Futuresource: Packaged media to remain flat through 2012 - High-Def Digest Forums
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Old 02-02-2009, 05:42 AM
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Default Futuresource: Packaged media to remain flat through 2012



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JAN. 30 | Despite the prevailing belief among studios that Blu-ray Disc will offset declines in standard DVD enough to return home entertainment to growth in 2010, Futuresource offers a more sobering outlook.

The research concern believes packaged media—DVD and Blu-ray—will remain a flat business at least through 2012, with the home entertainment industry’s growth fueled solely by online and mobile distribution.

Futuresource agrees with studio estimates that Blu-ray will triple its revenue in 2009. But the format’s pace still will be just fast enough to counter standard DVD’s slide, creating a flat packaged media business between 2009 and 2012.

The industry won’t again reach its peak revenue—achieved in 2006—until 2012, when mobile and online digital revenue will account for 15% of total home entertainment spending, Futuresource predicts. At that time, home entertainment will encompass $20 billion in packaged media and $3.5 billion in digital revenue.

In a spot check of studios, Warner Home Video confirmed it believes that DVD and Blu-ray revenue will return home entertainment to growth by 2010. Other studios didn’t respond by deadline.

Analysts at Futuresource note that one obstacle keeping Blu-ray from an even steeper climb is the fact that it doesn’t represent as dramatic of an upgrade from DVD as DVD did from VHS.

“We are projecting strong Blu-ray growth, but it’s not enough to stem DVD,” said Mai Hoang, Futuresource senior market analyst. “In reality, not all consumers will be completely replacing all video titles with Blu-ray. The format transition is a harder sell than it was when going from VHS to DVD.”

Another factor curbing spending is software pricing, especially in catalog.

Catalog titles often carry a 200% to 400% price tag premium over their steeply discounted standard DVD counterparts. Relatively stronger Blu-ray new releases generally carry a 25% to 50% premium over standard DVD versions, according to Futuresource.

“We see new release pricing as fairly reasonable,” said Hoang. “But with 200% to 400% premium on catalog, these titles have been struggling to move significant volume.”

However, fast declining hardware prices are expected to significantly strengthen Blu-ray’s installation base by 2012. Futuresource reports that by then, 62 million Blu-ray stand-alone players will be in homes, as well as 25 million Blu-ray-capable PlayStation 3 consoles. Following $250 average Blu-ray set-top pricing in 2008, tags should be further shaved to $199 in 2009 and $77 in 2012.

Futuresource doesn’t expect the current recession to notably curb the format’s progress. And eventually, software pricing will likely fall to ramp up demand.

“We don’t see the economy having a significantly negative impact,” Hoang said. “There will be an element there, but it won’t be significant. Software prices are going to decline and that will aid in the format moving.”

Compared to Blu-ray, digital adoption will be a much more gradual process, according to Futuresource. Consumers will begin to embrace it more as known brands expand their digital offerings. For example, Netflix and Amazon have recently begun offering streams and downloads on top of their traditional online DVD mail-order businesses.

“Amazon.com and Netflix have an existing relationship with customers and can target them with value-added video service,” said Hoang. “LG and Samsung Blu-ray players [now offering Netflix service] will also drive online going forward.”

Additionally, studios such as Warner and 20th Century Fox Home Entertainment are bowing more titles for video-on-demand at the same time as the DVD releases, contributing further to consumer digital acceptance.

