sony. These industry leaders disagreed with the guidelines established by the DVD Forum. They developed the DVD+R (recordable) and DVD+RW (rewritable) formats to be more compatible with existing consumer DVD players, which the Forum's DVD-RAM (random access memory) format was not. The DVD Forum has not endorsed the rival formats. The DVD+R and DVD+RW formats have become quite popular with consumers in the first decade of the 2000s. They offer faster writing, better internal linking, and support for drag-and-drop desktop file manipulation, but they are also more expensive than the DVD-RAM technology.
Any discussion of DVD media can be confusing because of the various disc capacities, the misuse of terms, and the competing formats. There are four different sizes categories of DVDs: DVD-5, DVD-9, DVD-10, and DVD-18. They are distinguished by their data storage capacity.
- DVD-5 (Single Sided Single Layered) holds approximately 4.37 gigabytes (GB) of data.
- DVD-9 (Single Sided Dual Layered or Single Sided Double Layered) holds approximately 7.9 GB of data.
- DVD-10 (Double Sided Single Layered) holds approximately 8.75 GB of data.
- DVD-18 (Double Sided Dual Layered or Double Sided Double Layered) holds approximately 15.9 GB of data.
Movies and music that are distributed on DVDs can not be written to. They are not sold as storage media. DVDs sold for use as storage media can be written to. Figure 85 presents a summary of recordable and rewritable DVDs by type. Each is discussed separately in more detail.
Writable DVD Formats
The DVD-R is the format supported by the DVD Forum. The DVD+R is the format supported by the DVD+RW Alliance. These names are pronounced in several different ways. DVD-R, for example, is pronounced as DVDR, DVD Dash R, or DVD Minus R. This recordable format may be written to only once and is best suited for the archiving of computer data or for the distribution of data or video. These discs hold up to 4 hours of DVD quality video or 16 hours of VHS quality video. Subtle differences exist between the DVD+R and DVD-R formats; the systems for tracking, error management, and speed control are more accurate at high speeds in the DVD+R than in the DVD-R.
DVD+RW and DVD-RW discs can be written to up to 1,000 times. Both formats have storage capacity of approximately 4.7GB, which is equivalent to the storage capacity of 6 CDs. This capacity allows 8 hours of video to be stored on a disc. The rewritable DVD format is popular because it can be erased and written to with ease. This makes it ideal for daily backups of computer data. It is also used in camcorders and personal video recorders. Backers of the DVD+RW such as Sony and Phillips claim this format is more compatible with consumer DVD players.
The DVD-RAM format is the most complex and expensive of the formats. It is also the least popular. The disc has defined tracks that allow the machines that read them to locate the exact track to write or to erase. This function makes the disc work like a computer hard drive. The format can be written to repeatedly and is seen as the most reliable format because of its built-in safeguards to manage errors and defects. It is well suited to data backups and archiving. DVD-RAM is more popular in consumer devices such as camcorders and set-top boxes than in computers. DVD-RAM can be written to up to 100,000 times before it is no longer usable.
Commercially produced DVDs may be played on any standard DVD player or DVD drive because of the manner in which such DVDs are produced. Commercially, mass produced DVDs used to distribute movies, music, and software, are made in a stamping process that is different from the writing process used to write onto rewritable or recordable DVDs. Audio and video content that is written to a disc on a personal computer may not be compatible with all DVD players. There is no guaran-tee that a DVD made on a computer or other electronic device will play on all standard DVD players.
As a relatively new technology, standards were still evolving for this medium in the latter half of the first decade of the twenty-first century and uncertainty in its use was expected to continue for the foreseeable future. As hardware and software formats are agreed upon by all parties involved—those who make the DVDs themselves, those who make the materials to be placed on the DVDs, and those who make the devices used to read or play the DVDs—the complexity that characterized this storage medium in the latter years of the first decade of the twenty-first century will diminish.
The number of producers of recording media in the United States is declining. According to U.S. Census Bureau figures, there were 173 establishments involved in the manufacturing of magnetic and optical media in 2002, down from 257 establishments in 1997. Most establishments were based in California, a state with numerous software and technology firms. Employment fell sharply between 1998 and 2004. U.S. employment in the recording and optical media industry fell from 20,476 workers in 1998 to 5,754 workers in 2004. Employment in this industry has followed the basic trend seen in the United States in other electronics industries. First, much of the production capacity has been moved to other countries. Second, technological improvements have increased productivity and this increased productivity has reduced the demand for labor.
