Blu-ray Surpasses Digital Dollars - High-Def Digest Forums
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Old 01-27-2009, 08:25 PM
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Default Blu-ray Surpasses Digital Dollars

http://www.homemediamagazine.com/hig...-dollars-14428

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Blu-ray Surpasses Digital Dollars

By Erik Gruenwedel | Posted: 27 Jan 2009
[email protected]

The transition from packaged media to digital distribution for movies and TV shows just got put on hold, again.

Sales of Blu-ray titles are projected to increase 150% to $2.9 billion this year from $1.1 billion in 2008, according to research firm Media Control GfK International. That’s nearly twice the $1.5 billion generated by digital last year, which included VOD and broadband.

Digital distribution is expected to top $3.5 billion and represent 15% of the home entertainment pie by 2013. Blu-ray is projected to reach 11% packaged-media penetration by the end of the year, up from 4% in 2008.

Michael Paxton, analyst with In-Stat in Scottsdale, Ariz., said wider proliferation of movie streaming and downloading is hamstrung by broadband limitations in households.

“The bandwidth required to stream any type of HD video is way beyond what most households have,” Paxton said.

He said the scuttlebutt for years suggested downloads and streaming would replace packaged media.

“The convenience factor is still not there for streaming media, unless you are watching on a laptop and it is the only option you have,” Paxton said. “The packaged media business model is one that the consumer is very comfortable with.”

That said, Paxton doubts Blu-ray will replace standard DVD, but he also doesn’t believe it would suffer the fate of Laserdisc.

Other analysts (and digital proponents) questioned Blu-ray’s perceived prowess, while others said the format’s premium pricing inflated revenues.

“They have to be leaving out the cable and satellite industries to get to that kind of conclusion,” said independent analyst Rob Enderle. “We are likely to see a number of reports like this as the Blu-ray marketing organization works to counter the perception that BD simply ramped too late and still hasn’t hit critical price points.”

Phil Leigh, analyst with Inside Digital media in Tampa, Fla., said the BD revenue projections are misleading because the format currently generates a premium on a per unit basis, compared to standard DVD and digital.

“I’m not sure I believe the revenue forecast,” he said.

Richard Doherty, director of The Envisioneering Group in Seaford, N.Y., said the concerns were moot since BD prices continue to fall as streaming costs rise.

He said streaming costs facing Netflix, Hulu, Blockbuster or CinemaNow are rising exponentially and ultimately have to be underwritten by the end user, which they currently aren’t.

“It’s costing Netflix and other Internet providers ‘tens of cents’ to watch any given movie,” Doherty said. “You watch 90 movies in a month and [they’re not] making any money.”

Reed Hastings, co-founder and CEO of Netflix, said the combination of partnering with consumer electronics manufacturers and reduced disc usage by subscribers would help stymie escalating streaming costs.

Netflix spent more than $11 million on streamed content and catalog acquisitions in the fourth quarter ended Dec. 31, according to a regulatory filing.

“We should be able to keep increasing our content investment while at the same time growing earnings,” Hastings told investors.

Doherty said the current economic recession put expansion plans for the Internet, which included broadband proliferation, on hold. At the same time, demand for streaming has risen leading some cable operators such as Verizon, Comcast and AT&T to consider capping or placing a monthly surcharge on consumers.

“Streaming is going to get costlier and less compelling experience to a lot of people,” Doherty said.

He said President Obama pledged making broadband access in U.S. homes a more economical option, from $15 to $20 per month, compared to about $35 per month, currently. Households that are used to streaming and downloading a lot of content may see their monthly bill increasing to $45 or $55 per month.

“The accelerant to what happens next is predicated by where the President’s stimulus dollars go in the next 90 days to nine months,” Doherty said.

Indeed, Obama created a mild panic in the Silicon Valley last weekend during his first weekly radio address, when he failed to mention a $6 billion stimulus campaign promise earmarked for broadband expansion.

Om Malik, founder of the GigaOm blog network, told Yahoo! Finance that technophiles shouldn’t jump to conclusions about the omission. At the same time, he said he hoped the funds — part of Obama’s proposed American Recovery and Reinvestment Bill — don’t just fall into the hands of Comcast, AT&T and others.

