Your Daily Phil

Blu-Ray sales not helped by HD DVD death

Posted by lozenp on May 2, 2008

New reports from ABI Research and NPD Group state that the death of HD DVD and the end to the format war has not helped Blu-Ray player sales, and that Blu-Ray is looking at an uphill battle in its efforts to entrench itself in coonsumer’s living rooms.

It’s been a couple months since HD DVD bowed out of the battle to become the next-generation DVD technology, but Blu-Ray has not been able to capitalize on being the last man standing. From January to February, Blu-Ray hardware sales fell 40 percent, excluding the Playstation 3 console. Following the HD DVD announcement in February, sales only rose two percent from February to March, according to NPD Group.

Several factors could be leading to this, but two are likely the biggest culprits: price and apathy. Player prices are still in the “premium” range in consumers minds, not yet hitting that magic $200 mark. Also, Blu-Ray disc prices still outpace standard DVDs by a substantial margin, more than 2:1 in many cases.

Many consumers still profess they can’t tell the difference between a Blu-Ray image and a standard DVD image. While this may be hard to believe, it shows the amount of work needed to show consumers what they are missing. Also not helping the cause are the cheap prices on upconverting DVD players, as low as $70 now, and consumer confusion surrounding those players. Many people think an upconverting player IS an HD player, falling in line with statistics that show that around 50 perecent of people with HDTVs aren’t getting an HD signal and don’t even know it.

ABI’s research shows that the PS3 will make up 85 perecent of the Blu-Ray hardware market in 2008, and it will maintain its majority lead until 2013, yet again solidifying the argument that the PS3 is the best Blu-Ray player currently available.

With all that said, however, it’s not surprising the adoption has been slow since the dust settled. During the high tide of the format battle, each side was cutting prices, offering incentives and inciting rabid fan bases to make purchases to help their format win. That pressure no longer exists, and the amount of incentives on Blu-Ray players has slowed.

Perhaps the biggest roadblock to Blu-Ray adoption however, is the one that is being somewhat ignored: an incomplete standard emerged at the end of the format war. Blu-Ray is in the midst of what it calls its “profiles”, with profile 2.0 being the complete spec. Profile 2.0 players are just now slowly starting to make it to market, and they are well about the prices of other Blu-Ray players currently available. The PS3 recently was updated to Profile 2.0, which allows ineractivity via BDJ as well as picture in picture, both features that HD DVD featured from the beginning, but I digress.

At this point the high definition disc party is still full of early adopters and audiophiles and videophiles, the general consumer has not entered the market yet. So for those of us who went with HD DVD, or other high-def aficionados who waited on the sideline, we’re educated enough to know that this is not the time to be buying a Blu-Ray player. That means a large portion of Blu-Ray’s target consumer knows to wait until the end of the year at the earliest to buy a new player, when prices come down – at least slightly – and Profile 2.0 players and movies dot the landscape. Until then, I see similar numbers for Blu-Ray hardware sales, excluding Sony’s PS3 which is gaining momentum in the video game market.

Other factors loom large for the future of Blu-Ray as well, with Apple announcing today that it has agreements with most of the major studios to put movies on iTunes day-and-date with their release on DVD, some in HD. This is just another push toward the eventual evolution to a physical media-less entertainment society (see Netflix and Blockbuster’s set-top-boxes), one that Blu-Ray is dreading.

The next 12 months will be huge for Blu-Ray. This Christmas season must see Blu-Ray gain serious momentum if it’s going to gain enough traction before consumers make the leap to downloading their movies, otherwise Sony might still have a new Betamax on its hands.

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