Blu-ray Set to Take Over in Europe

While sales of Blu-ray players remains relatively sluggish in North America, sales of the format are heating up in Western Europe. In fact, research company Futuresource Consulting reveals that sales of Blu-ray players are actually ahead of where sales were for the standard DVD format when it was at its same point of introduction into the market.

Futuresource anticipates that more than 10 million Blu-ray players will be in use by the end of 2008. By contrast, only 1.5 million DVD players were in homes by the end of the third year that this format hit the market. Going forward, the company sees Blu-ray performance out-doing DVD consistently, with almost double the growth in year 5; closing at just slightly higher in year 6 (45 million units shipping in 2011 vs. 37 million shipped for DVD in 2002).

Naturally, we have to take the Sony PlayStation 3 into consideration, which is purchased as a gaming system first and foremost, with the built-in Blu-ray player as merely a secondary feature (for the majority of consumers, at least).

"The timing of the PS3 launch has clearly provided a big boost to the initial uptake of BD," explains Jim Bottoms, MD Corporate Development at Futuresource. "With a number of hot titles now starting to emerge and console prices continuing to fall, we can expect to see continued strong uptake."

Bottoms also notes that the competitve nature of retailers trying to get as much market share in the category as they can is also helping sales. Not only are retailers exposing consumers more and more to the technology, but product pricing is also coming down, making Blu-ray a more affordable option to the every day customer.

This is impressive news for the Blu-ray camp. Hopefully, in time, we'll experience the same sort of growth in North America. Bottoms is confident that Blu-ray will eventually "mirror the trend we saw with DVD players replacing CD decks." We may be closer to that time than we think.

Blu-ray Awareness Picking Up

As more and more consumers in the U.S. are jumping on the HDTV bandwagon (especially in wake of the country's transition to digital TV), the familiarity with Blu-ray is also increasing. The NPD Group reports that awareness in the technology has jumped 10% in the past year, from 35% to 45% of HDTV owners. Despite this, only 6% said they would buy a Blu-ray device in the next 6 months (9% for existing HDTV owners).

"With HDTVs now in approximately 40 million U.S. households, that percentage translates to a pool of almost 4 million potential BD player buyers," said Russ Crupnick, Entertainment Industry Analyst for NPD.

The study reiterates what many others have said over the past few months: that customers are still quite happy with their standard-definition DVD players. However, as the life-cycle of these devices come to an end, it's safe to assume that many of those looking for a replacement will invest in a Blu-ray player rather than another standard DVD product. This will rely, of course, on the hope that, by then, the pricing of both Blu-ray hardware and software comes down to a point that the average consumer deems the technology an "acceptable" alternative.

In the meantime, what can retailers and manufacturers do to help ramp up interest in the category? The first recommendation is obvious: demonstrate the benefits of Blu-ray over standard-def fare in your store via a side-by-side comparison. What would make most sense is to do so with an upconverting standard DVD player rather than an old, $50 model: using the latter will only convince the customer that you think he's an idiot. Any consumer that's really interested in getting the best picture quality will need to be convinced that Blu-ray is better than a higher-end upconverting player.

The second recommendation is to offer incentives. People love free stuff, so to include a Blu-ray movie or two with the purchase of a Blu-ray player, or, in the retailer's case, to offer in-store promotions, could help bring attention toward the product category.

Third, make the products easy to use, and tout those features. Consumers that are interested in high-quality video but aren't exactly technophiles, might worry that a Blu-ray player is too complex for them to understand how to use. Show them that this isn't the case.

Finally, carefully outline what is required to fully enjoy a Blu-ray player (i.e. an HDTV and Blu-ray discs; not to mention a favourable audio system) so that your customer doesn't go home disappointed. More important, explain what he can't use one for (e.g. to play old HD DVDs!)

Over time, Blu-ray can make it to become the Compact Disc (or should I say digital download?) of the video world.

HD DVD is Gone, But Has This Really Helped Blu-ray?

It has been more than two months since Toshiba officially announced the end of the high-definition DVD format war by halting production of HD DVD players. The Blu-ray camp sighed a big sigh of relief, and poised itself for an increase in sales. But has Blu-ray really benefitted from winning the format war?

According to a recent study by The NPD Group, it hasn't; or at least not yet. Sales of Blu-ray players actually dropped 40% from January to February in the U.S. From February to March, during the time when the "war" had officially been declared over, there was only a 2% increase in sales.

