Blu-ray sales surging, but more growth needed

[ack_bak]

http://www.videobusiness.com/article/CA6705207.html

PHYSICAL: Blu-Con: Studios believe home entertainment revenue will rebound in 2012
By Susanne Ault -- Video Business, 11/3/2009

NOV. 3 | PHYSICAL: BEVERLY HILLS, Calif.—The home entertainment industry is on its way to recovery due in large part to Blu-ray Disc, according to retail and studio participants at Tuesday's Blu-Con conference here.

Best Buy is aggressively merchandising both Blu-ray players and titles, rallying around the products as a key expanding business. In particular, Blu-ray players are this year's fastest-growing consumer electronics product, surging 112% in year-over-year sales, Mike Vitelli, executive VP of consumer operations group at Best Buy, said in a keynote. That tops the 106% and 85% jumps for popular ebooks and netbooks, respectively.

Best Buy anticipates 18.6 million Blu-ray players (including PlayStation 3 videogame consoles and Blu-ray set-top players) to sell in 2010. That marks a significant hike from the 10 million units of Blu-ray hardware expected to sell this year.

Blu-ray players currently make up 66% of Best Buy's home entertainment hardware category, compared to 35% two years ago. Blu-ray titles comprise 25% of the retailer's video software, up from 13% two years ago.

"This is why we are bullish about Blu-ray," said Vitelli.

Retail and studios acknowledge that consumers are still reeling from the recession, which is continuing to negatively impact the entire home entertainment business. The momentum Blu-ray has enjoyed is not been enough to offset double-digit percentage slides of DVD. But when combining digital and Blu-ray gains, studios forecast the home entertainment business will return to flat to growing in 2012.

"In 2012, we'll see the growth trend again," Mike Dunn, 20th Century Fox Home Entertainment president, said in a panel moderated by analyst Merrill Lynch Jessica Reif-Cohen.

Dunn echoed other studios in noting that consumer reluctance to spend money is thawing. As proof, he pointed to healthy sales of relatively high-priced title configurations, including the Blu-ray version of Fox's Ice Age 3: Dawn of the Dinosaurs.

"Thirty-five percent of sales are in the premium SKUs: Blu-ray and the two-disc special edition," said Dunn. "The consumer is there."

Beyond Blu-ray, video-on-demand is another rising area for studios, especially when offered day-and-date with the DVD/Blu-ray release.

"We see huge spikes in VOD activity" with day-and-date delivery, Warner Home Video president Ron Sanders said in a panel. "But it does take a while for the consumer to know its available on VOD" that quickly.

Dunn said Fox sees VOD revenue climb 20% when titles are offered day-and-date versus the traditional window.

Things might be on the right track for home entertainment, but the business still faces obstacles, even with Blu-ray adoption.

Best Buy's Vitelli complained that Blu-ray titles are too limited in use, confined mainly to the one household player in living rooms. He believes that digital copy helps boost Blu-ray use but dislikes that studios charge more when a copy is included on the discs.

"It's like if you bought a cup of coffee, and they charged you a different price depending on where you drink it," said Vitelli. "That's not going to go over so well."

Best Buy thinks the industry needs to do a better job of educating the public about the advantages of Blu-ray. Store research shows that 68% of today's customers are unfamiliar with the high-definition format.

"People in stores still ask our employees about why they need a Blu-ray player," Vitelli said. "The situation [with Blu-ray] is improving, but we're still not there."

Pretty good article that highlights a number of interesting data points with regards to Best Buy.

[towergrove]

Originally Posted by ack_bak

http://www.videobusiness.com/article/CA6705207.html



Pretty good article that highlights a number of interesting data points with regards to Best Buy.

So even though they are making an online store selling streaming and digital downloads they are still strongly behind blu-ray. hmmm

Looks like at Best Buy the key phase is Coexist.

[Malanthius]

Originally Posted by towergrove

So even though they are making an online store selling streaming and digital downloads they are still strongly behind blu-ray. hmmm

Looks like at Best Buy the key phase is Coexist.

I'm ok with co exist I guess. As long as all the big titles come out on BR. One thing that sucks is that Star Wars wasn't released on DVD until the format was huge! I hope BR grows enough to get that series.

[oh noes!]

Originally Posted by Malanthius

.. I hope BR grows enough to get that series.

Nope. Sorry. It's "over" for the format.