As can be seen in Figure 86, the value of U.S. manufacturing shipments of magnetic and optical recording media have been declining since the mid-1990s. In 1997 shipments were valued at $5.9 billion. By 2005 shipments had fallen to $1.6 billion. In addition to blank discs, these establishments manufacture blank data tapes, reels, cassettes, and cartridges.
Retail Sales Figures
Recordable DVDs generated sales of $50.7 million at supermarkets, drug stores, and discount stores for the year ending December 3, 2006, excluding sales at Wal-Mart. This figure is approximately half of the $101.2 million in sales generated by blank CD-ROMs for the same period, but sales suggest the rising popularity of the DVD media format. According to MMR magazine, sales fell 2.4 percent for CD-ROMs between 2005 and 2006 while sales of recordable DVDs increased 38 percent. For the 2005 to 2006 sales period, floppy disc sales fell 42 percent to $3.7 million.
According to the Japan Recording Media Association (JRMA), global demand for DVD media products was strong in the middle of the first decade of the 2000s. Demand for recordable DVDs was anticipated to grow 21 percent and reach 5.7 billion units in 2007. This growth was anticipated to continue, reaching 6.9 billion DVDs in 2009. Growth was anticipated for rewritable DVDs as well. The JRMA forecasted rewritable DVD demand to climb from 495 million units in 2007 to 541 million units in 2009. This demand was forecasted based on expectations of continued growth in the shipment of personal computers and DVD recorders.
According to estimates from industry analysts Santa Clara Consulting, and Understanding & Solutions, Verbatim was the leading brand of recordable DVD products worldwide in 2005. It had a 16.9 percent market share that year as seen in Figure 87. The TDK brand had 14 percent of the market; Memorex had 10.7 percent; Sony, 8.2 percent; and Imation, 6.5 percent.
Imation was formed in 1995 from parts of the 3M Corporation. The 3M Corporation had stagnant revenues for some time and the move was seen as a way to stimulate growth. The Imation name comes from the words imaging, information, and imagination. In 2006 it acquired Memorex and in 2007 it acquired TDK. These acquisitions solidified the company's place in the optical media and flash storage markets and gave Imation commanding market shares across the various DVD media categories. Imation had 2,070 employees in 2007 and reported revenues of $1.5 billion for the fiscal year ended December 2006.
Memorex is the leading producer of recordable DVD media in the United States. Memorex had 28 percent of the U.S. retail market through the first quarter of 2006 based on dollar sales, according to The NPD Group. Memorex also manufactures other recording media. Established in 1961, the company first drew attention with its shattered glass ad campaign in 1972. In these ads, jazz singer Ella Fitzgerald would sing a note that shattered a wine glass while being recorded with Memorex audiotape. The tape was replayed and Fitzgerald's recorded voice again shattered the glass, indicating the crystal-clear quality offered by Memorex tape. The ad asked the question "Is it live or is it Memorex?" The company still uses this slogan and has found success through its brand recognition and strong marketing. The Memorex brand is marketed in more than 25 countries and is on the shelves of 21 of the top 25 consumer retailers. In recent years, the company was sold several times. As of early 2007 the company was a division of Imation, which manufactures a variety of computer data storage products. Memorex reported revenues of $430 million in 2005.
TDK, founded in 1935, is based in Japan. TDK employed nearly 54,000 people and saw revenues of $6.8 billion for the fiscal year ended March 2006. While its name is associated with audio tape and similar media, the company was founded to commercialize a magnetic material known as ferrite. Ferrite is used in the production of a variety of electronic components, such as high-frequency devices, capacitors, magnets, and transformers. It is from these products that TDK derives the bulk of its income.
Verbatim was founded in 1969 and is a division of the Mitsubishi Chemical Corporation of Japan. It earned revenues of $130 million for the fiscal year ended December 2005. Verbatim was the leader in the global market in 2005 in a number of media categories, including DVD-R, DVD+R, CD-R, and CD-RW.
