Even as the
streaming home video revolution continues to widen, Blu-ray software and
hardware sales continue to hold their own.
According
to DTC estimates, worldwide Blu-ray hardware sales rose 14% last year, will
rise 13% this year and 12% next year. On the software side, DTC projects worldwide
packaged media sales grew 43% in 2012, and will grow 32% this year and 29% next
year.
But in North
America – or at least in the U.S. – 2013 will be the last year in which Blu-ray
hardware sales show positive growth. Or, it could be the first year Blu-ray
will register the oxymoronic negative growth in the U.S.
In the last
couple of weeks, I've had conversations with executives from Samsung, the
worldwide Blu-ray hardware sales leader, Panasonic and LG, the numbers 3 and/or
4 Blu-ray deck sellers, depending on what month it is. When asked about Blu-ray
sales, all hemmed and hawed Ralph Kramden style – not exactly the reaction one would expect if all things Blu-ray
were as rosy as they appear to be worldwide.
Dave Das,
Samsung's VP for home entertainment products, allowed that the Blu-ray hardware
market in the U.S. was "starting to stabilize," and that unit sales
"seemed to have peaked and are already declining." Das is hoping for,
at best, flat Blu-ray hardware sales in the U.S. this year, but his current
forecasts say there'll be a 3% dip in Blu-ray units by the time the ball drops
in Times Square next Dec. 31.
Tim Alessi,
LG's new product honcho, was a bit more politically circumspect about
negatively projecting this year's Blu-ray hardware sales, estimating small
growth but allowing that sales could easily swing in the wrong direction. But
his body language didn't exactly exude confidence.
Panasonic's
estimates for U.S. hardware sales presented at a recent press event also are
officially flat for the first time.
Without
saying so, it would seem first quarter Blu-ray hardware sales weren't as robust
as these companies would have liked, a downward trend that may be accelerating
as streaming becomes more ubiquitous in the U.S.
Soft disc sales
While
Blu-ray unit growth/decline seems to be teetering on the sales fence in the
U.S., U.S. Blu-ray disc sales growth have already begun to decline, indicating
soft demand for software.
For
instance, DTC projects packaged media sales in North America declining compared
to the rest of the world, steadily dropping from a commanding 48% in 2011 to just
39% this year and 36% next year. By 2017, North American share of pre-packaged
media sales is forecast by DTC to drop to 24%, behind both Europe and
Asia/Pacific.
In the U.S.
market specifically, DEG (Digital Entertainment Group) recently reported
revenue from disc sales declined 5.5% from 2011 to 2012, revenue from
brick-and-mortar disc rental slid nearly 24% and revenue from subscription disc
rentals (i.e. Netflix) dropped a whopping 28%.
Meanwhile,
revenue from what DEG calls "electronic sell-through" (EST) leapt
34.6% while subscription streaming jumped a massive 46% last year.
Sexier streamers?
Obviously,
streaming media and streaming media devices – dedicated media streamers,
videogame consoles and smart TVs – are eating into physical media sales and, by
extension, sales of Blu-ray decks.
What's odd
about this pessimism surrounding Blu-ray hardware sales is that more than
three-quarters of the Blu-ray players sold by the major brands are
"smart" decks, packed with media streaming services such as Netflix,
Vudu, Hulu, et al.
While
Blu-ray hardware marketers know their wares present a high value proposition
compared to dedicated streamers, it doesn't appear they've gotten that message
out to consumers. Both smart TVs and media streamers seem to be perceived as
sexier products, easier to sell than old lady disc players.
Blu-ray
hardware and media sales are likely to continue to grow worldwide, albeit less
robustly as in years past. But it's clear that Blu-ray sales have reached the
top of the bell curve in the U.S. market.
