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NPD: Blu-ray Sales Begin To Cover DVD Losses

6/08/2011 02:43:18 PM Eastern

Port Washington,
N.Y. - Recent growth in sales of Blu-ray Disc players and content has prompted
CE market analyst The NPD Group to issue
a report showing evidence that Blu-ray sales are beginning to offset declines
in consumer DVD player and content sales.

According to the
group's "Entertainment Trends in America" report, 15 percent of U.S. consumers
reported using a Blu-ray player in the prior six months in March 2011, up from
9 percent the prior year.

In comparison, 57
percent of U.S. consumers reported using a standard DVD player in 2010, which
is unchanged from 2009.

According to NPD's
Blu-ray Disc Report, 49 percent of PS3 owners are viewing Blu-ray movies on
their game consoles at least once a month, which is also adding to the base of
physical-disc users. Year-over-year sales of set-top Blu-ray player units
increased 16 percent, NPD said.

According to NPD's
separate Blu-ray Disc Report, there are currently approximately 116 million
physical-disc buyers in the U.S., which is down from 128 million in 2009. However,
the nearly 26 million Blu-ray buyers helped keep that number from sliding
further.

Blu-ray buyers are
also beginning to buy more discs than they did in 2009 or 2010, including both
new releases and older catalog content, according to the report.

"Because fewer hot
titles came out of the theatres in time for first quarter release, the physical
video-disc market was a bit disappointing -- especially coming off of a good
first quarter last year; but consumer response to the Blu-ray format remains
strongly positive," stated Russ Crupnick, NPD entertainment industry analyst.
"While Blu-ray may not be the replacement for DVD that many once hoped for, it
is certainly adding strength to the physical video-disc market. This added
stability is helping to extend the life of discs, even as digital options gain
in popularity."

According to consumer
feedback, NPD said Blu-ray's technology advantages are being recognized by more
and more people, in addition to the format's value proposition, and benefits
from packaging (e.g., combo packs that offer a DVD, Blu-ray and digital copy).

Eight out of 10
current and prospective owners of Blu-ray set-top boxes cite high-definition
quality and technology as the reason they purchased, or intend to purchase, a
Blu-ray player, NPD said.

NPD reported that
consumers are also noticing the better pricing and value of Blu-ray, as prices
of hardware have declined.

Word of mouth is
helping grow the Blu-ray customer base, as well. Thirty-six percent of
consumers who intend to buy a player were influenced by the product
recommendations of friends and family members.

"It wasn't too
long ago that most consumers felt DVD was ‘good enough,' and while it's true
DVD is a terrific format, more consumers are now recognizing that Blu-ray does
indeed deliver a superior experience," said Crupnick. "Certainly the fact that
prices are now within the budgetary range acceptable to rank-and-file consumers
is helping bolster the overall value proposition of the Blu-ray format."

NPD also noted
that digital services have driven increased interest in Blu-ray players, with 50
percent of consumers who intend to buy Blu-ray set-top players in the next six
months citing a desire to use available subscription video-download services as
a primary reason.

"As more and more
buyers make the decision to obtain the superior picture and sound technology of
Blu-ray, there is also more awareness that the same player that delivers that
experience can also provide access to digital services that are gaining the
attention of American consumers," Crupnick said.