Sales of Blu-ray Disc Not Enough to Stop Home Video Slump
by Marcus Yam - DailyTech
Blu-ray Disc sales growing, but home video revenues are still down .
The future of home video is thought to be set now with Blu-ray Disc emerging as the victor in the high-definition format war, but things aren’t quite so rosy in the present market.
Blu-ray Disc sales have jumped considerably in 2008, particularly following Toshiba’s surrender of the HD DVD format. In December 2007, 63 percent of high-definition movies were sold on Blu-ray Disc, and in March 2008, that number moved up to 81 percent, reported one analyst firm.
According to Reuters, 4.9 million high-def movies were sold, 3.8 million of which were Blu-ray – already well ahead of the pace in 2007, which saw total sales of 9.8 million.
Strong sales of Blu-ray Disc are not enough to make up for sagging sales of standard DVDs, which have been declining over the last two years. In 2006, movie studios generated $25 billion in revenue for home video releases. That number fell to $23.1 billion in 2007, with a further fall to $21.4 billion expected for this year, figured Citigroup analyst Jason Bazinet.
Unlike the changeover from VHS to DVD, analysts appear less optimistic about consumers upgrading their machines and libraries to higher resolutions.
Analyst Michael Nathanson at Bernstein Research believes that uptake of Blu-ray Disc movies are behind the adoption curve set by DVD during its introduction to the market. At the end of last year, 3.5 million Blu-ray Disc players were on the market, though the majority of them were PlayStation 3 consoles. Some may have purchased the console for the purpose of playing games rather than movies.
Furthermore, consumers may not immediately see the benefits of upgrading to Blu-ray Disc, which mainly provides increased quality of picture and sound. Features such as chapter skip, multiple language tracks and lack of rewinding tape are already present on DVD.
Nathanson also points to price as a significant barrier, with the price of Blu-ray Disc players sitting at just below $400. It’s not until the $200 mark that Americans will begin to adopt the new technology, experts believe. Sony Electronics CEO Stan Glasgow said in March that such a price point won’t be possible until 2009 at the soonest.
“I don’t think $200 is going to happen this year. Next year $200 could happen,” said Glasgow. “We’ll be at a $300 rate this year. $299 will happen this year.”
Although movie studios are looking towards the higher prices of Blu-ray Discs, which hover around $10 to $15 premium over the standard DVD to help return revenue levels back to the heyday of DVD.
(Via DailyTech.com)
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