LAS VEGAS —
The future of home video entertainment may be coming from the Cloud, but the trusty Blu-ray Disc player continues to drive volume sales growth and revenue opportunities today.
That was the assessment of Andy Parsons, Blu-ray Disc Association (BDA) U.S. promotions committee chairman and Pioneer Electronics communications and advanced product development senior VP. The BDA is a multi-industry-supported promotional group that is dedicated to promoting developments in the Blu-ray Disc (BD) format.
“While it seems so logical and so obvious to many casual observers that all SD and HD programming will soon be distributed via the Internet, this all-or-nothing argument is too simplistic. What about bandwidth limitations of typical households?” Parsons asked, while comparing the prophesied extinction of optical discs to past predictions of the paperless office.
He pointed out that the average broadband connection speed in the U.S. today is about 5Mbps, which is not enough to support all the content being delivered on discs, including the HD quality and extra content afforded the 50GB Blu-ray platter.
Consumers are also attracted to the ease of use and collectability of physical media. Meanwhile, the continued growth of HDTV penetration and dramatically lower prices for BD players bodes well for demand sustainability, he said.
As for today’s software business, Blu-ray content sales grew 58 percent year over year in the third quarter of 2011, contributing to a cumulative 33.6 million unit U.S. household penetration, according to the Digital Entertainment Group (DEG).
Its latest industry report even showed significant growth in the rental of packaged media, despite the disappearance of numerous mom-and-pop stores.
“I think one key reason for this is that you simply can’t get access to most of the newest content via streaming,” Parsons added. “If I want to see a film that was just released on disc a month or so ago, I probably won’t find it on any of the legitimate streaming services that consumers subscribe to, but I can buy it or rent it on disc.”
Disc-by-mail services should be sufficient to carry the load for the foreseeable future, Parsons added, and they often provide availability and convenience that the momand- pop stores lacked.
Even as Netflix and Blockbuster expand their streaming and download services, renting physical media appears to be in their cards for some time to come.
“I just can’t see how any online rental service can provide a full range of content to their customers without discs, at least not anytime soon,” he said. “I don’t think streaming can really replace discs until it’s truly ubiquitous, matches the content availability, and works as reliably as discs.”
Still, Parsons said, streaming can be very convenient, and “it would be foolish to say that it’s not important. Our position is that it will take far, far longer to fully replace physical media than some people are predicting. Both disc and Internet consumption can coexist for many years to come.”
As for the future of Blu-ray 3D format, Parsons said it’s growing and is “as much a content-driven business as regular Blu-ray and DVD have been, so as the population of titles continues to grow, the interest level among consumers should continue to grow as well.”
He added, “The growth is also somewhat regulated by the adoption rate of 3D HDTV sets, which has grown at a very decent rate — up to about 3 percent penetration, I think — considering that these sets haven’t been on the market very long.”
Still, as prices on BD players drop below the $100 mark, the future for category feature advancement seems limited.
Parsons, though, said, “Bluray players deserve more credit than they get for being the most versatile content nerve center you can buy for your living room.”
At the same time, he said he still sees a promising market for “more upscale players that emphasize quality more than quantity of content.”
For the future, “I think we’ll continue to see new features appear initially at the higher end, such as 1080p-to-4K up-conversion as these displays begin to enter the market. It also may be possible to improve streamed content picture quality with realtime signal processing, much as we do with highly compressed audio streams in some home products.”
Another promising recent development was the introduction of the Ultraviolet virtual content locker system that enables consumers to pay one price to buy conforming Blu-ray Disc movies along with the rights to access the title in streaming, download and digital copy form for playback on other devices.
“We see Ultraviolet as a way of expanding the functionality of Blu-ray content, as it adds value to the ownership model,” Parsons explained. “I’m personally a big fan of Digital Copy because I travel a lot and like to watch movies on my iPad. Spending a couple of extra dollars for this feature is well worth it to me. Ultraviolet is very similar, except that it encompasses a larger array of platforms through both streaming and downloads.”
As for the future of the BDA, the promotional group will be helping to explain what Ultraviolet is and does as “another compelling reason to invest in Blu-ray titles,” he said. It will also be leveraging online and socialmedia tools in the coming year to present the creators of the BD software and hardware “to explain why they are passionate about the format.”
They will also work with influential “mom bloggers” who have followings outside of the usual technology audience to help explain why recordable Blu-ray is a great way to enjoy and archive personal content.