Blu-ray player sales to peak in 2013

Report says VOD expansion could threaten high-def disc leadership

By Danny King -- Video Business, 2/11/2009

FEB. 11 | U.S. Blu-ray Disc player sales and consumer spending on high-definition discs will both jump more than tenfold within the next four years, after which high-def disc spending growth will slow while Blu-ray player demand will drop as broadband advancements boost the popularity of video-on-demand over the Internet, according to SNL Kagan.

U.S. Blu-ray player sales, estimated at about a quarter-billion dollars last year, will triple this year to $765 million and will surge to a peak of $6.86 billion in 2013 before dropping to less than $3 billion the following year as the content format reaches maturity, SNL Kagan said. (See chart)

Meanwhile, consumer spending on Blu-ray discs will hit the billion-dollar mark this year, a milestone studios hoped to achieve last year. Disc sales will approach the $10 billion level and match standard-definition DVD market share by 2013, SNL Kagan said. (See chart)

As Blu-ray overtakes standard-definition as the primary type of disc player in the U.S., however, video-on-demand services will likely start pulling sales from packaged media. By 2017, about 99 million U.S. homes will have high-speed Internet service capable of processing video-on-demand, compared with 115 million homes with high-definition disc players, according to SNL Kagan.

"Blu-ray will be the driving force behind the video retail market throughout the next decade. The current economic climate, however, will slow the growth of this new format and likely keep it from reaching the heights that it may have in better times," SNL Kagan analyst Wade Holden said in a statement last week. "VOD services will continue to improve in both technology and content over the next decade and begin to draw consumers away from Blu-ray and DVD by 2017."

The Blu-ray player estimate is consistent with a December report from NPD Group unit DisplaySearch that said North American Blu-ray player shipments will jump 76% this year to more than 3.8 million units as a higher percentage of households have high-definition TVs and sales of standard-definition players fall.

Still, last year, U.S. home entertainment spending fell 5.7% from 2007 to $21.7 billion, despite Blu-ray sales tripling to about $750 million, according to data compiled by Video Business and Rentrak, reflecting the combination of DVD maturing, a stalling economy and the growth of a digital-delivery industry expected by many analysts to more than double within the next four years.

Meanwhile, the number of programs video-streamed or downloaded by broadband customers to their TVs will jump tenfold between 2009 and 2013 as the number of broadband-video, customers almost doubles from this year to about 940 million people worldwide, according an ABI Research report released in December.

Companies such as Netflix, Amazon.com and Blockbuster are expanding their digital-delivery services to prepare for growth in demand for movie and TV titles that can be downloaded or video-streamed through a broadband connection.

Netflix, which maintains that demand for its DVD-by-mail rental service is still five to 10 years from its peak, has in the past year brokered more than a half-dozen deals with makers of components ranging from TiVo digital video recorders to LG Electronics and Samsung Blu-ray players and Microsoft Xbox 360 videogame consoles to facilitate customer video streaming from an inventory of more than 12,000 digital titles.

Meanwhile, Blockbuster recently started selling a set-top box that plays digital downloads from Blockbuster.com directly on consumers' TV sets, allowing the largest U.S. movie-rental chain to compete directly with Netflix, Amazon and Apple's iTunes in the digital content delivery field. Blockbuster integrated what had been known as its Movielink digital download service into Blockbuster's Web site in July, almost a year after Blockbuster bought the service from the five major studios for $6.6 million.

And last month, Amazon, the world's largest Internet retailer, said it would make its 40,000 video-on-demand titles available for video-streaming through a Roku set-top box.

Last July, Amazon, which doesn't disclose sales from its digital titles, replaced its Unbox video-download service with a VOD service that allows customers to stream TV and movie content, in an effort to continue to build media revenue. The company also has an agreement with Sony in which owners of the TV-maker's Bravia HD sets can buy a component allowing direct-to-TV downloads.

Blu-ray player forecast

Source: SNL Kagan

Blu-ray Disc software forecast

Source: SNL Kagan