MATERIALS & SUPPLY CHAIN LOGISTICS
DVD production varies depending on the format. If a disc is single-sided, then it is composed of a recording side and a dummy side. A double-sided disc will use two recording sides.
The disc is manufactured through an injection molding process. It consists of three layers: a polycarbonate plastic substrate; a thin layer of aluminum or some similar reflective material which serves as the surface off of which the laser operates; and an acrylic layer that provides a protective seal for the bumps, lands, and aluminum layer below. A label is often painted on top using screen-printing methods and is often thought of as a fourth layer. Some DVDs consist of multiple readable layers and it is through the use of these multiple layers that manufacturers are able to produce the four different types of DVDs with varying capacities: DVD-5, DVD-9, DVD-10, and DVD-18.
The primary materials used in the manufacture of DVDs are polycarbonate plastic, acrylic, silver, silver alloy, silicon dioxide, germanium, and zinc sulfide.
The manufacturing process for the DVD-R and DVD+R formats, those intended for use as recordable storage media, differs slightly from the process used to make DVDs intended for use as a distribution media for music, movies, and software. The DVD-R, for example, has code prewritten onto it in what is known as the Control Data Zone of its lead-in area. This area of the disc surface is reserved for instructional codes. It is in this area that code designed for preventing illegal copying resides. Such computer codes are intended to prevent the direct copying of prerecorded DVD-Video discs encrypted with the Content Scrambling System (CSS).
Most companies that produce DVDs are involved in the production of many types of digital recording media. Both Memorex and TDK, for example, make a variety of recording products and have well established distribution networks in place through which they can send new products. The distribution channels used by DVD manufacturers were established first for the blank CD. As the technology advanced, and its applications grew, the number of outlets through which DVDs were made available also grew.
Blank recording media can be purchased in almost any type of general retail outlet. They are found in office supply stores, electronics stores, movie rental stores, music stores, many grocery stores, drug stores, dollar stores, and even in some gas station and convenience stores. The Big Box retailers such as Costco, Sam's Club, and Wal-Mart, also carry digital recording media and usually offer a full array of blank DVDs. Such stores have lower prices because they purchase directly from the manufacturer.
Office supply stores were once the primary retail outlet for digital recording media. Office supply stores such as Office Depot and Staples represented a significant share of office product sales in the early twenty-first century. According to Market Share Reporter 2007, office supply stores and warehouse clubs, as well as other discount chains, represented approximately 30 percent of the overall office supply market in the United States in 2005. Grocery stores, the Internet, independent dealers, contract specialists, and other chain stores held the rest of the market.
CD and DVD media were among the general merchandise categories showing the strongest growth in supermarkets in 2002. Maxell's blank DVD-R was among the top 50 best selling brands of general merchandise at supermarkets in 2007, according to Chain Drug Review. The brand's sales were up more than 52 percent; among the top 50 brands its sales increases were second only to Duracell Coppertop batteries.
Businesses first used DVDs, drives, and recorders for computer storage purposes, but consumers soon saw the value of these products as well. Archiving and data storage were the most popular reasons consumers gave for wanting a DVD recorder, according to a 2004 study by International Data Corp. Market researcher In-Stat predicted the worldwide DVD recorder market will grow from approximately 20 million units in 2006 to approximately 38 million units in 2008. According to In-Stat, the market will be affected by a continued fall in DVD prices, improved features in DVD recorders, and consumers' understanding of the benefits of DVD optical media and recording devices.
Consumer electronics such as camcorders, recorders, and cameras are increasingly becoming disc-based. The disc-based technology allows consumers to store and organize photos and provides high-quality video output. Digital video recorders (DVRs), also known as Personal Video Recorders (PVRs) have become popular ways to record television programming. Previously consumers had to use a VCR and videotape. Programs recorded with DVRs or PVRs are saved to a rewritable hard disk, instead of a videotape. Consumers prefer these digital devices because live broadcasts can be instantly replayed and commercials can be skipped. Also, saved programs can be organized by title and content. The industry started in 1999 with TiVo and ReplayTV. Users purchased the stand-alone devices and then paid a subscription fee; however, consumers did not really embrace the technology until it was integrated into cable and satellite TV set-top boxes.