"That standalone Blu-ray players haven't picked up significantly from HD DVD's loss shows that few consumers were dissuaded primarily by the 'format war'," declared Ross Rubin, Director of Industry Analysis, NPD. "When we surveyed consumers late last year, on overwhelming number of them said they weren't investing in a next-generation player because their old DVD player worked well and next-generation players were too expensive. It's clear from retail sales that those consumer sentiments are still holding true."

I've long said that, rather than focusing on becoming the winning format, both camps should have been more focused on convincing the customer that he needs to upgrade to an HD source, period. Either way, price will remain a factor with budget-conscious customer; not just of the Blu-ray hardware devices, but also software, which are often times almost double the price of a "regular" DVD movie. In fact, I think if the price of software were to drop down to become in line with standard DVDs, more people might be willing to fork over the extra dough for the player.

Interestingly, NPD notes that many consumers who are interested in a better viewing experience are quite content with upconverting DVD players. Sales of these such devices grew 5% during the first quarter of 2008 compared to 2007. Meanwhile, regular DVD player sales dropped a whopping 39%.

Nevertheless, it's only a matter of time before consumers finally pick up on high-definition DVD. Many are already enjoying HDTVs and high-definition TV viewing, so high-def DVD is naturally the next step in the equation. It's also important to note that this study only looked at standalone Blu-ray players: devices like the Sony PlayStation 3 gaming console, which includes a built-in Blu-ray player, has been selling like hotcakes!

HD DVD: The Fat Lady has Sung

As reported here and then officially here on our sister Website, the fat lady has finally sung, so to speak, and we've reached an end to the high-definition DVD format war. Simply put, Toshiba will stop production of all HD DVD products next month.

What does this mean for those consumers who have already purchased an HD DVD player or recorder? Perhaps the tiny, $130 player for the Xbox 360 gaming console? Or even a notebook PC with an integrated HD DVD drive? You'll still be able to continue playing discs you already own and any ypu purchase between now and the day they're removed from store shelves. And Toshiba says it will continue to honour product support and service, which is reassuring for those who want to get some life out of their investment.

Although you might think purchasers are slamming doors in anger at buying what will soon be an obselete technology, that doesn't appear to be the case. Most people who purchased HD DVD were fully aware that the technology might not "win". And in fact, I know some who are just waiting for discs to start "blowing out" at retail so they can stock up on a collection at an affordable price. Of course this collection will likely be collecting dust 20 years from now, but hey, you can take a piece of history with you.

Of course, as I've mentioned time and time again, just because a clear "winner" has been named, it doesn't mean that consumers will be running out in flocks to grab a Blu-ray player. Sure, there are smart-minded, tech-savvy individuals that have been waiting for the war to be over before dropping a half a grand on a player and some movies. But there are still plenty of others that stare blankly at the Blu-ray section in a store scratching their head trying to figure out what this Blu stuff is all about. One retailer once told me that customers were buying HD DVDs and trying to play them back in a Blu-ray player thinking they were "all the same" (and vice versa); while another noted that many customers thought they could just plop a Blu-ray or HD DVD disc into a "regular" DVD player and it would instantly display better quality images. So don't be fooled: we still have a long way to go.

Research company DisplaySearch echoes this sentiment.

"...Even if all HD DVD products were removed from retail shelves today, the average consumer still will not be buying Blu-ray hardware and software in mass quantities for some time," says the company.

With that said, Toshiba will easily pick itself up and move on. As for those in the Blu-ray camp, congratulations on the victory. It's likely that we'll see plenty more Blu-ray and Blu-ray-compatible products coming down the pike in 2008.

Wal-Mart U.S., Canada Supports Blu-ray!

The format war may officially be over. Wal-Mart in the U.S. has announced that it will be phasing out HD DVD players and software titles over the next coming weeks, and a spokesperson from Wal-Mart Canada tells me that stores north of the border will indeed be following suit.

"We are adopting the same decision here," said Wal-Mart Canada's Manager of Corporate Affairs, Karin Campbell. "As a result of customer feedback, we have decided to move toward offering the Blu-ray format only."

Campbell says that all HD DVD products will be sold and gradually phased out of stock over the next few weeks.

"We believe that this will help make the customer purchase decision easier," she added.

