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NPD: HD Disc Launch Slower Than Expected

9/19/2007 11:13:00 AM Eastern

Port Washington, N.Y. — Among those who currently own HDTVs, 52 percent are familiar with the availability of high-definition DVD players, but only 11 percent expressed strong intentions to buy one in the next six months, according to a new survey released by The NPD Group.

In addition, 73 percent of HDTV owners surveyed said their current traditional-format DVD player still works well for them, so they do not need to replace it, while 62 percent said they are waiting for the prices of high-definition players to fall.

The findings are part of NPD’s High Definition Video Report Series, which examined consumer awareness, ownership, usage patterns, and intent to purchase high-definition players and content, since the launch of the new technologies last year.

The survey examined the reasons why the launch of the new disc technologies has resulted in “a slower than expected start of high-definition video players and content sales,” NPD said.

NPD queried more than 5,500 adults between June 18 and June 28, 2007, for the study. Among the sample were 542 pre-identified owners of high-definition players and high-definition-capable video game consoles.

As a result, NPD said high-definition disc and video players producers “must do more to motivate consumers,” and that the “opportunity for growth is abundant.”

The survey also identified early adopters as key to evangelizing new formats, but their efforts are being restrained by a lack of available HD titles in either format.

According to the study, large numbers of consumers already understand what a high-definition player is when it is associated with one of the two formats; however, consumers’ knowledge of the HD DVD format is more prevalent than for the Blu-ray Disc format.

While 29 percent of respondents were aware of HD DVD, just 20 percent had heard of Blu-ray Disc. Consumers who purchased a Blu-ray Disc player reported that they did so because they believed it was superior to HD DVD, while those who purchased an HD DVD player did so because the price was lower than a Blu-ray Disc player.

“The format war continues to be a primary operative issue when it comes to determining the long-term viability for high-definition DVD technology,” stated Ross Rubin, NPD Group consumer electronics industry analysis director. “However, there are other more basic short-term obstacles blocking acceptance. As HDTV penetration continues to grow, manufacturers and studios will need to do a better job imparting the benefits of these formats to a consumer base that still reports a high satisfaction with the current DVD standard.”

According to NPD, familiarity with these formats is primarily coming from exposure to marketing — especially television commercials. Forty-one percent of consumers who say they are familiar with Blu-ray Disc players and content gained awareness through ads and commercials. The same is true for HD DVD (42 percent). Nearly one in five consumers reported learning about the devices from friends and family.

“Falling prices and the arrival of new dual-format devices can alleviate consumer concerns about investing in a losing standard,” said Rubin. “But, as was the case with proposed successors to the compact disc, both camps will lose if consumers don't embrace a higher-quality disc format. The clock is ticking as every major digital lifestyle stakeholder is blazing a direct path to the living room.”

Difficulty in communicating the high-definition message is compounded by the relatively small amount of available content in either of the two formats. NPD’s research shows that the overwhelming majority of DVDs purchased by high-definition owners are standard definition (64 percent); however, the primary reason consumers reported buying a traditional DVD was that the high-definition disc was not available.

“We’re seeing some frustration with high-definition formats among people who’ve made the plunge because they currently cannot get enough content to meet their needs,” said Russ Crupnick, VP and senior entertainment industry analyst. “These early adopters aren’t choosing to evangelize high-definition players to others, in large part because they are unhappy with the available selection. The good news is that the industry can address this concern by releasing HD DVD and Blu-ray Disc titles more aggressively.”

One encouraging signal for the industry is that existing HD DVD and Blu-ray Disc consumers are trading up from standard definition. According to NPD, early adopters plan to replace 23 percent of their current collections with high-definition format DVDs (either HD DVD or Blu-ray Disc), and there is an appetite for more. Some 63 percent of high-definition player owners would like to buy upcoming new releases in high definition and only 37 percent in the existing standard DVD format.

“Once consumers become convinced of the superiority of high-definition, and find ways to navigate the format issues, there will be a great deal of pent-up demand for HD DVD or Blu-ray Disc content. The film and video industry must now focus on getting that message out to the 32 million HDTV owners who are currently just sitting on the sidelines,” Crupnick said.