From The New York Times - December 14, 2009
By ERIC A. TAUB
Blu-ray, a high-definition variation of the DVD format introduced three years ago, was initially met by a collective shrug from most consumers. Who needed another black box to connect to the TV, the thinking went, even if it did promise to play movie discs in clear, crisp high-definition?
But this year, even as the country moves tentatively out of a recession, consumers are buying the devices at a faster pace than they bought previous generations of movie players like the VCR and the DVD player. Analysts predict that sales of Blu-ray machines will be up 112 percent over last year, one of the true bright spots in retailing this holiday season.
Blu-ray’s household penetration is higher than that of DVD for the same period after introduction, according to Shawn DuBravac, chief economist for the Consumer Electronics Association. Three years after introduction, Blu-ray stand-alone players, which excludes Sony’s PlayStation 3 game machines that also play Blu-rays discs, are in 7 percent of American homes.
Amazon.com reports that sales of Blu-ray players are outnumbering those of standard DVD units, according to Paul Ryder, the company’s vice president for consumer electronics. Among the top 10 disc players sold, eight were Blu-ray, and five of the top 10 movie titles sold were in the Blu-ray format.
At a Best Buy in Thousand Oaks, Calif., small mountains of Blu-ray players are stacked seven units high wherever flat-panel TVs are on display, while the handful of standard DVD players are in a distant aisle.
The main reason for the shift in thinking is right there on the stacks of Blu-ray players that Best Buy has piled at its video wall. Prices for high-quality models have dropped below $150, a steep drop from the $300-plus that retailers were charging when Blu-ray had its debut.
“The price for an impulse buy is under $100, and we’re getting there,” said Andy Parsons, president of the Blu-ray Disc Association, a trade group.
Amazon’s best-selling Blu-ray model, Panasonic’s DMP-BD60, is available for $129, while a no-frills Magnavox Blu-ray player is on sale at Wal-Mart Stores for $78.
“We’re sanguine about Blu-ray taking over as the physical disc format of choice,” said Tom Adams, the president of Adams Media Research. “The differences in cost between DVD and Blu-ray players and software is going away. So there will be a natural evolution from standard DVD to Blu-ray.”
It also helps that more Americans now have 1080p HDTV displays, sets with sufficiently high screen resolution to fully display the clarity of a Blu-ray disc. Forty percent of all TVs sold are 1080p, according to Riddhi Patel, an analyst at iSuppli. She says that number should rise to 46 percent next year.
In addition to superior picture quality, Blu-ray also offers features not available on standard DVD players, like pop-up menus during play. Some Blu-ray players can also connect to the Internet; the player can then receive additional information about a movie, offer movie-related games, provide updated trailers, and allow friends to simultaneously watch a film while writing comments on screen.
The newest generation of Blu-ray players lets viewers receive streaming movies and TV shows from online providers like Amazon Video on Demand, CinemaNow, Netflix and YouTube.
As a result, Blu-ray manufacturers have placed themselves in a seemingly awkward position: They are selling a device that relies on people to continue to buy discs, but the same device gives them a way to download videos — bypassing the discs the machines were built to play.
Consumer electronics companies believe that this strategy makes sense. The additional programming will add to the Blu-ray experience, executives say, which still offers superior picture and sound quality to what can be currently streamed over the Internet.
And since most HDTVs do not yet come with their own built-in Internet capability, a Blu-ray player can become an inexpensive but essential all-in-one content source, according to Todd Richardson, senior vice president for P&F USA, the marketing arm for Philips.
“These services are supplemental. They fill out the consumers’ demand for more and more content,” added Tim Alessi, LG’s director of new product development.
Yet, as high-speed broadband becomes ubiquitous, the ability to quickly download Blu-ray-quality content will become a reality. That day is probably 10 years off, according to Ross Rubin, an NPD Group analyst, as physical discs continue to provide a higher-quality image and an easier way to move programming throughout the house than by trying to create an in-home network.
But the consumer electronics industry is no stranger to product life cycles and planned obsolescence. Already, manufacturers are readying a new line of Blu-ray players and TVs that can display video in 3-D. They should be in place by next year’s holiday shopping season.
Now all we need is the pricing of Blu-ray software to be on par with SD-DVD's.