After it sells ~$1.5B this year, then $3B...then $5B - all of the studios and all of the CEs and all of the retail outlets are just going to abandon it and you will never gets Star Wars in HD.

/sarcasm.

I can't believe there are still people in 2009 that doubt that bluray is a living, viable format.

Seriously folks - that sort of pessimism and doubt should have died in 2008 - what is going on here?

In case you hadn't noticed, /=/ . The format is safe. No worries.

[Malanthius]

Originally Posted by oh noes!

Nope. Sorry. It's "over" for the format.

After it sells ~$1.5B this year, then $3B...then $5B - all of the studios and all of the CEs and all of the retail outlets are just going to abandon it and you will never gets Star Wars in HD.

/sarcasm.

I can't believe there are still people in 2009 that doubt that bluray is a living, viable format.

Seriously folks - that sort of pessimism and doubt should have died in 2008 - what is going on here?

In case you hadn't noticed, /=/ . The format is safe. No worries.

Banned already! I knew I knew him from somewhere!

[ack_bak]

Originally Posted by Malanthius

I'm ok with co exist I guess. As long as all the big titles come out on BR. One thing that sucks is that Star Wars wasn't released on DVD until the format was huge! I hope BR grows enough to get that series.

Star Wars is coming to Blu-Ray. Per an interview at the most recent Comic Con:

While at the San Diego Comic Con, Star Wars Examiner, Bryan Young, was able to get an interview with Steve Sansweet, the head of Fan Relations at Lucasfilm (you can check out the full interview here). As they were talking, the conversation turned to the subject of Star Wars ever seeing a Blu-ray release:

Q: Is there any talk whatsoever, and I'm not even going to ask for a date because I know that's ridiculous, but is there any talk about the Star Wars movies on a high definition format?
A: Yeah. I mean obviously we've been looking at that for a couple of years and I think one of the questions is when is the market penetration there and these days, will there be a market penetration before everything goes streaming? But we've been looking at an ultimate box set of the Star Wars movies, all six of the movies. And what special features would be. And clearly these days, if you did an ultimate box set and didn't do it in HD, Blu-ray, it just wouldn't make any sense. So now it's a matter of thinking okay, we've been thinking about this for a while, we know what kind of assets we want to use, we've done some work in cleaning up things, it's really a matter of making that decision of when's the best time to release it.

My guess is that we will see it sometime in the next couple of years. Probably when you can walk into Walmart and pickup a $49 Blu-Ray player. Probably 2012-2013.

[h0mi]

No box set. Individual movies. I'd rebuy 4-6 and grudgingly give Lucas my moneys and can ignore the last 3 movies ever happened until I see Hayden Christensen on Endor.

[comixguru]

More quotes and such at LA Times:

Home entertainment honchos see growth returning in 2012
November 3, 2009 | 4:22 pm

Sit tight, Hollywood, a turnaround in the DVD business is only three years away.

That was the consensus of four of the six major studios' home entertainment presidents, who spoke this morning at Blu-con, a daylong event in Beverly Hills dedicated to the business of Blu-ray high-definition discs.

"By 2012 is when the physical/digital combination will get to the point where we tend to see a growth trend again," said 20th Century Fox Home Entertainment President Mike Dunn, referring to Blu-ray and online movie distribution, the industry's two growing segments as sales of standard DVDs are falling.

Ron Sanders, president of Warner Home Video, Craig Kornblau of Universal Pictures and David Bishop of Sony Pictures all agreed with Dunn's assessment as they joined together for a panel moderated by Merrill Lynch senior media and entertainment analyst Jessica Reif Cohen.

"Prior to the recession, we thought it would be 2010, [but] now that date has moved out," said Kornblau.

"I think in 2010 we will be down, but not by as much as this year," said Sanders. "In 2011 we have a shot at getting to flat, though we have to see how pricing and other things evolve."

So far this year, total home entertainment revenue is down more than 3%, driven by a more than 13% drop in DVD sales. That has been a blow for movie studios, which have in recent years relied on the home entertainment market for more than half of their revenues.

Accelerating the growth of Blu-ray and digital is critical to turning that around. Though the two categories were up 66% and 18%, respectively, last quarter, their growth hasn't been enough to make up for the drop in DVD revenue, as many in Hollywood had hoped.

In a keynote address that kicked off Blu-con, Mike Vitelli, executive vice president of customer operating groups for retail giant Best Buy, urged studios to merge Blu-ray, standard DVDs and digital downloads into more of a combined offering in order to reduce consumer confusion and simplify purchases.