And for those who haven't yet taken the plunge, Campbell reassured that Wal-Mart would continue to stock "regular" DVDs and players. However, with the format war slowly coming to a close, we'll likely see more and more customers jumping onto the high-definiton DVD platform this year.

We won't call it a tried and true victory until, as they say, the fat lady sings. But it sure looks like she's taking a deep breath to belt out a big tune very, very soon.

Best Buy Next to Support Blu-ray - Canadian Update!

In the previous post, I discussed how U.S. Best Buy stores have decided to support the Blu-ray high-definition DVD format going forward, continuing to offer both Blu-ray and HD DVD products, but with an increased focus on Blu-ray. Well, this situation isn't the case in Canada.

Spokespersons from both Best Buy Canada and Future Shop tell me that Best Buy and Future Shop stores in Canada will not be following suit at this time, and will continue to support both the Blu-ray and HD DVD high-definition DVD formats.

"Future Shop will continue to carry both formats to meet the lifestyle needs of our customers," were the exact words of a Future Shop spokesperson.

This is surprisingly, since Best Buy Canada and Future Shop stores are owned by Minneapolis, MN-based Best Buy. But perhaps the landscape in Canada is different, and Canadian consumers haven't made a clear format preference. If you walk into any Best Buy (or Future Shop) store here, you'll see one side of Blu-ray discs, and one side of HD DVD. Players are also equally out in full force, with HD DVD players arguably more prominent, given the relatively cheaper pricing.

Judging from the U.S. announcement, we won't see such equality south of the border come March. I'm not sure how they plan to display Blu-ray more prominently: perhaps by having Blu-ray discs on a pedestal and HD DVDs in a bin? But with arguably more titles and players available in the Blu-ray format, it only seems logical that Blu-ray would be displayed more prominently regardless of whether a conscious choice was made to do so or not.

Stay tuned for more information as the format war continues.

Best Buy Next to Support Blu-ray

According to Reuters, Best Buy U.S. has announced its support for the Blu-ray disc format. Oddly, however, the mammoth retailers hasn't abandoned HD DVD altogether. Best Buy says it will still offer HD DVD discs and hardware for customers who prefer that format; but will more prominently feature Blu-ray products. The changeover will happen next month.

Whether HD DVD products will still be on shelves or not, Best Buy has clearly made its decision to back Blu-ray in an effort to put an end to the dragging high-definition DVD format war.

Will consumers view this as Blu-ray being deemed the winner? Or will they remain unconvinced, waiting until all retailers, manufacturers, and studios decide to stock and create hardware and software in only one format before taking the plunge? It looks like we're inching closer and closer to an answer.

On the Canadian front, due to the time difference, I was unable to receive clarification in time from Best Buy Canada (and Future Shop) on whether stores north of the border will follow suit with the decision to support Blu-ray. Stay tuned for a follow-up post!

Toshiba, PS3 Lead High-Def DVD Race

According to DisplaySearch, Toshiba led the pack in standalone high-definition format DVD players for the first three quarters of 2007, accounting for 64% more units than all of the Blu-ray manufacturers combined! The research company attributes this to aggressive pricing and promotions, and I'd have to agree: a $99 high-definition DVD player is indeed pretty aggressive! But really, what does this mean? Despite the favourable numbers, the HD DVD format is still dealing with the recent blow from Warner, which decided to exclusively join the Blu-ray camp.

Interestingly, though, DiplaySearch also reports that gaming console hardware, not standalone players, were the dominant shipped high-definition DVD product through most of 2007, accounting for 85% of all global shipments between Q1 and Q3 2007. What's more, revenue growth was more than three times that of standalone players between Q2 and Q3 of last year.

In the case of Blu-ray, it's safe to assume that the majority of PlayStation 3 purchasers bought the console to play games, with high-def movie watching as simply an added bonus (the PS3 has a built-in Blu-ray player. To achieve HD DVD playback on an Xbox 360, one requires a separately purchased player that connects to the console). Nevertheless, sales of the PS3 helped skyrocket Sony into the number-one spot worldwide for Blu-ray players, with the firm having achieved a whopping 97% share in the first three quarters of '07!

Overall, North America accounted for 80% of the worldwide market for high-def DVD hardware in Q3 2007. Worldwide, Sony, Toshiba, and Microsoft made up 98% of high-definition DVD hardware shipments, leaving all the others to fight for that remaining 2%.

