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Ultra HD Blu-ray Gears Up For Conservative Launch

1/25/2016 08:00:00 AM Eastern

Supporters of Ultra HD 4K Blu-ray believe the format will fly despite the growth of online video streaming and a launch supported only by two CE makers – Samsung and P&F’s Philips brand.

The two brands will be joined by a third CE company, Panasonic, sometime in the second half. And others, such as Sony and LG, are waiting to see how the market develops.

In fact, more content companies are lining up to support the format than CE companies. Four home-video companies — Sony Pictures Home Entertainment, Lionsgate, 20th Century Fox Home Entertainments and Warner Brothers Home Entertainment — plan to launch titles to coincide with the hardware launch, which is about a month away. Some titles are already available for preorder from Amazon and BestBuy.com. By the end of the year, more than 100 4K disc titles to be available in the U.S., said Mike Dunn, president of 20th Century Fox Home Entertainment.

The suggested retail prices announced for 4K discs to date range from $22.99 to $42.99.

For their part, CE suppliers are making conservative market forecasts. “From the manufacturer side, I’ve never seen this type of caution with a new platform,” said Dave Workman, president/CEO of buying group ProSource. “All brands are approaching this with a high degree of caution,” he said. “Even among manufacturers who have announced, the unit estimates are very, very cautious.”

Suppliers’ sales estimates range from 300,000 to 500,000 units on an annualized basis in 2016, he said.

Suppliers are being conservative for two possible reasons, Workman said. One is the growth of streaming. “Unlike previous platform launches, we’re living in a different world,” he said. The other is player pricing. With “a very capable Blu-ray player” selling for well under $100, he said, “the delta [in 4K player pricing] has them cautious.”

“It seems almost as if the software side is a little more determined about what they want to do than the hardware vendors,” Workman added.

For retailers, 4K Blu-ray would be a boon for demonstrating the capabilities of 4K HDR TVs, Workman said. An A-B comparison on the sales floor would show a “dramatic difference” in picture quality, driving sales of HDR TVs as well as enticing consumers into buying a 4K player as an attachment, he explained.

Uptake Upside: Format optimists are betting on Samsung’s marketing clout, broad consumer awareness of 4K, 100Mbps 4K Blu-ray picture quality that exceeds 4K streaming and Blu-ray picture quality, and broadband pipelines expected to choke in many homes when consumers try to stuff them with a high-data-rate 4K video streams. Proponents also point to a launch unencumbered by a format war, which plagued the launch of Bluray 10 years ago.

“Everyone is used to on-demand everything,” said Danny Kaye, 20th Century Fox Home Entertainment’s executive VP of global research and tech strategy and managing director of the Fox Innovation Lab. But research by Fox and others “shows no diminution of interest in the high-quality experience.” Video streaming has moved so quickly to the Internet that “the Internet hasn’t had a chance to catch up on quality,” he said. “There is a demand for high-quality from Vidity downloads and the next Blu-ray disc.”

Streaming, nonetheless, has come on so strong that in 2015, consumers spent almost as much on video streaming and downloading as they did on buying and renting physical discs, preliminary DEG statistics show. Consumers last year spent $8.9 billion on purchased downloads, subscription streaming and video on demand. They spent $9.2 billion to purchase and rent physical discs.

Quality Is Job One: Even if consumers increasingly favor the convenience of streaming, 4K will persuade many to keep discs spinning, said Karl Bearnarth, executive VP of sales and marketing at P&F USA. “The installed base of UHD TVs in the US will exceed 10 million by the time the new 4K Blu-ray players begin shipping,” he said. “The only source of content available to these customers thus far has been streaming content, which has significant limitations in bandwidth. The new 4K BD players will provide these tech-forward consumers with the ability to showcase the full potential of their new UHD TV. Consumer demand will be there, and the studios are supporting it with strong title releases.

“The 4K Blu-ray launch “will quicken consumers’ adoption of 4K, he added, especially as they see what the combination of 4K, HDR and Ultra HD Blu-ray’s wide color gamut can achieve.”

Quality is the reason that Fox eschews 4K streaming, at least for now, and ardently supports 4K discs and 4K M-Go/Vidity downloads. 4K “is a lot for the Internet to handle,” said Kaye.

For his part, Ron Sanders, president of home entertainment distribution at Warner Brothers Entertainment, contended that “physical is the most efficient way” to deliver 4K to households. Some households will want physical discs despite 4K streaming availability, he said.

As for 4K overall, Sanders foresees “broad adoption” because 4K represents a “step change” in quality, whereas the industry during the past decade has delivered only “evolutionary improvements.” The step change delivers “almost a 3D experience without the glasses,” he said.

Enough players? One factor possibly weighing against 4K Blu-ray’s success is that fewer CE suppliers – at least initially — will support the 4K Blu-ray launch compared with Blu-ray’s launch.

In part, once-strong brands such as Sharp, Toshiba and JVC are no longer in the disc-player market, nor is key TV vendor Vizio. And Chinese suppliers, which are increasing their TV share, aren’t in the U.S. disc-player market. Meantime, other CE suppliers – notably LG and Sony – are holding off introductions to see how the market develops.

“A new platform would typically be brought out by the big Korean and Japanese TV vendors,” said Workman, but that number has dwindled to three from 10 in the past decade.

Sony president/CEO Kazuo Hirai told TWICE that his company will launch a player if the physical format takes off in the face of growing streaming-service popularity.  

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