Blu-ray Growth Seen Despite IP Streaming

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LAS VEGAS —

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 2011.”

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