“Instead, the stimulus money should go to smaller companies in areas where there is a broadband problem,” Malik said. “Push to separate services from the pipes and increasing competition in a true capitalistic fashion.”

While broadband proponents wrestle for funds, Blu-ray disc prices continue to fall.

BD pricing dropped 14% in 2008 to an average retail price of $28.93, which still represented a $13.19 premium on standard DVDs, according to Media Control.

Indeed, Sony Pictures Home Entertainment, in a weekly newspaper circular, offered instant $3 discounts on 15 titles, including Pineapple Express, Hancock, Underworld: Evolution, Step Brothers and Nick & Norah’s Infinite Playlist, the latter of which streets Feb. 3.

Analyst Doherty said Blu-ray would become even more affordable after Sony’s recent announcement it would build a disc replication facility in China. He said movies should cost less to replicate and package, which would translate into more attractive new and catalog release prices.

“[Catalog is] what really saved DVD over the past 10 years,” Doherty said.
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Old 01-27-2009, 08:48 PM
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The broadband infrastructure is not there and it's not going to get better any time soon.
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Old 01-27-2009, 09:48 PM
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Originally Posted by Stryydr View Post
The broadband infrastructure is not there and it's not going to get better any time soon.
New Modem Chips Provide Huge Bandwidth For IPTV Gateways

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Soon cable operators will be able to fire up scads of bandwidth for subscribers, with even faster next-generation DOCSIS 3.0 gear in the pipeline. And beyond just raw speed, the technology may provide the industry a clean path to Internet protocol-based video services.

Two key suppliers of cable modem silicon components, Broadcom and Texas Instruments, are now delivering chips that can bond eight downstream channels together in a single DOCSIS 3.0 device.

What that means: The industry could soon see cable modems capable of transmitting upward of 400 Megabits per second to a single subscriber.
http://www.multichannel.com/article/..._Hot_Chips.php

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The effort, announced Tuesday, matches the centerpiece that broadband deployment has become in the new Obama administration's economic stimulus package.

It also comes as Congress is debating how to dole out over $8 billion in grants for broadband. Satellite operators are fighting for their share of the money, arguing that satellite-delivered broadband will be the only way to reach some rural enclaves.
http://www.multichannel.com/article/...ional_Show.php

Last edited by Lee Stewart; 01-27-2009 at 10:03 PM.
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Old 01-27-2009, 10:20 PM
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Originally Posted by Lee Stewart View Post
New Modem Chips Provide Huge Bandwidth For IPTV Gateways

What that means: The industry could soon see cable modems capable of transmitting upward of 400 Megabits per second to a single subscriber.
We could see that as well as we could see a nice added expense to our monthly bill for taking part in this bandwidth orgy. I'll stick with my packaged media for the most part. Even with the 8 mb/s I have now it takes the better part of a day to download an HD movie.
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Old 01-27-2009, 10:39 PM
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Sales of Blu-ray titles are projected to increase 150% to $2.9 billion this year from $1.1 billion in 2008, according to research firm Media Control GfK International. That’s nearly twice the $1.5 billion generated by digital last year, which included VOD and broadband.
Wait, I'm confused! This is a really badly written article that avoids doing like for like comparisons. Blu-ray generated $1.1B in 2008, but will make more next more passing the $1.5B digital distribution figure from last year? (and for some reason they assume flat growth in that department but I'll ignore that for now...)

Have I read that right? Because it sounds like Digital (including cable VOD) made more money than Blu-ray last year (1.1 billion vs 1.5 billion). What happened to 0.06% figure so many were clinging to so tightly?
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Old 01-27-2009, 10:48 PM
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the MAIN obstacle will the loss of something TANGIBLE. even if i could dl a 1080p movie in 5 minutes for 25% cheaper than what it would cost me to get a physical copy, id still opt for the physical copy. i like having a disk, case + cover art and so do a billion other people.
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Old 01-27-2009, 10:52 PM
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Originally Posted by Citizen Erased View Post
Wait, I'm confused! This is a really badly written article that avoids doing like for like comparisons. Blu-ray generated $1.1B in 2008, but will make more next more passing the $1.5B digital distribution figure from last year? (and for some reason they assume flat growth in that department but I'll ignore that for now...)

