Do Gamers Care About the Bells and Whistles Anymore?

Monday July 27, 2009 – Shelby Cunningham

Looks like video game consoles aren’t as immune to the recession as everyone had originally thought. They sold well for a while, but now it turns out people bought their single consoles and aren’t going any further than that. Sure they’re playing more games than usual, but the variety of consoles in the home isn’t expanding, and people are playing a few games for longer periods of time rather than many games for shorter time periods.

But once you look at the numbers you realize, maybe some consoles are doing better than others, and it’s the others that make the whole market look like it’s taking a small dive. The Xbox 360 and PlayStation 3 (PS3) are more high-end than the Nintendo Wii and PlayStation 2 (PS2). They double as home entertainment centers and include more features and tote more connectivity than the Wii and PS2. Is that what people need right now?

So it appears that people are willing to spend money on entertainment, just not high-end entertainment. Consumers are keeping to the basics. In 2008 over 35 million “basic” consoles shipped worldwide, while only about 20 million “high-end” consoles shipped. The trend should remain the same for the next few years. Consumers can’t justify the need to purchase a high-end console when money is tight. During times like these a basic video game console and a working DVD player hooked up to whatever TV you already own should suffice as a home entertainment center. And apparently gamers can survive without being able to check Facebook and Twitter while they play Gears of War 2.

Source: DTC

Just take a look at the PS2. The PS2 was released in 2000, making it 9 years old, and yet it is still selling strong. The PS2 even outsold the 3 year old PS3 in 2008. And because of the low $99 price tag Sony is even still releasing the PS2 into new markets around the world. Maybe if the recession hadn’t hit, the PS3 would be the top seller in the Sony lineup. But it’s hard to resist a $99 price tag, especially when current hot games are still being released for the console.

DTH Satellite in India: Is There Room For Anyone Else?

Monday July 20, 2009 – Antonette Goroch

India, only just beginning its transition from analog to digital, is now one of the fastest growing regions for pay TV. The Indian market, with more than 100 million TV households, is almost as large as the U.S. market, making it a handsome target for vendors and operators seeking high-growth territory. Even though digital cable, IPTV and DTH satellite operators have sought an early foothold, only satellite has gained real traction.

Indeed, DTH satellite providers have blanketed the country with inexpensive digital TV packages so fast and so well, one wonders whether other platforms have any hope for widescale success at this point.

DTC’s most recent look at the market showed DTH in India now reaching 12.3 million subscribers, up from only 7 million in 2007 and 3 million in 2006. Competition among operators is hot. Three new systems launched in 2008 (Reliance, Bharti Airtel and Sun Direct), joining the three market incumbents (DD Direct, Tata Sky and DishTV). Another system, Videocon, is due for launch in 2009, bringing the total number of systems available to seven by year’s end.

The crowded field has led to fierce competition and heavy discounting of STBs, (two operators, Sun Direct & Reliance, offer free STBs for new subscribers), which has helped stimulate demand in India’s large market. DTC expects that DTH will see significant growth over the next several years, with subscribers forecast to surpass 27 million by 2010, close to the size of the U.S. market.

Similar efforts are expected from both new IPTV systems and incumbent cable subscribers, but these operators will have to shell out a lot of capital to put in infrastructure in areas already covered by satellite. It could be a tough sell unless they can successfully differentiate themselves from satellite services. IPTV and digital cable’s two-way infrastructure will enable interactive services – a possible competitive advantage over satellite. Advanced services aren’t a guarantee of success. Any new operators will have to struggle to find profit in such a highly competitive, price-cutting environment.

Don’t expect either digital cable or IPTV to disappear in the region, however. Future partnerships between DTH and other wired providers, using hybrid boxes to extend the range of services already available through DTH, will likely be the next phase in India’s transition from analog to digital TV.

The Converter Box: It’s Still Alive?

Monday July 13, 2009 – Myra Moore

So, now that we’ve checked off the U.S. analog TV shut down from the giant DTV “to do” list, we can declare the U.S. DtA converter box market dead. Right? Well, not exactly.

