Originally Posted by Bill Hunt from The Digital Bits

All right... let's talk Blu-Con 2.0. The event was held on Tuesday up at the Beverly Hilton, and it was at least 3 or 4 times bigger than last year's event - no doubt a reflection on the end of the format war and the format's growth. I moderated a panel discussion last year on BD special feature production at the event, and was set to do another this year with a trio of well known directors, but one (?) was never locked down, which caused another (McG) to flake, resulting the third (John Singleton) to flake as well. Ah well. Hey... I wasn't coordinating this stuff, and not doing the panel was actually nice, because it gave me the chance to really sit back and soak in all the day's information (and there was a LOT of information, as you'll soon see).

Very senior representatives were on hand from the home video divisions of all the major studios, as were the same from all the major consumer electronics manufacturers involved with the Blu-ray format. Also on hand were engineers, authoring, mastering and replication folk, content producers, industry analysts, select media - you name it. The number of these people whom I've gotten to know over the last decade is quite high, so in many ways it felt like old home week or some kind of DVD industry class reunion. I've always enjoyed that aspect of these events.

As I mentioned, a TON of interesting Blu-ray statistics, market research and "state of the industry" type information was revealed at the event, so I'm going to take up most of today's post to run it all down. Note that this information comes from a variety of sources: The DEG, CEA, specific retailers, a little from the BDA and much from various market analysis firms (InStat, Adams, etc). Where possible I've tried to note the specific source, but the info came pretty fast and furious. None of it was considered controversial or suspect, so I have no reason to doubt it.

Ready? Here goes...

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Expect holiday Blu-ray player prices to be around $99 for profile 1.1 players and $149 for profile 2.0 players. SOME of the 2.0 may be as low as $99. That's considered to be the mass market price needed for sales to really start breaking out in 2010.

Blu-ray customer satisfaction: 90% of Blu-ray owners are very happy with the format and 85% would recommend it to a friend.

BD software sales are up 80% for the first three quarters of 2009 over the same timeframe last year.

For the biggest blockbuster titles, as much as 30% of all disc sales have been on Blu-ray.

Best Buy is expecting 95% U.S. household penetration of HDTVs by 2013. The CEA (Consumer Electronics Association) predicts the 60% penetration by the end of this year.

CEA: Despite popularity, DVRs are still only in about 30% of U.S. households.

Best Buy believes that software pricing and perception of value is going to be key in driving Blu-ray into the mass market. Adding DVD and Digital Copy to BD packages is good, but charging a premium for that is not.

Blu-ray player sales are growing faster than any other electronics category, and the initial 4-year period of Blu-ray player sales growth is matching or exceeding that of standard DVD during its first 4 years.

Best Buy expects as many as 10 million BD players to be in U.S. homes by the end of this year, and predictions are that 18.6 million will sell by the end of 2010. (Includes PS3).

Consumer awareness of Blu-ray is a key area the industry needs to work on. Best Buy research shows that only 32% of its consumers are familiar with Blu-ray this year, up from 29% last year and 19% in 2007.

The good news is that 60% of consumers who are familiar with Blu-ray have at least some intent to purchase the format in the next year, especially if the price is below $150.

Research indicates that Blu-ray players' backwards compatibility with DVD is a mixed blessing - most people who have purchased Blu-ray players still purchase at least 1/3rd of their movie titles on standard DVD. HOWEVER, as Blu-ray software prices drop, there's no reason to believe that Blu-ray won't be 100% of the mix at some point in the next few years.

Consumers consider some titles worth buying and owning on Blu-ray, while other titles are considered best as rentals or DVD purchases only (at the existing software price points).

Adams Media Research is confident that Blu-ray will eventually take over from DVD as the playback format of choice for home video, but Blu-ray sales will probably not completely offset DVD sales declines.

The Consumer Electronics Association has been tracking Blu-ray sales and says they're exactly where they expect them to be compared to the sales trends for DVD at this same point in that format's life. Year 4 was the breakout year for DVD, and we're just now going into Year 4 for Blu-ray. They believe the hardware price point - under $150 - is exactly where it needs to be for Blu-ray to break fully into the mass market. The expectation is that 2010 WILL be the breakout year, barring additional economic shocks.

According to CEA research, Blu-ray has made the Top Ten list of "devices people want" for the first time this year.

CEA: 2.7 million stand-alone Blu-ray players were sold in the U.S. last year. 3.7 have been sold so far this year, and 40-50% of all sales for the year happen in the 4th quarter, so CEA believes we could easily see the final total of BD stand-alone players sold in 2009 hit 6 or 7 million units. The number could go as high as 10 million, depending on supply and retailer aggressiveness.

