Gates, considered one of the wealthiest and technologically innovative businessmen in recent history, is warning market players that within the next decade, DVD players will be destined for only one place: the trash can.
Gates' forecast comes on the heels of the kick-off of the Video Software Dealers Association 2004 Home Entertainment convention in Las Vegas, Nev., which has seen attendance soar 20 percent over last year. The VSDA is a yearly gathering of players in the VHS and DVD markets.
But contrary to signs that the market is thriving, Gates stated this week that in 10 years, DVD players will become obsolete, partly due to the fragility of DVD discs themselves, and the fact that computers will soon be able to deliver services that make all peripheral forms of entertainment unnecessary.
In place of DVD players, says Gates, will be a convergence of home computers and televisions that provide "what we want to see, when we want to see it," Gates said.
"When we get home, the home computer will know who we are from our voice or our face," Gates said. "It will know what we want to watch, our favorite programs, or what the kids shouldn't be allowed to see."
The trend away from VHS formatted entertainment to DVDs has been a fast sweep and an added revenue stream for adult entertainment companies looking to provide both low-tech and high-tech consumers alike with the same quality adult content.
Contrary to Gates' prediction, a major boom in the DVD player market has been predicted for some time and global shipments of DVD players could reach 47.4 million with the next five years, three times what they were in 2003.
According to the author of "Overdosing on Porn," Rebecca Hagelin, there are 800 million rentals each year of adult videos and DVDs, out of the 11,000 adult movies that are produced yearly.
Studies on the maturation of the DVD market say that it took DVD players less than half the time it took VCRs to reach critical mass with U.S. consumers, following a massive price drop and the wide availability of DVDs themselves.
According to a report on the DVD market released by Business 2.0, existing VCR players still outnumber DVD players 4 to 1, but DVD player sales have nearly doubled since 2000.
Gates' forecast also comes at a time when DVD makers in Taiwan are switching over to a cheaper model that will more easily appeal to consumers who have not yet made the switchover from VCRs.
Taiwan-based manufacturers such as Lite-On IT and Mustek Systems are expected to take a sizeable portion of market share away from the Japanese, the number one supplier of DVD players in a $4 billion industry.
Lite-On IT supplies DVD players to Wal-Mart stores throughout the U.S.
An estimated one in every eight Americans have said they plan to buy a DVD player this year, according to a survey done by TechnoMetrica Market Intelligence.