More Blu-Ray Blues?

Last week, the analysts at iSuppli, a market research firm in southern California, asked the question: "Toshiba's HD-DVD Exit: a Pyrrhic Victory for Blu-ray?" They went on to say this:

However, after years of a standards war, the major question for Sony Corp. and the Blu-ray camp is whether a physical format for high-definition still has any relevance to consumers in this era of Internet-delivered movies and video on demand.

"The demise of HD-DVD will reduce consumer confusion, since everyone will talk about a single next-generation DVD player and the benefits of owning such a player," said David Carnevale, vice president of multimedia content and services at iSuppli Corp. "But the biggest question of them all now is: Do consumers even care?"

Here at Spectrum, we try to control our fits of self-congratulation, but it's hard not to notice that we made the very same prediction a month ago, in a radio segment that aired on the public radio show, Here and Now. If you subscribe to Spectrum Radio, a copy is already on your iPod. If not, the podcast, "No More Disks?" is downloadable here. (If you'd like to subscribe, the RSS feed is here.)

Our reasoning was pretty much the same as iSuppli's. Theirs went like this:

During the years while the DVD war raged, online services - from iTunes, Amazon and others - have gained traction and now offer numerous movie titles, television programs and other content, all in a digital format downloaded directly to a consumerâ''s PC or portable device and now, on their television with products like Apple TV and Sonyâ''s Bravia Internet Link.

This begs the question: Do consumers even want or need a physical copy of their movies or TV programs anymore?

Our podcast concluded on a similar note:

So, do we really need to trudge out to Blockbuster, Best Buy, and Wal-Mart for a disk? Or wait for the now-familiar red envelope from Netflix? A lot of companies, including Apple and Netflix itself, are betting no. Sony and the studios hope they're wrong. But my bet is they're not.

iSuppli also looked at Blu-Ray's current high price, which isn't about to plummet now that it has the market to itself.

Blu-ray DVD players now sell for about $400. In contrast, a decent standard-definition player is priced at about $60Ë'a huge difference for Blu-ray to overcome. Furthermore, upconverter DVD players, which translate standard-definition DVD content to 720p resolution, are becoming commonplace. With these players priced at about $100, cost is likely to be an area where Blu-ray will continue to struggle.

It's not as if, however, no Blu-Ray drives are going to be sold, and iSuppli had some interesting numbers along those lines.

iSuppli's present forecast, developed before the news from Toshiba, calls for worldwide blue-laser DVD player shipments, i.e. Blu-Ray and HD DVD, to rise to 45.4 million units in 2011, up from 6.6 million in 2008. This figure excludes PCs and game consoles.

Shipments of blue-laser recorders will rise to 6.6 million units in 2011, up from 500,000 in 2008. However, the total of both players and recorders in 2011 will fall far short of the peak shipments of the older-generation red-laser players and recorders, which amounted to 156 million units in 2006.

My own prediction is that while the transitions from analog to digital television and from standard- to high-definition are logically distinct, the first is going to inspire a lot of the second. So I think we'll see a lot more Blu-Ray players sold in calendar 2009. They'll never be as cheap, or ubiquitous, as standard DVD players are today. But that's okay. DVD was arguably the fastest-selling consumer electronics category of all time.

By the way, it can't keep up, relying as it does on early adopters, but according to Displaysearch, another market research firm, the high-def DVD market has, to date, grown even faster.

To paraphrase Margo Channing in All About Eve - which, by the way, is already available in high-definition - fasten your couch's seatbelt, the high-definition video market is going to be a bumpy ride.

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