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!

Falling CD Sales, P2P Sites Still Plague Music Industry

A new study conducted by The NPD Group confirms that CD sales continue to fall, and peer-to-peer download Websites remain a problem for the music industry's profitability and sustainability. According to the research group, U.S. consumers acquired 6% more music in 2007, but music spending overall was down by 10%, from US$44 per capita to US$40.

Why? Even though the number of Internet users that engage in P2P downloading remained flat at 19%, the number of files each person downloaded went up. What's more, the habit is becoming increasingly popular among the teen and "tween" crowd.

Making the situation even worse, NPD says that approx. one million customers completely stayed away from buying physical CDs in 2007. Almost half (48%) of teenagers said they did not buy one CD throughout the entire year!

Despite the grim outlook, there is a small silver lining. NPD reports that legal music downloads were up 5% when compared to 2006, representing 10% of music sold in 2007, with 29 million U.S. customers having obtained their digital tunes legally. Not surprisingly, Apple's iTunes service led the pack. But what is somewhat surprising is that iTunes was the second most popular spot to obtain music overall, overcome by only Wal-Mart!

If that isn't a clear indication of the direction the market is going, I don't know what is. The world's largest retailer sold the most music, which makes perfect sense. But to say that a digital download service rather than a traditional retailer came in second is an incredible achievement.

Now that the mistake-that-is DRM restrictions is slowly fading to oblivion, we might see interest in legal download sites rise this year. If the industry stops trying to find bundles and wonky subscription rates/plans and just focuses on giving customers tunes they want for a set price (either individually or by album), this would be a good start. Buying music digitally should be just as easy as it is to buy a physical CD. I just want to buy good quality tunes that I can play anywhere I want. No bells, no whistles, and no restrictions.

Video Gaming Stronger Than Ever

What is it about video games that has such appeal among people of all ages? Is it the feeling of comraderie? The reported development and stimulation of hand/eye co-ordination? Or the aspect of competition, perhaps? Whatever it is, video gaming is a burgeoning industry, with The Retail BRIDGE reporting US$17.94 billion in sales for 2007, rising 43% from the year prior. According to figures cited from the NPD, the video game industry rose 28% during the month of December 2007 alone, reaching a record US$4.82 billion.

Of those people I know who actively engage in video game play, the majority are surprisingly not kids, but rather grown men. Some use it as a way to unwind after a hard day's work; while others enjoy a game or two in the company of friends. Others yet use video gaming as a way to keep in touch with friends and family who, due to the constraints of adult life and location, they can't catch up with face-to-face. With Internet connectivity available with the most advanced gaming platforms, someone in Canada can shoot, fight, and drive his way to virtual glory with a friend or family member somewhere across the world. And why talk by telephone or type an e-mail when you can race your buddy through curvy and dangerous roads on-screen, or work together to conquer aliens in a virtual world while chatting through a headset?

The Retail BRIDGE goes on to report that video game software sales rose 33% in 2007 to US$8.62 billion. This isn't hard to believe. I often see or hear about an avid game player buying an $80 video game one day, only to complete it by the next (after playing continuously for hours on end, no doubt). With a new game purchase every few weeks, well, you do the math.

Word of mouth works wonders as well, and with new and highly-anticipated titles coming out all the time, there's no surprise that gamer's wallets keep opening to jump on the newest and most exciting game train. Not to mention that with the appeal of the aforementioned Internet connectivity options, each friend and family member has to own the game in question in order to participate. This means that one gaming session can easily translate to 5x the sale.

We've heard the video game debate over and over when it comes to kids and teens, but here's an interesting question: what about adults? Are video games bad for the 30+ crowd? On the one hand, there's nothing wrong with engaging in fun activity every now and then, and it can actually help someone relax from a stressful day. Stereotypically, women shop and get their hair and nails done while men watch football and play video games, right? But on the other hand, too much of anything can wreak havoc in one's life.

The same rule applies to this past-time as does to any other: anything in moderation is a-ok. And with consoles like the Nintendo Wii becoming increasingly popular, gaming is more often than not a family activity rather than a solitary pleasure, meaning that it can even be used as a means to bring everyone together.

With that said, the video game industry is likely poised for further growth in 2008. Whatever this industry is feeding consumers, no doubt that it's working wonders.