Home Media Magazine - December 30, 2007 - January 5, 2007 - (Page HD9)

studio roundtable TO 2008 this bolsters Blu-ray’s presence and prominence at retail, where the format and the consumer meet. Steve Beeks: We are very confident that 2008 will be, if not a breakout year, then a solid year for Blu-ray, which will be a big growth driver for the packaged-media business. With hardware prices coming down, and sales of PS3 now taking off, we think you’ll see a big bump in Blu-ray Disc sales almost immediately. Kelley Avery: The increased number of HDTV households, the significant price reductions on hardware, and the increasing number of broadly appealing titles, such as Transformers, available on high-definition have the potential to make consumer adoption a logical and affordable choice in 2008. Steve Einhorn: It is estimated that, by the end of 2007, HDTV will have a 36% U.S. household penetration. Clearly, consumers are very enthusiastic about upgrading to a world of high-definition and are hungry for high-definition content delivered over the air, in physical media and electronically. We are looking forward to next year as the installed base of HDTVs reaches mass-market levels and continues to grow. I HM: Some said Q4 2007 was supposed to be the breakout time, and Q4 2006 before that. Why are things taking longer than projected? Craig Kornblau: Pricing is a critical factor for consumers, and we’re just now seeing prices come down to a level that’s appealing to a mass audience. There’s still a lot of consumer education that needs to take place, but we feel we’re on the right track. Einhorn: Dueling formats have restrained our ability to launch large-scale, industry-wide marketing initiatives directed toward providing high-definition disc and hardware purchasers with the simple, direct and compelling story required to drive consumer interest and packaged-media sales to the next level. Bob Chapek: Our year-end numbers show that studios, retailers, manufacturers and consumers are committed to Blu-ray Disc and its superior technological advancements. And it doesn’t stop there. The film and entertainment industry also is supporting it. As director Michael Bay himself says, “As a director, my critical eye is that Blu-ray is where my money is.” Avery: We always knew that communicating the benefits of highdefinition would take time, given consumers’ continuing satisfaction with DVD. The adoption rate of HDTVs clearly indicates that consumers crave high-definition content, so the groundwork has been well established. Dunn: Rather than collectively educating consumers, as the industry did with DVD, we’re embroiled in a manufactured format war that is slowing uptake to a degree. That said, this past fourth quarter was incredibly strong for Blu-ray hardware and software. Conversely, and interestingly, some of the blowout pricing seen by the other format appears to have been counterproductive, as software sales showed no dramatic increase. I HM: Studies have found that consumer indifference is the reason more consumers have not bought high-def players. What needs to be done to get consumers to understand the benefits of HD media? Chapek: The industry and Disney, especially, are invested in educating consumers’ perceptions through facts. For example, Disney and Panasonic recently teamed and launched The Disney Magical Blu-ray Tour. Dunn: The price of a high-definition player is not the primary consumer concern compared to what households will spend building a movie library. We need to instill consumer confidence that current and future software investments are safe. Blu-ray is “future proof” technology with the capacity to grow and evolve, rather than one that faces near-term obsolescence. Continued on page 12 » Winter 2007/2008 HOLLYWOOD goes HIGH-DEF 9

Table of Contents Feed for the Digital Edition of Home Media Magazine - December 30, 2007 - January 5, 2007

Contents News Commentary TV DVD Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Hollywood Goes High-Def

Home Media Magazine - December 30, 2007 - January 5, 2007

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