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Blu-ray Growth Seen Despite IP Streaming


Despite the growth of streaming
movie services through connected devices in
2010, Blu-ray Disc player sales seem to remain on
a surging growth track for the foreseeable future,
key hardware and software industry executives
told TWICE.

Andy Parsons, U.S. promotions committee chairperson
for the Blu-ray Disc Association (BDA) and Pioneer
Electronics USA senior VP,said BD player and
disc sales growth exceeded expectations in 2010.

Citing Adams Media Research, Parsons said,
“We should have nearly 25 million U.S. households
with Blu-ray playback capability, including
PS3 consoles, by the end of the year, which is well
over 20 percent household penetration in the 4.5
years since the format launched.”

Similarly, Ron Sanders, president of both Warner
Home Video and the Digital Entertainment
Group (DEG), cited DEG’s Q3 report figures that
show more than 3 million set-top unit sales over
the first three quarters, up 104 percent over the
same period last year.

Meanwhile, HDTV household adoption exceeds
the initial adoption rate of DVD by SDTV households
despite very similar unit sales, Parsons added.

“The fact that Blu-ray penetration has grown so
quickly despite a very difficult economy is particularly
striking,” he observed.

Last year marked the launch of 3D Blu-ray into the
market, supported by new specification standards
that provide “the highest-quality 3D experience available
to consumers. At last count, there were at least  19 Blu-ray 3D players available or announced, and we
expect more at CES,” Parsons added.

Prior to 2010, the PlayStation3 gaming console represented
the largest segment of 3D player penetration
into U.S. homes, but last year dedicated Blu-ray players
surpassed PS3 sales for the first time, according
to Adams Research data.

“Set-top players have also become more and more
affordable, and we know that an increasing number of
households have more than one player,” Parsons said.

Software sales, too, have started to pay dividends.

“Blu-ray clearly began to evolve into a very mainstream
product in 2010, consistently showing strong
growth in every category,” said WHV’s Sanders.
“Quarter after quarter, we have seen over 60 percent
growth in Blu-ray catalog spending this year, challenging
conventional wisdom that Blu-ray is mainly
a choice for new release films with heavy special effects.
And, of course, `Avatar’ broke all records, becoming
the biggest selling Blu-ray title to date.”

Despite the growing popularity of streaming video,
Sanders said the superior picture and sound quality
of Blu-ray should keep the momentum going into the
future, although the inevitable commoditization of the
once-profitable category has driven entry player prices
below $100 in 2010 door buster promotions

“Commoditization is at once a positive and negative
thing,” Parsons noted. “On one hand, it means that
the format has achieved mass-market status, but on
the other, it makes the business side more challenging.
The traditional way to hold it off is to differentiate
your products as much as possible. In the case of Bluray,
this can also be a challenge, since by definition,
the format is `standardized’ — all content is expected
to work the same way on all players.”

Parsons said the addition of streaming services is
one way manufacturers are seeking differentiation,
which has helped Blu-ray players to become “the
best overall content consumption value available to
consumers today.”

As for when the burgeoning streaming video trend
will being to impact Blu-ray Disc sales, Sanders said:
“Given the infrastructure issues and the amount of data
a digital delivery system can put on the screen, it’s going
to be a very long time before the average consumer
is going to be able to get a true Blu-ray quality picture
and sound on their high definition displays through any
means of conveyance other than a Blu-ray Disc.”

Parsons added, “We think they will coexist for many
years to come. As you know, I’ve always likened this
peculiar all-or-nothing thinking to the infamous ‘paperless
office’ that everyone predicted we’d have 20
years ago. The lesson we learned from that was that
imagining how something might happen is the easy
part, but it turns out there are many complications that
crop up.”

The challenge for 2011 will be to drive more 3D
players and TVs into consumer’s hands.

“Beyond the earliest adopters, you can’t sell many
3D products if there isn’t much 3D content available,”
Parsons said. “So in this respect, we need more titles
to entice consumers to get down to a store and see
how remarkable a well-produced 3D program can
look on a quality 3D set.”

He said the exclusive title bundling of 2010 that
limited disc access for 3D Blockbusters like “Avatar”
and “Alice In Wonderland” to purchasers of select TV
brands was typical of a new format launch.

“Bundles are a natural part of launching a new format
or format feature,” Parsons said. “I think the practice
helps get the format moving forward.” At least 24
titles were available for purchase outside of bundles
before CES began, Parson said. “We have every expectation
that many more titles will be introduced in