WSJ: Blu-ray Player Makers Embrace Online Movie Delivery

[mikemorel]

Maybe not as compelling as blu-ray's 3.4% market share in France

From Wall Street Journal

2009 Blu-ray sales in France cover DVD sales attrition

Some of the biggest companies backing the Blu-ray format for high-definition movies are hedging their bets by introducing players that can also show Internet video, which is making surprising inroads in the home-entertainment market.

Electronics retailers and manufacturers including Best Buy Co., Samsung Electronics America Inc. and LG Electronics USA Inc. are selling Blu-ray disc players that tap into movies from online rental companies. The devices provide an alternative to pay-per-view cable services.

The hybrid movie players tap a growing library of online movies and television shows from Amazon.com Inc., which screens movies for as little as 99 cents, and from Netflix Inc., which allows unlimited movie streaming for $8.99 a month.

Blu-ray supporters fought a bruising and expensive battle over competing formats a few years ago. Now, to salvage those investments, they're incorporating a feature, Internet video, that threatens to make the players irrelevant over time but allows them to sell the disc players as multi-purpose machines this holiday.

Best Buy recently disclosed a partnership with Netflix to offer streaming video through its private-label Insignia players, and last week slashed the price of one older Insignia model by $50 to $99, promising that it will soon be made Netflix capable through a software patch.

U.S. movie disc purchases dropped 13.8% during the third-quarter of 2009 as digital distribution such as Internet streaming and cable pay-per-view rose 18%, according to Digital Entertainment Group, an industry association. Blu-ray disc sales are up 80% year-to-date, according to The Nielsen Co., but remain a fraction of overall disc sales. Nielsen estimates DVD sales are off 14%.

Sony Corp., which led the Blu-ray charge and licenses the technology, insists consumers won't abandon the format.

"The streaming services are complimentary," said Lexine Wong, senior executive vice-president of worldwide marketing for Sony Pictures Home Entertainment. Customers of such services "don't get to add it to your collection of movies," she said.

"The horse is out the gate and there's no going back. Consumers want Internet-enabled devices," said Reid Sullivan, a vice president at Samsung Electronics America, which also makes Blu-ray players that stream movies. "We can upgrade the software on the players to offer more content or new kinds of services."

Mike Vitelli, Best Buy's chief merchant, said hybrid players are proving popular because consumers favor the convenience of instantly ordering Internet video, even if image quality is not on par with Blu-ray discs.

Roughly 80% of current Blu-ray players are already equipped with Internet connections. That feature makes the players inexpensive to adapt with software for streaming video.

"It is absolutely going to be a bigger category," Mr. Vitelli said. "It is not a material add-on to the price, and the benefits of the feature are enormous.

Ever since Blu-ray won the backing of Hollywood studios last year over the rival HD-DVD technology, electronics makers have predicted that the sharper and more lifelike Blu-ray format would eventually supplant the DVD.

But digital downloads and streaming are emerging faster than the industry expected; as recently as 2008, product makers predicted it would be years before there were mainstream alternatives to renting or buying high-def movies on Blu-ray discs.

Retailers and electronics manufacturers are scrambling to entice recession-scarred consumers to switch to the new format now, before the trend toward digitization gains further steam. Analysts expect big-name brands will sell versions of these hybrid players for about $150 apiece on the day after Thanksgiving.

Netflix said it expects to add more subscribers in the fourth quarter, partly because the growth of these hybrid players is expanding its base of potential customers.

Its third quarter results were boosted by a deal with Microsoft Corp. that allowed consumers to stream movies via the Xbox 360 videogame console. Netflix said it expects to add up to 1.2 million more subscribers in the fourth quarter, thanks in part to a similar partnership with Sony on its PlayStation 3 console.

"Streaming offers easy access to a large variety of content but you trade picture quality for it," said Andy Parsons, vice president of new product planning at Pioneer Electronics USA Inc. Mr. Parsons, also U.S. promotional chair for the Blu-Ray Disc Association, added, "Eventually there will be a transition to a completely online world but it's going to take a very long time."

"The horse is out the gate and there's no going back. Consumers want Internet-enabled devices" - Samsung

CE manufacturers and retailers are using online movie delivery to sell blu-ray players. Apparently they just don't sell very well on their own.

Pretty soon they will be known as "set-top boxes that happen to include a blu-ray drive", instead of "blu-ray players that can download movies".

[Kosty]

Ever since Blu-ray won the backing of Hollywood studios last year over the rival HD-DVD technology, electronics makers have predicted that the sharper and more lifelike Blu-ray format would eventually supplant the DVD.

But digital downloads and streaming are emerging faster than the industry expected; as recently as 2008, product makers predicted it would be years before there were mainstream alternatives to renting or buying high-def movies on Blu-ray discs.

