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Ultra HD Blu-ray Players Pave Way For Discs

At least three suppliers – Samsung, Panasonic and P&F’s Philips – flew to CES to launch the industry’s first 4K Ultra HD Blu-ray players, hoping to tap potential demand from 4K TV owners for a more reliable, higher quality source of native 4K content than streaming services.

At least one company – Samsung – will ship in the first quarter. Other suppliers, such as LG and Sony, declined to introduce players at CES.

For its part, LG won’t launch until the second half at the earliest — if it decides to launch in 2016 at all, said Tim Alessi, LG’s U.S. head of new product development for home entertainment. The company isn’t displaying a model at CES.

LG is keeping an eye on the market but notes that Hollywood hasn’t committed to many titles yet, Alessi explained. He also said many people are getting 4K video via streaming services. “We’ll wait and see how the market develops before we jump in,” he said.

In any case, LG couldn’t produce a 4K player any sooner than the second half because putting chipsets into production “has taken longer than expected,” he added.

Samsung is more bullish. “Physical media is still the best to deliver a 4K experience,” said Jim Kiczek, Samsung digital-AV group VP. He believes 2016 forecasts of 500,000 to 700,000 4K players are conservative given the growing availability of 4K TVs with HDR and wide color gamut.

Some analysts are cautious, contending the success of the format will depend on many things, such as 4K TV set penetration, pricing, and disc availability.

A member of the Blu-ray Disc Association, however, argues that pricing won’t be an impediment, saying “there won’t be any sticker shock” as there was for the launch of FullHD Blu-ray players, which were priced initially at around $1,000.

Likewise, Victor Matsuda, chairman of the Blu-ray Disc Alliance’s global promotions committee, said player pricing at launch will be “reachable” even though they will be premium-priced. He noted that premium FullHD Blu-ray players currently run from $150 to $200.

For his part, Paul Erickson, senior analyst at IHS Technology, tied demand to 4K TV penetration as well as to “the availability of marquee 4K content in both volume as well as speed of release post-box-office.”

Disc availability “is important because alternatives are not only today’s Blu-ray players but also streaming 4K propositions. Roku, Fire TV, and others to come will be there, but their [4K Blu-ray proponents’] particular twist is that 4K streaming availability will remain limited in 2016 as well.”

Erickson contends 4K content availability via streaming “is one bottleneck, as well as the average amount of free bandwidth per household steadily available to deliver a 4K stream, which is 12-15 Mbps by most estimates.” With many households’ broadband connections being split across multiple devices, “that constant bandwidth availability remains a wild card,” he said. That will help bolster 4K Blu-ray’s sales, he said.

For 2016, IHS estimates North American 4K player shipments will hit 836,000 with mid-year launches and then ramp up “aggressively” to 13.8 million in 2019. “While the supply of content will still be spinning up in 2016, by the end of 2017 it should be in full swing and help pull more of the mainstream consumer into the Ultra HD Blu-ray proposition by holiday 2017,” Erickson said. He sees 2016 as the year of early adopters, with the fourth quarter of 2017 seeing a “substantial rampup from the volumes seen in holiday 2016.”

NPD Group is more cautious. “We have a mixed outlook on 4K Blu-ray,” said Stephen Baker, VP of industry analysis. “Clearly there is still significant demand for physical media,” with almost three-quarters of homes with a Blu-Ray player using it for Blu-ray or DVD movie watching, he said. “I think for 4K, there is likely to be more demand since the capacity of streaming for 4K will be either limited by content availability or household bandwidth.”

On the other hand, “the costs are likely to be high and the volumes low as the streaming narrative is well-established,” he continued. “So the road to significant sales will be a tough one and mostly driven by bundling and add-ons to 4K TV sales, which of course means that the market is likely to be dominated by TV brands who can build attractive bundles.”

At Futuresource Consulting, senior market analyst Jack Wetherill wonders whether consumers are all that interested in physical media these days. “The format is launching in an era where packaged media is giving way to streamed video,” he said. Nonetheless, upside potential exists because “players are emerging at a time when there is still a relative lack of broadcast UHD content while the ownership of 4K sets is forecast to exceed 17 million units by the end of 2016. Also in favor of player uptake is the absence of a UHD BD games console.”

On top of that, 54 percent of U.S. respondents who own a 4K TV, or intend to purchase one in the next 12 months, buy Blu-ray discs compared to just 31 percent of all respondents, a Futuresource survey found. “Packaged media buying is proving resilient particularly among 4K TV owners,” Wetherill said.

Nonetheless, success will be determined by such factors as the availability of compelling content, the level of marketing, and the level at which suppliers bundle UHD TV sets, players and discs, he said.

When it launches, 4K Blu-ray “will be a premium home-video solution, commanding significantly higher prices over 2K Blu-ray both in terms of the hardware and the discs,” Wetherill added. Futuresource estimates that 5 percent of Blu-ray players, excluding game consoles, that will ship in 2016 in the U.S. will offer UHD playback, and many will likely also stream online 4K content.

On the content side, Futuresource expects discs will initially command a premium of 50 percent over their 2K counterparts.

Fox and Sony Pictures Home Entertainment have said they will support the format’s launch, with Sony launching with six titles followed by “a growing roster of titles, including new release film and television content,” the company has said.

The Blu-ray Disc Association’s Matsuda also positions the format as delivering a “best-of-best” experience, and the industry will promote the technology as delivering more than just higher resolution. “HDR will be highly promotable along with color gamut,” he said.

The industry had hoped to have players ready for 2015’s fourth quarter, but Wetherill noted that “the timescale between putting the specification out to license, testing the players and discs, and making them available at retail proved too tight.”