DVR firms estimate that there were 7.4 million households with DVRs in the United States in early 2005, or 6.5 percent of all U.S. households. Estimates from analyst eMarketer suggest that there will be more than 47 million households with DVRs by 2009. The estimate may seem high, but cable and satellite television penetration is increasing in the United States. The Cable and Telecommunications Association for Marketing claims that cable households with a DVR have more than doubled in 2006 from 2005. Thirty percent of digital cable households have a DVR compared to 22 percent of satellite households. Three-quarters of these digital cable households received their DVR from their cable provider.
DVD media is part of the larger market of recording media. Demand for many of these formats has reached its peak and is declining. According to the Japan Recording Media Association, CD-R/CD-RW demand will fall from 6.5 billion units in 2007 to 5.5 billion by 2009. Audio CD-R hit peak demand in 2004. Demand is expected to fall from 258 million units in 2007 to 225 million units in 2009. The older data storage formats, audiocassettes and tapes, have been on the decline for years and are expected to decline further as users recognize the limitations of such media and upgrade their storage hardware. Global demand for blank audiocassettes was anticipated to fall from 228 million units in 2007 to 137 million units by the end of the first decade of the twenty-first century. Demand for full-sized blank video-cassettes and floppy diskettes were forecasted to drop by 20 percent per year through the first decade of the 2000s.
Interest in Electronic Devices
As consumers become more interested in computers and entertainment, the use of DVD media will become more prevalent. Many businesses use DVDs as reliable means for archiving data. Consumers are being encouraged to perform similar backups on their home computers. Santa Clara Consulting Group forecasts the worldwide installed base of DVD writers will climb to more than 180 million by the end of 2005.
DVD players and camcorders continue to become common in American homes. According to statistics from Appliance magazine more than half of U.S. households (55%) owned a camcorder in 2005, up from 32 percent in 1998. Seventy percent of households owned a DVD player in 2005; only 2 percent did in 1998. Approximately 65 percent owned a computer; 44 percent reported having one in 1998. The combination of falling prices and attractive new features will likely make these devices irresistible to consumers.
RESEARCH & DEVELOPMENT
DVDs have been on the market for only about a decade, yet next-generation formats are already appearing. The high-definition industry gained a foothold in the American electronics market in 2006, which translated into increased sales of high-definition televisions, DVD players, and discs. This industry is still in its infancy, and neither the public nor electronics makers have embraced the Blu-ray or the HD format, the two formats competing to be the standard for the next generation of high definition recording.
In the early 2000s the Chinese government has been trying to find a technology to compete with the DVD in order to reduce its licensing fees and royalty payments to foreign countries that use DVD technology. The development of the Enhanced Versatile Disc (EVD) was announced in China in November 2003. The EVD uses converters developed by On2 Technologies. Development stalled after legal disputes developed between the consortium of companies developing this technology and On2 Technologies. The replacement for the EVD is the Advanced Video Standard (AVS). AVS was approved as a national standard in China in March 2006; however, it has been adopted by only a handful of Chinese companies.
The Forward Versatile Disc (FVD) was developed in Taiwan and is a less expensive competitor of the high-definition disc. It is manufactured like a regular DVD and uses a red laser, but track width has been shortened slightly to allow the disc to have 5.4 GB of storage per layer as opposed to the standard 4.7 GB.
The Holographic Versatile Disc Alliance (HVD Alliance) was formed in 2005. Its technologies combine single beam holographic storage and DVD technologies to provide cartridge capacities starting at 500 GB. The HVD Alliance has not yet brought any products to market.
Another new development is the protein-coated disc. In 2006, Professor V. Renugopalakrishnana and his colleagues at Harvard Medical School coated a disc with light-sensitive proteins called bacteriorhodopsin. These proteins enter into an intermediary state when exposed to light. This intermediary state acted as a sort of binary system. Renugopalakrishnana and his colleagues were able to alter the DNA of the protein and prolong this state for several years. This disc could hold up to 50 Terabytes (50,000 GB). It was unclear when (if ever) this disc would be available.
The DVD media market was strong enough to support the plethora of formats that continued to co-exist at the end of the first decade of the 2000s. There was no clear leader in the field based on format and manufacturers supported either the Plus or the Minus technologies. Manufacturers have split again, this time in support for the next generation of DVDs.