Have I read that right? Because it sounds like Digital (including cable VOD) made more money than Blu-ray last year (1.1 billion vs 1.5 billion). What happened to 0.06% figure so many were clinging to so tightly?
Well, I think there are a couple things. The article is a bit confusing, but they are clearly stating that DD as they define it is not anticipated to grow nearly as quickly as Blu-ray. Based on their numbers, it'll take four years for it to grow a little over 100%. Whereas Blu-ray will show larger gains in 2009 alone.

There's also the definition. One would have to compare what is being included in DD in their numbers, versus what others include (I'm willing to bet cable VOD is not normally counted as DD by many).

Granted, we're also comparing DD in total...versus a hi-def format, which makes it not exactly an apples to apples comparison to begin with.
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Old 01-27-2009, 11:05 PM
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Originally Posted by justjoined View Post
the MAIN obstacle will the loss of something TANGIBLE. even if i could dl a 1080p movie in 5 minutes for 25% cheaper than what it would cost me to get a physical copy, id still opt for the physical copy. i like having a disk, case + cover art and so do a billion other people.

Try telling that to my 9 neices, 1 daughter, 1 son, and 5 nephews who are physically attached to their ipods and Zunes and cell phones that play music, take pictures, and, yes, watch movies. My oldest neice has 35 movies on her ipod and more on her computer ( along with thousands of songs) and she does not have any on discs with cover art. This is the way its going and I don't think there is a billion people who would agree with you.
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Old 01-28-2009, 12:58 AM
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Originally Posted by Citizen Erased View Post
Wait, I'm confused! This is a really badly written article that avoids doing like for like comparisons. Blu-ray generated $1.1B in 2008, but will make more next more passing the $1.5B digital distribution figure from last year? (and for some reason they assume flat growth in that department but I'll ignore that for now...)

Have I read that right? Because it sounds like Digital (including cable VOD) made more money than Blu-ray last year (1.1 billion vs 1.5 billion). What happened to 0.06% figure so many were clinging to so tightly?
Read that very carefully. VOD is cable/satellite video on demand --- that's been around for over a decade, and the HD digital broadcast side is widely available for almost a decade.

Just try to break down that figure into video via IP (internet packets = iptv ) separately from cable, satellite and see if anyone is willing to give that figure. Unless white-box video (advertising on free video like youtube) are included, no download iptv company is willing to explain carefully what their actual revenue ramp is like ( minus the advertising revenue of free video ).

That's because after years of mucking around, the hockey stick is still nowhere to be found other than a projected future point that keep moving away.

Adding the vod from traditional broadcast may make the number respectable, but it makes even more difficult to show any major growth --- not that there's any real way to present the number, or any revenue growth in a pleasing way.

At some point someone has to say there is no spoon.
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Old 01-28-2009, 09:40 AM
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Looks like Blu-ray is on pace to surpass VOD for revenue in 2009, which is not exactly what many people would consider a 'niche' product. Seems to me that the more growth that Blu-ray has, the more some people rail against it as a product.

I don't get it personally... I've been trying to digitize my movies over the past year or two and I am personally getting really sick of it. Almost every portable player requires DIFFERENT video codecs for playback. My iPod Touch can't handle what my AppleTV can and neither are compatible with my Archos. If I want surround sound, the AppleTV can do it, but the resulting videos aren't compatible with my iPods... or the Archos.

Then I am still looking at needing to buy a 1TB hard drive to even begin to get enough storage capacity for all my movies - and then there is the countless hours (measured in the hundreds+ hours) which is required to encode all these movies digitally.

Then, when it is all said and done.... NOT ONE OF THEM IS HD!

I'm thrilled that more and more we are seeing Blu-ray come up to expectations in sales in so many areas and surpassing other technologies that still have one leg jammed into cement about things that just aren't as friendly and compatible as they should be.

At a very basic level: Why can't I have a list of DVD movies stored on my PC and have an iPod like interface which allows me to pick one and play it back easily regardless of format?

Digital has a long, long - LONG - way to go. Netflix is easily the best option out there currently and is not a ownership process.
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