Disney sees opportunity in Blu-ray growth

PHYSICAL: Studio predicts high-def format sales will rise

By Danny King -- Video Business, 6/9/2009

JUNE 9 | PHYSICAL: Blu-ray Disc growth will be key in ensuring that home entertainment sales don’t plunge over the next few years, as standard-definition disc sales fall faster than revenue from digital downloads and video streaming rises, Walt Disney Co.’s chief financial officer Thomas Staggs said at the Credit Suisse Global Media and Communications Convergence Conference in Dana Point, Calif., today.

With higher-priced Blu-ray discs currently accounting for one out of every nine discs sold or rented, sales of the high-definition format will rise as more people own HDTVs and studios include more features on the format, Staggs said. Disney will benefit from higher Blu-ray demand because its sell-through relative to rentals is higher than most other studios, according to Staggs.

“The wildcard in the middle is high-definition and how fast that grows,” said Staggs. “Therein lies the opportunity.”

In the first quarter of this year, sales of Blu-ray discs more than doubled to about $230 million.

Disney hasn’t been immune to the DVD spending downturn, reporting last month that its studio entertainment unit’s earnings for the quarter ended March 28 plunged 97% as DVD titles such as High School Musical 3: Senior Year failed to keep pace with year-earlier releases such as Enchanted and No Country for Old Men. The division’s sales dropped 21% despite having five of the first quarter’s Top 10 selling DVDs.

“There’s good reason to believe the home entertainment market has some opportunity to at least be able to be maintained as a strong market,” Staggs said. “There’s room for continued growth in the high-def format.”