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2010 Should See Blu-ray Transition Into A Mass-Market Product

Approaching the end of 2009, sales of Blu-ray Disc players were expected to be one of the great consumer electronics success stories of the year.

Player sales remained on a solid pace, rivaling the unit sales of DVD players at this point in their rollout. But much of that success has been spurred on by price points, record-setting price reductions through Black Friday doorbusters, and other promotions that have driven the price of some machines below the $100 mark, putting stress on category profit margins.

The Blu-ray Disc Association (BDA) cited numbers from Adams Media Research showing the total number of Blu-ray households in the U.S. reached 11.6 million by the end of the third quarter in 2009, a nearly 84 percent increase over the same time last year.

As of press time, Adams had projected this would increase to 16.2 million by the end of 2009, which would be a 77.8 percent increase over the final number for 2008.

“I think it’s safe to say that the BD format’s penetration will see dramatic growth in light of the much lower entry-level player pricing we are seeing now,” said Andy Parsons, BDA spokesman and new product planning and corporate communications senior VP at Pioneer Electronics.

As for software sales, Adams Media Research said year-to-date totals were up 107 percent at the end of Q3 compared with the same time last year. They expect the increase to be 113 percent at the end of 2009 as compared with 2008.

Now virtually a staple feature in most new Blu-ray players, BD-Live — which uses a player’s connection to the Internet to access extra bonus content and other features — was one of the most hyped capabilities of the Blu-ray format, beyond 1080p high-definition resolution.

According to Parsons, “BD-Live is still a new feature that I believe many consumers are not aware of yet. There is also a fair amount of effort that has to be put into connecting a BD-Live player to the Internet, particularly if an Ethernet line is not conveniently located near the home entertainment system. Some player manufacturers are helping to make this easier by including Wi-Fi in newer players, which is a helpful trend that should make things easier if a wireless network is available.”

Parsons acknowleged the capability has been somewhat difficult to get across to consumers.

“Interactivity has always been a rather abstract concept, and I’ve learned over the years that a proper demonstration is vital to build enthusiasm for it,” he said. “So I think showing well-executed BD-Live content to consumers at retail would really help them appreciate its potential and overcome the connection-effort barrier.”

“I think we need the studios to continue to promote BD-Live aggressively, as they have been,” said Chris Fawcett, Sony home A/V products group VP. “We also need killer apps. Let’s face it: We’ve seen everything from goofy to really cool in BD-Live, and it’s the goofy stuff that really hasn’t lit up the market.”

Parsons agreed that BD-Live content on recent titles “is continually getting more interesting. I can’t tell you how many times I’ve wondered who particular actors are and where I’ve seen them before, so having a contextual lookup in an online database adds real value and feels like a very natural extension of the title.”

To keep the category successful as the market continues to evolve, Parsons said, “The industry will need to relentlessly hammer away at the basics next year to maintain growth and complete the transition to the mass market.”

That will involve delivering the message that Blu-ray Disc is the closest experience to an actual theater, and that Blu-ray players will play most disc formats.

“We’re talking to a new audience as prices continue to drop, so none of us can afford to assume that these fundamental features are obvious to later adopters who think DVD is still pretty great,” Parsons said. “Today’s entry-level buyer is probably much more interested in the cool factor — the overall experience of high definition — than they are in the underlying nuts and bolts that make it happen.”

As prices on entry-level players continue to drop into the sub-$150 range (even sub-$100 in some cases), manufacturers of more advanced products need to “focus on performance and build quality as the top priorities for our traditional home-theater customer,” noted Parsons, speaking for his product development and marketing roles with Pioneer. “At the same time, we recognize that streaming video services are also important, so we showed our Entertainment Tap prototype at CEDIA that, if productized, would allow consumers to have a choice of many different online services to choose from instead of just one or two that are chosen for them. Online streaming does not offer the same “blow-you-away” picture quality as Blu-ray, but if you’re going to offer streaming, we think choice and flexibility are very much in line with the whole concept.”

Parsons said online streaming videos and Blu-ray Disc movies “will be largely complementary. The usage model behind IPTV is very different from investing in a permanent, archive copy of a particular title. The online HD content I’ve seen in my own home so far has looked OK, but it hasn’t compared with what I can get from a disc.”

Consumers, he predicted, will buy titles they want to keep on Blu-ray Disc and will use streaming services for content they want to view only once.

Perhaps the hottest Blu-ray story at International CES will be the arrival of the first 3D-capable players this year.

“Blu-ray Disc has always been about achieving the best-quality high-definition experience in the home, and has always offered a relatively lavish capacity and bandwidth to accomplish this,” Parsons said. “The BDA wanted to continue this philosophy for delivering 3D content, and so we determined that 1080p per eye would be a key objective of the specification. Everyone I know who’s seen how it would look in real life has been very impressed, and any skepticism about its potential to excite consumers tends to disappear. It will require investing in a new 3D-capable set as well as a 3D-capable player, so the market uptake will naturally take some time.”

Parsons said the Blu-ray 3D specification was designed to allow backward compatibility with 2D players, meaning that it’s possible for a 3D title to allow playback in 2D on an existing player.

“There should be no feeling of obsolescence here — consumers should even be able to invest in 3D content before they have the equipment to get the full benefit out of it,” he said.

Reid Sullivan, Samsung digital audio/video products marketing VP, estimated that 3D would be roughly around 20 percent of the total BD player market in 2010, depending on how quickly consumer awareness can be generated.