Shipments of DVDs surged past the 2 billion mark during the third quarter as DVD players are expected to be in more than half of U.S. homes by the end of the year, according to figures released Tuesday by the Digital Entertainment Group.

With third-quarter shipments to retailers at a blistering pace of nearly 215 million units -- a 40 percent increase from the same period last year -- shipments have surpassed 2 billion since the format was first introduced to consumers in the third quarter of 1997.

"What keeps catching us all by surprise is that you still see people purchasing 20-22 DVD titles per year," said DEG Executive Director Amy Jo Donner. "Those are big numbers at this point. The format has really changed the way people are viewing movies in the home."

There are now more than 26,000 titles currently available to consumers and among the most popular third-quarter releases were recent box office hits "The Lord of the Rings: The Two Towers," "Chicago" and a special edition of "Scarface."

The continued climb in software sales is connected to the increase in sales of DVD players -- up 36.4 percent during the quarter compared with 2002. More than 6.4 million players were sold in the United States during the months of July, August and September.

In all, more than 73 million DVD players have been sold since the launch six years ago, bringing the number of U.S. households with DVD players to more than 48 million. Many homes now have more than one player.

"As DVD-recordable products continue to gain momentum, we're also seeing a marked rise in the purchase of second-room units, many of which are either combination or multidisc/carousel models," said DEG Vice President Joe Stinziano, general manager of home audio/video for Sony Electronics.

With such solid third-quarter results, the industry expects even more phenomenal sales in the fourth quarter, which includes the holiday season. DVDs have become a popular gift item and such summer blockbusters as "Finding Nemo," "Pirates of the Caribbean," "X2: X-Men United," "Bruce Almighty," "Terminator 3: Rise of the Machines" and "Bad Boys 2" will be on sale in the coming weeks and months.

DVD sets of television shows have been one of the fastest-growing genres and November/December releases include "Friends: Complete Fifth Season," "The X Files: Complete 8th Season," "Buffy the Vampire Slayer: Complete Fourth Season" and "The Honeymooners: Classic 39 Episodes."

"Not only has the hardware penetration grown beyond our expectations, the lineup and diversity of the software titles being offered will prove to make this year end (with) phenomenal success," said DEG President Bob Chapek, who is president of Disney's Buena Vista Home Entertainment.