CEA: PS3 sales were surpassed by stand-alone BD players for the first time in 2009.

CEA: Blu-ray players are still considered an early adopter product, but that's starting to change this year and there's tremendous growth potential.

Most Blu-ray players that are network-capable STILL aren't connected to the Internet. Convincing people to connect their players to the Net will continue to be a challenge, and must be addressed with wireless modems and a much easier process.

Consumer home video "transactions" were actually up 7% in the 3rd quarter of this year, but actual sales were down 2-3% (reflecting price discounting).

Universal figures that 10% of its customers for movie discs are major collectors, and they're still willing to buy - especially premium product like Blu-ray in collectible packaging.

During the studio panel, the studios could not talk in detail about pricing because of anti-trust considerations, BUT... all agreed that software pricing is going to start coming down soon reflecting pressure from both consumers and retailers to get Blu-ray software priced at a more mass market friendly level. This could start happening as soon as the holidays this year.

The rate of catalog releases on Blu-ray is going to increase in 2010 - particularly Universal suggested that they were going to get more aggressive with their catalog release plans on the format in the year ahead.

The growth trends in home video are going to be Blu-ray, VOD (Video on Demand) and EST (electronic transactions). Digital Copy will gradually evolve such that everyone will eventually have a "locker in the cloud" where they can store digital movie files they've purchased, and all of a person's consumer media devices will be able to "reach up into that cloud" to access the material. The "locker" will also provide security against data loss. But for the foreseeable future, none of this will have the quality level of Blu-ray and avid movie fans and collectors will continue to prefer the physical product. A key idea is to do more bundling, so when you purchase the Blu-ray you also get a DVD and some kind of portable digital version.

One "rental" idea that's being explored is the notion that you could purchase a digital file version from a retail kiosk - you could load it onto a flash drive right in the store and take it anywhere - but there are many technical and security-based hurdles still to overcome.

Regardless, physical product isn't going away. The future is going to be a combination of all three - Blu-ray, VOD and EST - and they should complement each other.

Overall home video sales were down in 2009 because of the recession, but not as bad as late 2008. There are signs that the market is slowly starting to recover. 2010 is expected to be still slightly down (but not as bad as 2009) or even flat. 2011 could start seeing stronger recovery. Studios are cautiously optimistic going into the holiday season.

Sony says that 9 million PS3s will be in consumer homes in the U.S. by the end of the year - 27 million worldwide.

1 million PS3 units were sold globally within 3 weeks Sony's price drop.

90% of PS3 owners watch Blu-ray movies, and 55% prefer Blu-ray over DVD. 39% of them always choose Blu-ray over DVD.

Sony is launching its largest advertising campaign ever for the PS3 in late November, which will strongly emphasize its Blu-ray playback capability.

Sony's PS3 streaming deal with Netflix will start this month. The monthly fee will be $8.99 per month (streaming + DVD rentals) or there will be a Blu-ray deal for $10.99 per month (streaming + Blu-ray rentals).

Sony and Netflix firmly believe that Blu-ray and streaming can coexist - they're largely different customer bases - collectors and enthusiasts versus renters and more casual movie viewers.

Sony is also launching a PSP-Go which will feature all digital/streaming viewing of movies.

Gaming industry market research shows that more Xbox 360 gamers are starting to purchase PS3s too at the new lower price.

Microsoft's Steve Ballmer hinted last week that a Blu-ray add-on drive for the Xbox 360 is on the way.

There are also strong rumors of a Blu-ray-equipped Nintendo Wii coming soon as well, but the consumer/industry value of this unknown.

According to the Blu-ray Disc Association, the final spec for 3D Blu-ray (possibly called 3D-BD or something like it) will be announced by the end of the year, likely in December. The spec WILL REQUIRE that all 3D capable displays (regardless of how they process the 3D-BD signal) will use the same signal. The spec will be DISPLAY FORMAT AGNOSTIC, meaning whether the display is Plasma or LCD based (or whether it uses active or passive glasses) won't matter. So if you buy a 3D-BD player, it will work will all properly marked 3D display technologies. What's more, all 3D-BD discs will be backwards compatible with current Blu-ray players, so the disc will include both a 3D version in the new spec AND a standard 2D version for current players - all in full 1080p. The 3D-BD spec will require full 1080p signal delivery for each eye - left and right. The intent is that there's only one shot to get it right, so make sure it's a standard that will work for a long time to come.

