Monday June 20, 2011 – Stewart Wolpin
DVD replaces VHS, and Blu ray replaces DVD in the land of home video formats. Right?
But is Blu-ray's future as the primary home video format secure?
Not really.
I don't need to be descended from Nostradamus to know this. After six years, a new format ought to be more popular than the format it is replacing. And Blu-ray was and is not as popular as DVD was and is.
Twice as many DVD players were sold in that format's first six years (1997-2002) as Blu-ray decks in its first six years (or will when this sixth year is over). And Blu-ray's numbers have been boosted by early HD-DVD sales plus sales of Sony PlayStation 3.
Blu-ray Blues
Why is Blu-ray lagging behind DVD? It's not because of price. According to CEA, the average selling price (ASP) of DVD decks in 2002 was $142. Blu-ray decks are already selling around he $120 range and prerecorded movies are selling in the $20 range.
Here are some of my guesses as to why Blu-ray is singing the blues:
• Blu-ray is more an upgrade of DVD than a radical format replacement, as DVD was to VCR. And replacement formats – Super VHS, SACD, DVD-A, for instance – never do well compared to the original.
• Sales of TVs of less than 50 inches make up the majority of digital displays around the world. This leaves a huge number of consumers with no reason to switch from "good enough" DVD. Even though the number of buyers of 50-plus inches is inching upward, it'll take a long time – perhaps too long – to make a difference for future Blu-ray sales vitality.
• Blu-ray is a dud for portable products because Blu-ray's resolution advantages are invisible on small portable screens. And large screen smartphones and tablets that are able to stream or store movies are becoming the dominant mobile video viewing screen.
• Streaming content availability (incuding pay TV VOD services) is eating into packaged media sales. Anyone believe the percentage of non-packaged media isn't going to grow, perhaps geometrically, as time and technology move inexorably forward? Anyone? Bueller? Bueller?
Blu-ray's Streaming Future
It's not that Blu-ray sales aren't healthy and growing. DTC projects that shipments of Blu-ray decks world wide will move to 84 million by 2014.
But this global growth is primarily due to so much of the rest of the world catching up to the U.S. in Blu-ray and large screen HDTV adoption. Based on Blu-ray's comparatively creeping growth rate, much of the format's growth is normal new format upward bell curve momentum, not the excited land rush DVD was.
Yes, I'm ignoring 3D, which many Blu-ray deck makers are already doing. Well, not ignoring, exactly, but relegating to secondary marketing emphasis.
Instead, Blu-ray deck makers have been marketing their Blu-ray wares as media streamers with, oh yeah, a disc player. I, personally, have used my connected Blu-ray to view more streaming Netflix than Blu-ray movies. I'm sure I'm not the only connected Blu-ray deck owner who uses its media streaming features more than its disc playing features.
And maybe that's the future of Blu-ray.
