Low-priced Blu-ray players should spur adoption

Set-tops could be priced at $150 by Black Friday

By Susanne Ault -- Video Business, 11/11/2008

NOV. 11 | LOS ANGELES--Despite a sinking economy, studios predict healthy holiday Blu-ray Disc spending due to fast declining hardware pricing, according to participants at Tuesday’s High-Def Conference here.

Blu-ray players have fallen to sub-$200 pricing and should hit the $150 mark by Black Friday, effectively widening the customer base from early adopter to mainstream, noted studios during the event, sponsored by Home Media Magazine.

Currently, the U.S. Blu-ray install base totals 1.5 million set-tops and 5.5 million PlayStation 3 consoles. Between now and the end of 2008, that combined set-top/PS3 install base should grow more than 40% to 10 million units, according to Paramount Home Entertainment and 20th Century Fox Home Entertainment. Walt Disney Studios Home Entertainment is even more bullish, projecting a year-end base of 11 million to 12 million Blu-ray players.

This expanding Blu-ray penetration is moving at a quicker pace than the uptake for standard-definition players between 1998 and 1999, noted Danny Kaye, Fox’s executive VP of global research and technology strategy.

“The high-def audience is 25 to 49, mostly male,” said Chris Saito, Paramount marketing VP. “But it’s broadening out to include families. With Black Friday, there will be lots of manufacturers with [Blu-ray set-top] prices at $150 and less, and PlayStation 3 is historically a great gift.”

Lori MacPherson, Disney’s general manager of North America, added, “The prospects are extremely good for providing customers with the complete value equation.”

Studio participants did admit that the slowing economy could prove an obstacle to fourth-quarter Blu-ray adoption. But they are hopeful that consumers will realize that falling pricing is making the format a relative bargain.

“History shows that home entertainment has fared well over past recessions,” said Kaye. “The messaging is that there is value watching your movies on Blu-ray.”

Besides focusing on price, Panasonic also has been trying to boost hardware sales through retail education. As part of the Tru Blu studio and manufacturer marketing team, Panasonic has helped train 275,000 sales people spanning 1,000 retailers, including Wal-Mart and Costco. Tru Blu, whose members also include Disney, Sony, Paramount, Fox, among other partners, launched a $25 million Blu-ray TV ad blitz earlier this month.

“The idea is getting the word out about Blu-ray through retailer training,” said Tony Jasionowski, senior group manager for Panasonic, which just launched the cheapest out-of-box BD Live set-tops at $299.

Strong retail support may help persuade consumers to buy into Blu-ray even as their discretionary dollars shrink in this financial climate.

“The economy is hitting everybody,” said Rich Marty, Sony VP of business development. “The biggest challenge is getting with the retailers, and as [Blu-ray] becomes more mainstream, it’s important now to get that message out to consumers.”