Next-generation DVDs offer greater storage capacity than their predecessors. There are two competing formats. The first is the Blu-ray Disc developed by the Blu-ray Disc Association (BDA). The BDA includes electronics, personal computer, and media manufacturers such as Apple, Dell, Hitachi, Hewlett-Packard, JVC, LG, Mitsubishi, Panasonic, Pioneer, Philips, Samsung, Sharp, Sony, TDK, and Thomson. Most recordable media uses a red laser to read and write data. The Blu-ray, however, uses a blue laser. It is this distinction which gives Blu-ray its name. There are two types or recordable Blu-ray discs. The BD-R disc can be written to once, while BD-RE can be erased and reused multiple times. A single layer Blu-ray disc has a 25 GB capacity while a dual layer has 50 GB. The dual layer can store approximately 9 hours of high-definition film. A single layer disc has a read mechanism of approximately 36 megabits per second (Mbit/S). A double layered disc's read mechanism has a speed of approximately 72 Mbit/S.
The HD-DVD (High-Definition) format is Blu-Ray's competitor. In November 2003, the DVD Forum voted to support the format as the high-definition replacement to the original DVD. Like Blu-ray, the HD-DVD disc has its own prominent supporters, including Microsoft, Intel, NEC, Sanyo, and Toshiba. There are two forms of recordable HD discs. The HD DVD-R is the writeable disc version of HD DVD, and has a single-layer capacity of 15 GB. HD DVD-R has slower write speeds than the competing BD-R format and lower storage capacity. The HD-DVD disc has about the same read mechanism speed as a Blu-ray disc.
Most analysts feel that consumers are waiting to see which format will win the battle before making an expensive investment in media equipment. In June 2006, the HD-DVD format appeared to be the winner, taking 70 percent of DVD video sales while Blu-ray had the remaining 30 percent. By January 2007 the two companies saw their positions reversed. Blu-ray reported a 67 percent market share in that month while the HD-DVD format claimed the remaining 33 percent.
TARGET MARKETS & SEGMENTATION
Businesses and individual consumers are both target markets for DVD media. The media is a reliable method of storing and transferring data. Electronics and software companies have turned to this product as a format on which to release software and video games that require large storage capacities. The DVD can also store photographs, which stimulated the digital photography market. As a sign of how important data storage is to consumers, computers are routinely built with CD or DVD drives capable of writing to recordable and rewritable CDs or DVDs. DVDs can be purchased in a wide variety of retail outlets as well as through e-commerce Web sites.
RELATED ASSOCIATIONS & ORGANIZATIONS
Blu-Ray Disc Association, http://www.blu-ray.com
DVD Forum, http://www.dvdforum.org
DVD+RW Alliance, http://www.dvdrw.com
International Recording Media Association, http://www.recordingmedia.org
Optical Storage Technology Association, http://www.osta.org
Video Software Dealers Association, http://www.vsda.org
Blass, Evan. "Protein Coated Discs Could Enable 50TB Capacities." Engadget. July 2006.
Chan, Joshua. "DVD Players Surpass VCRs in U.S. Households." International Business Times. 19 December 2006.
"Change a Constant in Blank Media." MMR. 8 January 2007, 89.
Lazich, Robert S. Market Share Reporter 2007. Thomson Gale, 2007, Volume 2, 626.
"Magnetic and Optical Recording Media Manufacturing: 2002." 2002 Economic Census. U.S. Department of Commerce, Bureau of the Census. December 2004.
Macklin, Ben. "The Rise of the DVRs." IMedia Connection. 12 August 2005.
"Media Changes Accelerated by Optical Disks and Compact Memory Cards—Next 3 Years Forecasts for Recording Media Global Demand and Production." Japan Recording Media Association. 17 November 2006. Available from 〈http://www.jria.org/english.html〉.
"The Role of Standards in Accelerating Markets." Consumer Electronics Association. 27 September 2005. Available from 〈http://www.ce.org〉.
"Top 50 General Merchandise Brands." Chain Drug Review. 21 May 2007, 37.
"Verbatim Global Recordable CD and DVD Media Sales." E Media Live. 19 March 2006.