Seems like a huge straw man on the part of the author as I don't think there was any consumer electronics manufacturer saying that Blu-ray was going to replace DVD anytime soon.

Adding streaming to Blu-ray players is complementary just as its upconversion playback of existing DVDs.

"Streaming offers easy access to a large variety of content but you trade picture quality for it," said Andy Parsons, vice president of new product planning at Pioneer Electronics USA Inc. Mr. Parsons, also U.S. promotional chair for the Blu-Ray Disc Association, added, "Eventually there will be a transition to a completely online world but it's going to take a very long time."

This observation seems perfectly obvious.

[Kosty]

Consumers tend to use consumer electronic devices that they purchase most of their primary use that they bought the item for. Hence PS3 buyers tend to play games and Blu-ray purchasers will tend to play Blu-ray movies on their new players.

Sure Hollywood and CEMs are hedging their bets by adding streaming, but it obviously is a complement and certainly sales of streaming players to date have not slowed down Blu-ray's growth during the last month in the slightest.

[Kosty]

Last week ending 10/25/09 Blu-ray probably moved a year high 1.8 Million top 20 units and HMM reported a 2009 high $38.86M in Blu-ray revenues for the week.

Sure did not look like streaming capabilities on Blu-ray players throttled Blu-ray sales a whole lot.

[mikemorel]

Originally Posted by Kosty

Consumers tend to use consumer electronic devices that they purchase most of their primary use that they bought the item for. Hence PS3 buyers tend to play games and Blu-ray purchasers will tend to play Blu-ray movies on their new players.

Blu-ray players that include movie streaming have gone from 0% to 80% in one year. Even the PS3 will soon stream Netflix video.

Sure Hollywood and CEMs are hedging their bets by adding streaming, but it obviously is a complement and certainly sales of streaming players to date have not slowed down Blu-ray's growth during the last month in the slightest.

There you have it. Kosty knows that blu-ray sales are completely unaffected by streaming. If there were no streaming, then people would buy exactly the same amount of blu-rays. Instead, (according to Kosty) people are merely watching a lot more movies with their free time. Got it.

[mikemorel]

Originally Posted by Kosty

Last week ending 10/25/09 Blu-ray probably moved a year high 1.8 Million top 20 units and HMM reported a 2009 high $38.86M in Blu-ray revenues for the week.

Spamming every thread with these graphs is becoming quite comical.

Is there anyway to put them in your signature???

[mikemorel]

Originally Posted by Kosty

Seems like a huge straw man on the part of the author as I don't think there was any consumer electronics manufacturer saying that Blu-ray was going to replace DVD anytime soon.

Blu-ray: We'll Replace DVD in Three Years

Blu-ray is aiming to replace the DVD format within three years, and is practically claiming victory at the CeBIT technology show in Germany.

The European chairman of the Blu-ray Disc Association says that by the end of that period, Blu-ray would be the only next-generation format left. It pointed to the launch of the PlayStation 3 as a major impetus for the format's eventual supremacy.

"Within three years it will just be Blu-ray," Frank Simonis, the Blu-ray Disc Association's European chairman said, according to Reuters.

That was March 2007. So you have until March 2010 to completely replace DVD. Better get cracking.

Look at Kosty, trying to revise history to back up his ridiculous assertions.

[zombieflanders]

Originally Posted by mikemorel

Blu-ray: We'll Replace DVD in Three Years

That was March 2007. So you have until March 2010 to completely replace DVD. Better get cracking.

Except for the part where Betanews (a site with not a few anti-BD editorialized news posts) has a headline that lies about the content. Unsurprising that you would jump on it, but puzzling as to why you would post a quote directly contradicting your own argument. Read it again:

The European chairman of the Blu-ray Disc Association says that by the end of that period, Blu-ray would be the only next-generation format left. It pointed to the launch of the PlayStation 3 as a major impetus for the format's eventual supremacy.

Nowhere in that article is there a direct quote that from a rep that talks about replacing DVD. In fact, the entire article talks about BD vs HD DVD. The only person who says otherwise is the Betanews writer/editor.

Look at Kosty, trying to revise history to back up his ridiculous assertions.

It's not Kosty who's lying about what was said here.

[mikemorel]

Originally Posted by zombieflanders

Except for the part where Betanews (a site with not a few anti-BD editorialized news posts) has a headline that lies about the content. Unsurprising that you would jump on it, but puzzling as to why you would post a quote directly contradicting your own argument. Read it again:Nowhere in that article is there a direct quote that from a rep that talks about replacing DVD. In fact, the entire article talks about BD vs HD DVD. The only person who says otherwise is the Betanews writer/editor.
It's not Kosty who's lying about what was said here.

Google:

simonis blu-ray 3 years

See what you get.

