By Lisa Johnston
New products on display at the American International Toy Fair, held in N
The 2009 International CES will serve as a coming-of-age milestone for the Blu-ray format, as lower prices for players and software and better hardware features begin to take the platform into the mainstream.
This year Blu-ray hardware options are expected to explode with a wave of new network BD-Live models and integrated systems, including Blu-ray home theater in a box (HTiB) solutions, flat-panel TV/Blu-ray combo offerings, and newly configured thin-design players targeted at wall-mountable applications.
At the same time, stand-alone player prices have fallen into the realm of affordability among the millions of new HDTV owners, who have prepared themselves for the switchover to all-digital TV broadcasting in February.
Prior to the holidays, entry-level Blu-ray Disc models were spotted at doorbuster price tags as low as $128 in Wal-Mart, hinting at new everyday price thresholds for later in 2009.
The NPD Group recently reported sales of Blu-ray Disc players tripled from a year ago over the Black Friday period, with Sony and Samsung accounting for 85 percent of sales over the period after offering promotional sale prices on entry-level players in the sub-$200 range.
Sales of stand-alone Blu-ray players were estimated by NPD's DisplaySearch unit to have shipped 911,000 units during the fourth quarter of 2008 and about 2.2 million for the full year.
Meanwhile, sales of Sony's PlayStation3 video game console, which also plays Blu-ray Disc movies, registered 378,071 hardware units in November, representing an increase of almost 100 percent from the prior month, NPD said. From January to November 2008, more than 2.8 million PS3s have been sold in the U.S., representing a year-to-date hardware sales growth of more than 60 percent.
For this year, stand-alone Blu-ray player sales are expected to rise 76 percent to 3.84 million units in 2009 while DVD player sales will fall 24 percent to about 14 million units, according to DisplaySearch forecasts.
Some manufacturers were even more bullish, forecasting U.S. stand-alone player sales to reach between 4.5 million and 8 million units in 2009.
"Price points are coming down but overall dollar growth is good," Reid Sullivan, Samsung digital audio/video products marketing VP, told TWICE.
Sullivan said the end of the format war encouraged more consumers to purchase Blu-ray players along with new HDTV sets at the start of 2008.
From there, increased penetration of 1080p HDTV sets helped to whet consumer appetites for the true 1080p source material that Blu-ray Disc was almost uniquely able to deliver.
For 2009, Sullivan said to look for consumers to seek out models with BD-Live features and/or the ability to access video download services and other IPTV content offerings in addition to playing Blu-ray Discs.
Such models, he said, "are providing a digital roadmap to the future as an additional value that is resonating for many of [consumers]."
Partly due to the appearance of more and more players with built-in downloading capability, several player manufacturers said they don't expect another format war to emerge with video-on-demand (VOD) or IPTV services. Rather, the two are not only co-existing, but complementing each other.
Allan Jason, LG Electronics digital media VP, added: "For packaged media, this is still a $25 billion business. While it may decline, it is not going away. The key here is the price of Blu-ray movies. As prices continue to decline, sales of Blu-ray movies will surge. We think the ability to offer consumers access to online HD content and VOD services in a Blu-ray player is giving them the best of both worlds."
"VOD and digital downloads will co-exist with Blu-ray Disc for quite some time," said Chris Fawcett, Sony home products marketing VP. "While online/VOD formats offer an immediate satisfaction, BD is the only format that can offer Full HD 1,920 by 1080 and uncompressed 7.1 digital surround sound."
Many players coming to market in 2009 will accommodate Internet connections to support the BD-Live system that will enable a wide range of interactive applications designed in Blu-ray software titles.
Now with players available to utilize it, BD-Live is expected to be a big part of the Blu-ray Disc story. However, manufacturers and retailers acknowledged that the industry has a lot of work to do to educate consumers about what the features provide.
"It can really be a challenge to sell BD-Live without a great demonstration," acknowledged Andy Parsons, Pioneer Electronics advanced product development senior VP. "It's like it was 10 years ago, if you ever tried to explain the Internet's value to someone who had never seen or used it. So I think that as more and more innovative BD-Live titles become available — and once people can see what those titles can do firsthand — the feature's benefits should be much easier to sell.
"Also, since the market is so competitive, I would certainly not be surprised to see that virtually all players in the future will include BD-Live functionality, as no one wants to be the only manufacturer without such an important feature. So the step-up concern may end up being moot anyway. Perhaps the more significant challenge will be to make these players completely effortless to connect to a network when they are first set up in the home."
As awareness of Blu-ray builds, manufacturers are moving beyond stand-alone players to offer players in a wide variety of integrated components. At CES, several manufacturers are unveiling expanded ranges of HTiB solutions with built-in Blu-ray players. Sharp is offering a line of integrated Aquos Blu-ray/LCD TV combos, and Samsung is presenting a speaker-bar solution for flat-panel TVs with a built-in Blu-ray player.
One practice that saw reasonable success last year was manufacturer-promoted bundling of home-theater systems, HDTVs and Blu-ray players. While some expect retailers to take the practice further in the year ahead, several manufacturers said they will likely continue to offer Blu-ray hardware bundle promotions this year, especially with new Blu-ray HTiB systems coming out in 2009.
"We will expand bundles again with LCD TV and BD players but we want to also bundle audio products for a richer experience for the end customer — picture and sound all as one in addition to HDMI interconnections for a better end user experience and setup," said Bruce Tripido, Sharp entertainment products division associate marketing VP, echoing a common theme among manufacturers that market multiple home-theater product categories.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.