Just when it seemed destined to become as universal as the telephone or the TV set, the videocassette recorder is starting to wane as a home entertainment staple.
VCR sales dropped sharply last year for the first time since the machines came on the market, and sales are expected to fall again this year. The downturn follows eight years of double digit sales growth that established the VCR as the hottest-selling consumer-electronics product of the 1980s.Moreover, the amount of time consumers spent recording programs on VCRs dropped about 10 percent in 1987, and fell another 10 percent in the first half of 1988, according to the A.C. Nielsen Co.
The slowing penetration of VCRs in American households - and the fact that consumers are using them less - may cause some rethinking about the ways in which people will entertain themselves in the future. These trends also have important ramifications for electronics manufacturers, retailers and the television and advertising industries, whose fortunes have been affected by the popularity of VCRs in recent years.
As an entertainment device, the VCR is "becoming stagnant and expected, it's no longer the exciting surprise it used to be for many people," said Faith Popcorn, chairwoman of BrainReserve, a New York market research firm.
"The VCR isn't going away but it isn't growing," she said. "We're a very superficial society. We are constantly seeking the next new thing."
The flagging outlook for VCRs is surprising in light of its rapid acceptance.
Until the early 1980s, videocassette recorders were largely a novelty, and fewer than one in 10 American households had one as recently as 1983. But sharp decreases in prices and the widespread availability of new movies and other programming on videocassette sent hardware sales to a peak of 12 million standard units in 1986. As of November, 62 percent of all U.S. households owned a VCR, Nielsen said.
Although the industry expects to sell another 10 million units this year, many industry analysts believe that the percentage of households owning a VCR won't grow much further. Currently, most of the buyers of VCRs are repeat purchasers seeking to replace an older model with one of the new generation of VCRs that feature stereo sound or enhanced picture quality. A smaller percentage are first-time buyers.
"We still don't know where (household penetration) will level off, but from here on in each percentage-point gain becomes harder and more expensive (for manufacturers) to achieve," said Tom Lauterback of the Electronics Industries Association, a trade group based in Washington. "There are a lot of people out there who simply don't want to buy a VCR, either because it's too difficult for them to operate, or because they don't watch much TV, or some other reason."
This year, retailers and others say lower priced models selling for less than $200 will be more difficult to find, which could further discourage first-time buyers. The shrinking of the low end of the market reflects two industry trends: some Asian-based manufacturers are raising prices in this country to compensate for a decline in their currency's purchasing power due to the dollar's devaluation, and in general, VCR manufacturers are seeking higher prices as their overall market contracts.
For television and advertising executives, slower growth in the number of households with VCRs would be welcome news. VCR viewing has been blamed, in part, for hurting the ratings of prime-time network shows during the 1980s, although the popularity of cable TV and other broadcasting alternatives are significant factors as well. The increased choices offered television audiences has made it more expensive and more difficult for advertisers to reach viewers. VCRs also have made it possible for viewers to fast-forward past commercials on programs they record.
Bill Wiener, senior vice president of new technologies at the BBDO advertising agency in New York, said the decline in time consumers spend using a VCR indicates its limited utility. He said people who have owned a VCR for several years tend to use it less than those who have bought one more recently.
"When you first get it, you go out and rent all the movies you want to see, the old stuff and the new," he said. "But after the first year or 15 months you're basically going to be down to renting the latest blockbuster release."
Nielsen's research bears this out: During 1987, VCR owners spent 2 hours and 34 minutes recording programs each week, compared with 2 hours and 52 minutes a year earlier. Viewing time fell from a weekly average of 4 hours and 33 minutes in 1986 to 4 hours and 17 minutes in 1987. Wiener said VCR owners spend roughly 70 percent of their time viewing prerecorded cassettes, such as a rented movie, with the balance reserved for programs they have taped off the air.
On the retail side, a slowing VCR market portends a dampening of demand for movie rentals. Erol's Inc., the Washington area's largest video chain and second largest in the country, has begun to see a decline in the growth rate of its rental business. "Right now there's still real growth, but in a couple of years we're going to see a tougher situation," says Ron Castell, Erol's vice president of marketing and merchandising. "As the business matures, we're moving from being demand-driven to being a marketing-driven business."
Judith Langer, president of the market research firm Langer Associates in New York, is more hopeful than others. She suggests that the VCR market may be reaching a point of temporary saturation, but said she believes that sales again will take off if the machines become easier to use, more attractively designed or feature new technological breakthroughs.
Still, Langer says, "The novelty of the VCR has definitely worn off. You used to be able to invite people over to your house and be the first kid on your block to have a VCR. Maybe the next step is to be the first kid on your block to have a large-screen television."