[luclin999]

Originally Posted by mikemorel

Google:

simonis blu-ray 3 years

See what you get.

A misquote that went viral?

From the context of the interview he was discussing BD vs. HD DVD when making that statement. It looks like one reporter misrepresented what was being discussed and several other sites simply referenced the misquote.

Here is a clarification which was released the next day.

The comments followed the announcement at the BDA press conference yesterday that the Association expects Blu-ray to be the standard optical media format within three years.

He said the two main reasons why Blu-ray will win over HD DVD are its greater capacity and the larger number of movie studios supporting the format.

"The fact that BD hardware is now outselling HD DVD for the first time, and that BD software titles are outselling HD DVD by three to one, is a very good indication of where it's going," he said.

And

"What we have seen in the United States is that, yes, HD DVD came to market a bit earlier and it's cheaper at the moment. And yet, the total volume of Blu-ray players equals the number of HD DVD products, which shows that price sensitivity is not there. If it were, HD DVD would be winning.

"If we talk two years form now I think it's a totally different ballgame, because we expect around 2-4 million products shipped and then price sensitivity is lower and costs will come down."

He added that when you look at the number of manufacturers making HD DVD and the number of manufacturers making Blu-ray, you cannot compare the two.

Obviously in expecting to see only 2-4 million players shipped by 2009 there is no way in hell that the BDA was predicting that DVD would be "dead" a year later.

Also note, that the actual number of players which have been shipped at this point exceeds that estimate considerable, indicating that BD is actually doing better today than they had expected back in early 2007.

[KYThrill]

Originally Posted by mikemorel

Google:

simonis blu-ray 3 years

See what you get.

I did that. You get the same article repeatedly, and all of them say the same thing.

That withing three years Blu-ray will beat HD DVD, and Blu-ray will be the sole next gen optical format.

Only if you pull his quote out of context can you warp it to make it sound like he was refering to DVD. His entire statement was clearly about the battle between HD DVD and Blu-ray, and he predicted Blu-ray would win by 2010.

Guess what? He was right!

[zombieflanders]

Originally Posted by mikemorel

Google:

simonis blu-ray 3 years

See what you get.

I get...not a single person directly quoting him in reference to DVD.

Every single article says that on their own. As luclin999 points out, the context is HD DVD. Your rebuttal amounts to a single guy--one who had knowledge that DVD took roughly a decade to have more players in homes than VHS--talking about HD DVD before the end of the format war, with absolutely zero evidence (let alone a direct quote) referencing DVD.

[GizmoDVD]

It is pretty obvious that streaming is being included in every BD player and its working - the players are selling regardless if a Blu-ray disc will ever hit the drive. Thankfully they still play DVDs as well. Look at the PS3 - they got Netflix.

The 'complimentary' thing always makes me laugh because none of us have any idea if people bought a BD player for BDs or because it was a cheap DVD replacement or if because it could stream/VOD. Taking a look at the sales for BD discs show people still like buying new releases but most catalog titles flounder (not the big ones or highly discounted ones that someone is sure to bring up to go 'HA!').

[ack_bak]

Sorry Mike, people are not buying streaming Blu-Ray players just to stream video and not play Blu-Ray discs. If all they wanted to do was to stream video, they could simply buy a Roku box at half the cost.

Netflix has made it very clear that their model going forward is to couple streaming with an optical disc rental package. The majority of new releases will be on optical disc only and streaming will offer access to a lot of catalog titles, TV shows, documentaries, etc. It is a value add by Netflix and a smart move. The fact that CE's are offering streaming makes a heck of a lot of sense as most Blu-Ray players have a SOC design and an ethernet/wireless port. It is most likely trivial for them to allow streaming on their players, and I think most consumers would rather buy a player that offers more features (ie streaming) than not.

As for your comment as to one day these players will be streaming players first and Blu-Ray players second, I would say that could happen eventually, but probably not for another 10-15 years. Netflix has stated that they will be renting optical discs for at least another 20 years.

[GizmoDVD]

Originally Posted by ack_bak

Sorry Mike, people are not buying streaming Blu-Ray players just to stream video and not play Blu-Ray discs. If all they wanted to do was to stream video, they could simply buy a Roku box at half the cost..

My mom has. She's happily been watching Netflix and video files on her $99 Insignia. I asked her if she wanted to borrow any of my BD movies and she said "not when I have 10,000 Netflix ones to look through". Since she piggybacks on my Netflix account there is no monthly fee for her. Keep in mind the Roku does not do everything a BD player can do (various different streaming services, divx/xvid/MKV etc.)

As much as this site is for happy shiny Blu-ray people you really have no idea why people buy what they buy. I owned a PSP but not for PSP games. I also own a $99 Insignia and it will probably never see a Blu-ray hit its drive (instead for Netflix and video files via USB).