BDA: Blu-ray's future is bright
Video Business
By Susanne Ault -- Video Business, 1/9/2009 10:25:00 AM
LAS VEGAS—The 2009 outlook for Blu-ray is bright, as the format well exceeds DVD performance at similar points in their lifetimes and has impressively accomplished that feat in a rough retail climate, according to participants at Wednesday’s Blu-ray Disc Assn. press conference during the Consumer Electronics Show here.
In three years time, U.S. Blu-ray hardware penetration is nearing 8%. That compares to slightly more than 4% penetration for DVD in the same period after its bow in 1997. Blu-ray adoption also trounces other entertainment formats, with TV and CD reaching 3% and 2% penetration, respectively, in the first three years of their existence.
Since Blu-ray’s June 2006 format launch, 10.7 million Blu-ray set-tops and PlayStation 3s have shipped. In year three for DVD, 5.4 million units had shipped.
Several of the research analyst participants admitted they have revised their hardware projections upward in light of Blu-ray’s pace. Analysts believe that the emerging $200 to $300 pricing for many Blu-ray players made them the perfect family gift this year. With so many new models announced for this year at CES, that pace is unlikely to let up in 2009.
“With the economy, I was at first conservative with Blu-ray’s prospects,” DisplaySearch analyst Paul Erickson said. “But I’ve changed my perspective. In 2009, we’re getting new models with more functionality and affordability. The demand for Blu-ray will still increase. I’ve changed my perspective from conservative to fairly optimistic.”
Richard Doherty, an analyst with Envisioneering, acknowledged that overall, there were a lot fewer shoppers in stores in December. However, Blu-ray managed to be a hot item.
“With the shoppers that were out there, they were better educated about the format after all of the Black Friday sales. This became the family purchase for December,” said Doherty.
Similarly, Adams Media Research predicted 2.9 million set-tops would sell in 2008, but ended up being off by about 200,000 units.
One soft spot for the format, conceded participants, is software uptake. Consumers are finding Blu-ray titles a bit too steeply priced during the current recession. However, Adams Media Research still predicts software sales will double or even triple in 2009 over 2008.
“People will end up being more cautious about software in the year ahead,” Adams Media founder Tom Adams said. “Consumers are in a recession frame of mind, and [Blu-ray's] premium pricing does not help.”
Participants also believed Blu-ray would ultimately prove victorious over competing download/streaming or video-on-demand entertainment. Consumers can’t help but notice how far ahead Blu-ray’s quality is over other options, they said.
“When people see [The Dark Knight] on Blu-ray, it brings them to tears. But the best of satellite and cable is delivering just one-third of Blu-ray’s data quality,” Envisioneering’s Doherty said.
Adams added that consumer preference still overwhelmingly rests with physical entertainment, citing little attraction so far to new technologies such as Apple TV and Vudu. One increasingly popular method to view streaming films is Netflix, he noted, but so far, the service is limited to offering catalog movies.
