Home Media Magazine - February 24, 2008 - (Page S12) blu skies » Continued from page 10 “The more high-def is available, the more demand there is for high-def equipment at retail,” DisplaySearch’s Erickson says. The number of HD channels available via satellite or cable has nearly doubled in the past year from 57 to 97, according to DisplaySearch. Furthermore, the satisfaction level among Blu-ray owners is very high, according to NPD studies. Between 80% and 90% of owners describe their high-def discs as sensational, Crupnick says. “It’s not like we have a product problem,” he says. “It’s not a lousy product; it’s a great product.” That kind of message also needs to get out to potential Bluray customers, according to Crupnick. Since they have more at stake, studios and electronics companies may have to push broad-product stores such as Target and Wal-Mart to help tell and sell — tell the high-def disc story and sell the product. But they are used to that. Studios have not been waiting around to see if the stagnating DVD market is a temporary blip or a peak. They have been pushing Blu-ray Discs as if there is no tomorrow, which many in their ranks believe could well be the case if they are not successful, and soon. “High-definition disc has a crucial role to play in maintaining studio revenue,” Bottoms says. “Stimulating the overall disc business represents a potential opportunity to re-sell catalog titles and stave off the threat of online delivery.” Consumer electronics companies are motivated to sell their premium-priced 1080p displays with much greater profit margins that are best served by Blu-ray Discs, one of the few products that deliver full 1080p picture quality. Future Looks Bright Even if Blu-ray Discs do not catch fire as quickly or as strongly as DVDs in the third and fourth years, as long as the combined DVD and Blu-ray market grows, the industry should be in good shape. Although Adams forecasts high-def disc growth to be slower than DVD; he pegs the high-def disc market at $9.5 billion by 2012. According to Erickson, “It will take time, but people will adopt high-def discs, and it will supplant DVD.” As for the competition from digital and electronic delivery, Adams says, “Physical products are important to consumers.” Studios may not really care where or how they sell their movies, as long as they continue to find sustainable growth markets. But, so far, electronic delivery of movies has been a great disappointment and is nothing that studios can count on as a safety net or substitute for discs. Adams notes that movies-on-demand via phone and remote control have been around as long as movies on videotape and have yet to generate more than a tiny percentage of the revenue of home video. The pay-per-view/video-on-demand market — cable/satellite/Internet — finally crossed the $1 billion mark for the first time last year, compared to the $24 billion consumers spent on renting and buying discs. Bottoms notes in his Understanding & Solutions report that, while there has been activity and investments in the online VOD space, “these services are generating very little in the way of real revenue.” “In the United States, Wal-Mart, Best Buy and MovieBeam have already exited (or cancelled their planned entry into) this business, in the face of fading confidence in the scale of the opportunity,” he notes. Erickson of DisplaySearch adds Movielink to that list of Internet VOD companies struggling to be successful. “The business for selling physical media is well-established and well known,” he says. “We’ve yet to discover usage habits showing they will abandon physical media in the next few years.” Bottoms says a mass market solution for online VOD is likely to be two to three years away. “There’s something in human DNA that makes spending a lot of money on physical media products make sense, while electronic products are just too ephemeral to feel good about,” Adams says. It’s not likely those habits will change just because the movies come from the Internet instead of cable or satellite. Crupnick says it will take even longer for electronic delivery to take hold because most consumers don’t want to have to go to the trouble of figuring out how to connect their Internet or computer to their primary TV set, let alone pay for the bandwidth required to download the movie in a reasonable time or wait more than a few minutes to watch it. And consumers still want to have a disc to take to their friend’s house to watch or take with them in the car, Erickson adds. “I don’t think digital downloads [will be] a threat to physical media anytime soon,” he says. Further, Bottoms of Understanding & Solutions says, “The disc format, in any form, remains the most consumer friendly, cost-effective, durable and convenient method of delivering such large amounts of data or high-quality video content. Its physical presence gives it a ‘gifting’ edge over digital delivery, as most consumers still favor the tangible nature of packaged media when buying entertainment content to pass on.” Scott Hettrick is a former home entertainment editor of Variety and former editor in chief of Video Business. 12 IT’S BLU February 2008
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