Paul Erickson, Director of DVD and HD Market Research at DisplaySearch reinforced a point I've made in earlier blog posts: that the two competing formats (Blu-ray and HD DVD) not only have to compete against each other, but also against the "standard" DVD format, which many consumers are still quite content to enjoy.

"Due to consumer price sensitivity and satisfaction with regular DVD in North America," he said, "the substantial growth needed for next-generation DVD to grow beyond a niche market dominated by consoles will require time, persistence, and aggressive pricing. This is expected to be a dynamic that will persist regardless of whether the market consolidates around a single format, or continues onward with the status quo."

I couldn't have said it better myself. Let's focus on ways to make the players and, even more important, the software titles, more affordable; and added-value features more enticing...not just from one format versus the other, but in relation to the standard DVD experience.

Keeping Track of the High-Definition DVD Format War

Trying to keep track of the high-definition DVD format war is like trying to keep tabs on the invisible man: it's a constantly moving target, and I have no idea where each format is at any given time. Sales of hardware and software, market penetration, movie studio and retailer support, all of which will help determine a "winner", are all consistently shifting. Not to mention that, depending on the source, different numbers are reported everywhere.

Hardware sales in one country are higher for X format; but if you look at numbers from a specific region, Y format is actually doing better. Meanwhile, software sales for one format in a particular store are triple that of the other format; but sales in a much larger retail outlet are double, which equates to much more when you look at the bottom line. It's like high school math problems all over again!

With that said, I thought I'd add some fuel to the fire, and increase the complexity of this math problem. The latest numbers I've received (from the RetailBRIDGE) say that the North American HD DVD Promotional Group is reporting that 750,000+ HD DVD players were sold in the U.S. this past Black Friday weekend. This includes both standalone players (like the one that was selling in Wal-Mart stores for US$99!) as well as the add-on drive for the Microsoft Xbox 360 gaming console.

I haven't heard any comparable figures about Blu-ray player sales throughout the weekend, but I'm sure they're similar in some fashion. It will be interesting to see how HD DVD and Blu-ray software titles sold during the weekend, especially since the National Retail Federation claims that books, CDs, DVDs, videos, and video games accounted for 41.7% of purchases that weekend.

As for the format war itself, if this busy, holiday shopping season doesn't put an end to the fight come early 2008, I don't know what will. But I might just have to track down my old math teacher for some help in figuring out which format is actually in the lead.

Could New HD Red-Laser Disc Blow Blu-ray & HD DVD Out of the Water?

Wouldn't it be interesting if, after a year-and-a-half or so of the Blu-ray and HD DVD high-definition DVD formats duking it out for market domination, someone came up with a way to create high-capacity, standard red-laser discs? The existence of such a technology might not be as far off the horizon as you think.

According to Display Daily, a London, England-based company called New Medium Enterprises (NME) Ltd. has developed what it calls the HD-VMD disc (the "VMD" stands for "versatile multi-layer disc") that can store up to 30 GB worth of content using the same processes used for creating standard DVDs.

This means that you can watch HD movies using your trusty, old DVD player (with a firmware upgrade, of course), plus "other off-the-shelf technology". Display Daily reports that, because the discs rely on the same processes currently used to create DVDs, the cost of each disc would be much lower than what one might pay now for a Blu-ray or HD DVD disc (of course it would, in turn, be higher than what you pay for a standard DVD). NME plans to launch a pair of players and discs of the new HD-VMD format next month.

If this technology lives up to its promises, it could mean an end to the format war once and for all. Ironically, it would also bring everyone right back to where we started, with the standard red-laser disc format. Essentially, two camps have been working furiously to find new methods and standards of fitting more information on a disc, offering neat, interactive features, and creating highly-advanced players, only for someone to come out and squash the whole thing by simply finding a way to update the already existing, tried-and-true, method. Of course, we'll just have to wait until next month to see how well HD-VMD performs, and how practical it is to implement. But my question is: why didn't someone come up with this in the first place?

[Photo: The ML 622S HD VMD Multilayer Player from NME Inc. claims to be able to play back high-definition, 1080p content via HDMI, and using the Sigma Designs EM8622L chipset. It can also read all types of disc, including standard DVD, CD, and even MP3 discs; and can playback MPEG-1/2/4, VC1, WMV9, and H.264 video; as well as JPEG and BMP photos. Data transfer rate is 45 Mbps. It is scheduled for availability in the U.S. in Q3 for US$199, and will come in a choice of black, red, grey, or white finish.]