An important point to make: THERE IS NO 3D-BD spec format war. Every company in the industry is cooperating on the final spec. The only difference is that the DISPLAY technology each company uses may be different, but the 3D-BD spec will be used by ALL of them.

Manufacturers will introduce a variety of 3D signal processing technologies, some based on plasma and some on LCD. Some will use active shutter glasses and some will use passive or polarized glasses. These technologies will be on display at CES in January and the first gear (and 3D-BD movie titles) will start arriving by mid-2010. Some product announcements MAY be made at CES. The glasses needed will be sold with the DISPLAYS, not the players, because the type of glasses needed will be dependent on the display.

All of the CE manufacturers stressed that 3D display is here to stay. It's not just about Blu-ray - you'll see cable and satellite offerings, live sports broadcasts and even gaming in 3D. The next round of gaming consoles are likely to support 3D gaming.

There WILL be a premium for the 3D capability in terms of display/player pricing, but as with all new technologies, this will drop over time.

This is particularly interesting: Multiple sources at the event - including one Sony source - informed me that there's a possibility that the PS3 can be firmware-updated to make full 3D gaming and (possibly even) 3D Blu-ray playback possible. All you'd need to do is to buy the glasses as an accessory. This may be possible because of the power of the PS3's Cell processor.

As far as consumer interest in 3D, InStat reports that 10% of consumers are extremely interested in 3D, 15% are very interested, 39% are somewhat interested, 26% not very and only 10% not at all. The interest is very price sensitive however.

Panasonic had their Full 3D HD system on display at the event. Their initial plan is to sell the system as a "3D theatre in a box" - you'll get a large 3D-ready plasma display, a 3D-ready Blu-ray player and a set of 2 or 4 active shutter glasses with an IR transmitter (that sits on top of the TV) to sync the glasses with the display. (You'll likely be able to buy extra pairs of glasses if you need them).

My own observations on the Panasonic system: The 3D effect is VERY good (with only very minor ghosting), but the effect is MUCH more pronounced when there's an object in the close foreground (for example, when the camera is near the ground or sitting next to a foreground object). Compared to LCD projection, I'm not a fan of the black levels of plasma TV. I'd much rather view 3D HD via a front or rear projection system. Multiple viewers (including myself and TV Shows on DVD's Gord Lacey) found that the active shutter glasses induced a certain amount of eye strain on the viewer, though it might have been a problem with the system. Viewing for a few minutes wasn't a problem, but the feeling was that you'd have a pretty good headache watching an entire movie with them. The strain was more pronounced the more your eyes darted around the scene. Again, these are very initial impressions of a prototype - I'm going to withhold my judgments until I see more demos at CES, because the demos I saw last year at CES didn't have the eye strain issue. (I'm willing to believe it was just a technical problem with this particular demo.)

All studios are going to continue trying new BD-Live applications and technologies. While these have less appeal to early adopters of Blu-ray (who tend to be more movie-content interested), as Blu-ray moves into the mass market these features will have more consumer appeal.

Deluxe reports that 50 million BD discs will be connected to the Net via BD-Live by the end of 2009.

Sony reports that once people connect to the Net via BD-Live, 50% of them come back and reconnect at least once.

Studios report that Digital File/Copy redemption rates are in the strong double digits. Research shows that 50% of people using Digital File are watching on laptops or portable devices. Some are also using the Digital File as a "backup" copy to the Blu-ray, or for standard-def viewing situations.

I specifically asked about Digital File expiration dates: The studios responded that when they see download/authorization activity after the expire date has passed, they're simply extending the expire date indefinitely. Fox had this happen with Family Guy: Blue Harvest and their response was to just extended the date.

Managed Copy is still being readied and is expected to launch fully in the next few months.

Warner has noticed that Digital File redemption rates are slightly higher on standard BD/DVD releases (19%) versus special edition (more elaborate) BD/DVD releases (13%).

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Okay... that's the most important information to come out of Blu-Con 2.0, based upon my extensive notes taken during the day's various panels. I'll have a little more to say about the event tomorrow, but what's above is the key information. PLEASE NOTE that I've tried my best to get all of the above information down accurately. To the degree that there are errors or contradictions, my apologies. Nobody's perfect, but I've tried my best to get it all down and convey it to you properly here.

That's a lot of information to be sure, so I'm going to let you guys chew on it overnight. ;)

Back tomorrow. Stay tuned...

Originally Posted by Kosty (Post 1739800)

Thats the first time ever that Blu-ray has had 4 consecutive weeks over $25 M in revenue.

$123.17 M in last 4 weeks for Blu-ray

$144.98 M in last 5 weeks for Blu-ray already in the 4Q