"I have a mental picture of walking up to a coffee shop and saying 'How much do I owe you?' [and their replying] 'Well, where are you going to drink that?' " he said by way of comparison to the different prices for DVDs, Blu-ray and digital copies.

The current result, he said, is that consumers who have a Blu-ray player in one room and standard DVD players or computers in others are buying the regular DVD so that they can pay one price for a movie that will work everywhere they want to watch it.

"What's looming in front of us is an increasing amount of confusion as Blu-ray players and televisions and other set top boxes are becoming more connected to the Internet," he stated. "Until all of this gets settled, there will be massive confusion. And in massive confusion, you get a pause."

--Ben Fritz

[Malanthius]

Originally Posted by ack_bak

Star Wars is coming to Blu-Ray. Per an interview at the most recent Comic Con:





My guess is that we will see it sometime in the next couple of years. Probably when you can walk into Walmart and pickup a $49 Blu-Ray player. Probably 2012-2013.

Originally Posted by h0mi

No box set. Individual movies. I'd rebuy 4-6 and grudgingly give Lucas my moneys and can ignore the last 3 movies ever happened until I see Hayden Christensen on Endor.

Good to hear. Sad that it is still far off. And I would like the original versions. Just cleaned up for BR. Not the special crazy Lucas editions.

[Malanthius]

Originally Posted by comixguru

More quotes and such at LA Times:

Ya I don't buy half of what these guys are saying. I mean even the automotive industry saw some light at the end of the tunnel today with their earning reports. But physical media is going to take 3 years to rebound? Something just doesn't sound right. I think it's all a bunch of BS propaganda.

[vinnie97]

The automotive industry saw a temporary boon thanks to one thing only: Cash for Clunkers

[AV_Integrated]

Originally Posted by vinnie97

The automotive industry saw a temporary boon thanks to one thing only: Cash for Clunkers

While that was completely off topic, according to numbers released today, the car industry actually saw positive growth in the second month after the C4C program ended. My guess, if people were definitely buying in September, then they bought ahead of time and took advantage of C4C. So September sucked for car sales, but November was far stronger than expected, and was even with last year, which helps point towards good numbers. I think Chrysler was the real stinker out there.

http://www.wtopnews.com/?sid=1666208&nid=111

The stock market is pointing upwards right now, which has historically been the indicator for a turn in the economy, and it all is going on while BD player pricing continues to drop.

It'll be really interesting to see at what point BD sales start to match the sales of DVD on new titles.

Two years?

I don't think that is out of the question. Especially if the economy turns.

[vinnie97]

I don't know...yes, the stock market is better but that is undergirded by continued job losses (which goes some way in helping companies recoup losses). I'm way more pessimistic. Sorry for being OT. Lower BD prices are welcome no matter the outcome.

[Philnerd]

Originally Posted by Malanthius

One thing that sucks is that Star Wars wasn't released on DVD until the format was huge! I hope BR grows enough to get that series.

As pointed out, Lucas has already confirmed that the Star Wars Blu-Rays are in the pipeline.

You have to remember, Star Wars isn't necessarily released after a format reaches a specific number of households, its released after a format reaches a specific saturation point relative to its total projected markeshare.

That's why Star Wars was published on Laserdisc. Obviously Star Wars on Blu-Ray would outsell the entire Laserdisc run on Tuesday morning. But Laserdisc had reached a certain saturation point and Lucas decided "Ok, its not gonna get much better, lets go for it." Ditto DVD. Blu-Ray will be likewise.

[ack_bak]

Originally Posted by Philnerd

As pointed out, Lucas has already confirmed that the Star Wars Blu-Rays are in the pipeline.

You have to remember, Star Wars isn't necessarily released after a format reaches a specific number of households, its released after a format reaches a specific saturation point relative to its total projected markeshare.

That's why Star Wars was published on Laserdisc. Obviously Star Wars on Blu-Ray would outsell the entire Laserdisc run on Tuesday morning. But Laserdisc had reached a certain saturation point and Lucas decided "Ok, its not gonna get much better, lets go for it." Ditto DVD. Blu-Ray will be likewise.

Which is why I think we will see the set released on home video in the next couple of years. Lucas will want to get as much as he can out of DVD, which is clearly in a decline, and hit Blu-Ray right when it is starting to peak.