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Blu-ray, Full Stream Ahead?

Does Blu-ray have a future in an internet connected world where video streaming is becoming more readily available? 

Blu-ray players were one of the hottest retail electronics items over the holiday season. Retail prices have dipped below $200. In fact, many retailers have been promoting free blu-ray players with the purchase of a large screen or flat panel TV. 

CEA reported that nearly 3 million Blu-ray players were shipped to dealers in 2008 and that number is expected to double in 2009 at almost 6 million. So is all this positive momentum and increasing installed base for Blu-ray enough to keep the category relevant for the long term? 

Video streaming via the internet direct to the TV is about to become reality. However, is the American consumer finally ready for internet connected television?  Remember WebTV? 

In 1996, consumers were introduced to internet TV for the first time. WebTV offered the ability to surf the web via a “dial-up” 28.8kbps modem from the comfort of your living room sofa. Clearly, WebTV was an idea well ahead of its time. Fast forward to 2009. Almost 75 million households have broadband access to the internet and more than 70% of those households have a home network as well. 

Today, Blu-ray decks and other devices such as Roku and Vudu connect to the internet to stream video to your television. For 2009, TV manufacturers have announced internet connected televisions which will deliver video services such as NetFlix, Amazon unbox, CinemaNow and even YouTube direct to the TV. 

Clearly, video streaming will have a significant impact on Blu-ray. But even with today’s broadband networks, there is not enough bandwidth to deliver the high quality video experience that Blu-ray offers.  But will this impact consumer acceptance of video over the internet?  Remember SACD?  Similar to Blu-ray, SACD was the high resolution successor to the compact disc. 

SACD quality was superb, but it never gained traction in the market. It was the MP3 format combined with the internet and ultimately the iPod that stole the show. The iPod didn’t provide high quality audio like SACD, but together with iTunes, it was incredibly convenient, easy-to-use and provided access to thousands of music titles. The American consumer voted for convenience and access over quality. The same is likely to happen with video. In the near term, Blu-ray should continue to grow its installed base. However, over the long term, as video streaming devices and services become more widely available, consumers are likely to choose the convenience and access of video streaming over the high quality of Blu-ray.

Frank DeMartin is Vice President of Marketing for Mitsubishi Digital Electronics, Inc