Blu-ray opinion comes around
March 28, 2008

When Toshiba conceded the format war last month and said it would drop HD DVD, the Blu-ray camp had barely a moment to celebrate before some press outlets had spun the story into “Blu-ray won, but is it too late for packaged media?” Studios and electronics makers wasted so much time feuding over high-def disc formats that downloads and other forms of video-on-demand had time to insinuate themselves with consumers, to packaged media’s detriment, the stories went.

With a month’s perspective, however, there are numerous signs that that is not really an issue. And while Blu-ray still has a long way to go to reach the masses in high-def DVD, it’s not because of a recent mass adoption of digital distribution.

Consider that Netflix stock hit its highest price in four years last week, due to positive reports from a couple of analysts including Piper Jaffray’s Michael Olson, who cited Blu-ray as a positive factor for the continued use of physical media.

Other recent research bodes well for both Blu-ray and physical media retailing (not just Netflix):

• U.K. researcher Informa Telecoms & Media predicts that legitimate online TV and video services will generate $7.9 billion worldwide in 2013, almost six times the 2007 figure. North America will account for more than 60% of the global total, at $4.7 billion. A large figure and huge growth to be sure, but still just 20% of consumer spending on packaged media. And, Informa says, advertising will consistently outperform a la carte and subscription-based download services in terms of revenue generation.

• The Assn. of Public TV Stations believes that just one out of 10 households that now get TV over the air will start subscribing to satellite, cable or fiber-optic packages in order to maintain service after the U.S. switches to digital broadcasts from analog next February. Not a huge upside for these VOD carriers.

• ABI Research last week said that despite an increasing number of products designed to download or stream content directly to a TV, computer use as a home-entertainment component will surge during the next five years. The number of worldwide households using a PC to download content and feed it directly to the TV will jump fivefold to about 25 million in 2013. A fivefold jump but still small overall, and suggestive that an alternate killer device to deliver Internet VOD to the TV, like Apple TV, will not catch on in the meantime.

There’s a recent video on Motley Fool (fool.com) in which senior analyst Rick Munarriz is asked to identify the most serious competition for Netflix. Amazon? Apple? Comcast? Blockbuster? He comes up with ... no one, in part because of Blu-ray’s potential to revitalize packaged media. 

Posted by Marcy Magiera on March 28, 2008 | Comments (0)