The shut-off occurred a month ago and our data indicates that plenty of people are still buying the boxes. Before the boxes started selling, DTC estimated that more than 30 million converter boxes would ship into the U.S. over the life of the coupon program. Other forecasters estimated fewer would ship. And it turns out we were right (although a little low).

Our quarterly converter box tracking service estimates that about 30 million boxes shipped through 2008 with another 7 million shipped in the first quarter of 2009 (http://dtcreports.com/documents/converterboxtrackingwebsite2.pdf). We’ve got analysts shopping for converter boxes all over the country and retailers report sales are still strong. When I popped into my local Radio Shack last week, the Shack folks were opening a new carton of Digital Stream converter boxes and restocking the shelves. When I asked if people were still buying the boxes now that the shut-off is over, I got the “why do you think we’re restocking the shelves?” look – along with a spirited sales pitch.

Source: DTC

Less well-known consumer electronics brands like Digital Stream took a gamble when they designed boxes, got them certified and hit up major retailers for a slot on the shelf. It’s a one-time market and box margins are low. But the combination of acquiring real estate in a big retailer’s store (albeit temporary) and the rising interest in value brands that this nasty recession has produced may pay off. A little increased brand awareness and a foot in the door at Wal-mart or Radio Shack might lead to orders for portable DVD players, TVs, or, who knows, more converter boxes.

Blu-ray Doomsday?

Monday July 6, 2009 – Stewart Wolpin

DVD hardware makers and Hollywood studios have pinned their hopes on Blu-ray to revitalize the whole home theater and pre-packaged media market.

They should be prepared for disappointment.

Even before the economy tanked, DVD was sliding down the razor blade of product commoditization. DTC believes that the entire non-PC DVD hardware category will dip 18% this year, buoyed only by the slightly growing portable/automotive market.

By contrast, only 5.7 million Blu-ray players will be sold this year, which represents only 4% percent of the total DVD market. And that's taking into account the increased inventory of Blu-ray titles, heavily-promoted new Blu-ray player brands such as Vizio, an increasing number of Blu-ray players that can stream online content, and shrinking Blu-ray hardware prices, which could conceivably dip below $100 by year-end.

Source: DTC

The picture for Blu-ray gets increasingly fuzzy five years hence, when DTC believes the high-definition disc format will have to compete with a growing internet download and streaming market already being overwhelmed, like the music business, by downloads and streaming.

Blu-ray's boomlet is blocked by another thin barrier: HDTV ownership. Most consumers without at least a 50-inch HDTV will pass on a Blu-ray deck. HDTV household penetration, although growing, is only a small slice of the worldwide TV market. It's not that people don't like a higher quality picture. It's just that they'll choose a different way of getting it. In other words, it's not about the product, it's about human behavior.

Take my own home, for example. While mindlessly channel surfing, my wife will happen upon a movie she likes and start watching it, even if the film is half over, even if it's constantly interrupted by commercials, even if it's not even in high-def (oh, the shame) and pock-marked with ShamWow pitches, it doesn't matter. I gently suggest we could watch the film from the beginning commercial free and in high def on Blu-ray, or even just standard def on DVD. Nah, she says, I'm fine.

I'm sure she's not the only sofa spud who would rather lump than load. Even I, so cinematically holier than thou, will record a movie to the HD DVR I find on HD cable for later 1080i viewing, even though I already own said movie on Blu-ray or DVD. And I'm sure I'm not alone and most viewers choose to watch from the HD DVR or just plain non time shifted and scheduled HD programs – most cable, satellite and telco systems now offer nearly 100 or more HD channels – over playing in on a Blu-ray or DVD player because it's simply way too much trouble to hunt down the disc, boot up the player, find the player remote, and switch the receiver or HDTV to the proper output. It's just easier to hit LIST and PLAY on the always handy cable remote.

It is this La-Z-Boy behavior that will eventually doom Blu-ray to little more than a niche market.