Quickening broadband speeds within the next several years also should boost consumer digital sales, according to Futuresource.
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Old 02-02-2009, 10:41 AM
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engadget's take:

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The usual suspects of Blu-ray's marginal quality benefits and pricing disparity are offered up as reasons that Blu-ray won't increase packaged media consumption overall, but we think there might be something else to the chart. The slow overall growth of media consumption shows we're becoming saturated by existing content delivery (physical discs, online, mobile, VOD, DVRs); or we're seeing the death throes of physical media and the slow initial growth of its successor(s) -- what's your take?
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Old 02-02-2009, 11:29 AM
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It sounds like "Analysts" are struggling to remain relevant. While
I don't disagree with their theories I do think all the data is not
in and things are still in a state of flux. So much so I'd be hard
pressed to attribute anything to pricing at this time. Sure lower
pricing does increase sales of units, but with being bombarded
with reports of recession also leads to a theory called the Paradox
of Thrift
This month, the Consumer Confidence Index fell to
37-percent -- an all time low since the inception of the index in
1967. This confidence is so crucial because consumer spending
accounts for two-thirds of the U.S. economy.

People are on a roll with a SAVE mentality, and it just doesn't affect
the entertainment sector. It is across the board. So the Analysts
in this article are just trying to maintain their relevancy when in
fact it is much bigger than their one area. While what they say may
be true or not it is just so much wind blowing to remain employed
on their part.

It is interesting that according to Price Waterhouse Tampa took in
about $150 million during Super Bowl week -- that's a lot of money,
but it's 50-million dollars less than what was spent in the cities
that hosted the past two Super Bowls.

People just are not spending money whether they have it or not.
Let's not just focus on one sector and try to theorize with price
cuts to solve it.



I have a problem with this quote

Quote:
Quickening broadband speeds within the next several years also should boost consumer digital sales, according to Futuresource.
At least in my area there is no projections by providers about
quickening of broadband speeds. Nada. Except for increase in
rates. At current limitations inherent with broadband it would
take a massive investment in upgrading the infrastructure. I don't
see that happening anytime soon.
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Old 02-02-2009, 11:42 AM
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Quote:
At least in my area there is no projections by providers about
quickening of broadband speeds. Nada. Except for increase in
rates. At current limitations inherent with broadband it would
take a massive investment in upgrading the infrastructure. I don't
see that happening anytime soon.
There is an op-ed in today's WSJ, "Congress Approves Broadband to Nowhere". Pretty good info that pertains to your concerns.
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Old 02-02-2009, 12:02 PM
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Quote:
Originally Posted by The BJD View Post
There is an op-ed in today's WSJ, "Congress Approves Broadband to Nowhere". Pretty good info that pertains to your concerns.
http://online.wsj.com/article/SB123353476246637693.html
Yep, good info. We aren't getting any Broadband upgrade
to sustain digital downloads. Fine with me actually. I'm
not that "wired." Now the "Analysts" need to read that
before they make projections.
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Old 02-02-2009, 04:28 PM
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As usual, another projection "based" on recent experience - which will therefore lead it to be wildly inaccurate.

The current market meltdown is going to wipe out the value of the existing inventory of movie rights, and consumers are going to continue switching to copy software at unheralded levels in order to access this now largely worthless ( in monetary terms) software reservoir. In other words, why buy the cow, when the milk becomes extremely cheap to attain by other means.

The economic world is undergoing revolutionary change - and these incremental forecasters continue on with their worthless sophistry.
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Old 02-02-2009, 06:52 PM
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Originally Posted by browny75 View Post
...consumers are going to continue switching to copy software at unheralded levels in order to access this now largely worthless ( in monetary terms) software reservoir. In other words, why buy the cow, when the milk becomes extremely cheap to attain by other means.
viz Theft.

Sophistry, indeed.
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Old 02-02-2009, 07:42 PM
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Originally Posted by browny75 View Post
As usual, another projection "based" on recent experience - which will therefore lead it to be wildly inaccurate.

The current market meltdown is going to wipe out the value of the existing inventory of movie rights, and consumers are going to continue switching to copy software at unheralded levels in order to access this now largely worthless ( in monetary terms) software reservoir. In other words, why buy the cow, when the milk becomes extremely cheap to attain by other means.

The economic world is undergoing revolutionary change - and these incremental forecasters continue on with their worthless sophistry.
Yeah, and unlimited hard drive space will rain from he sky regardless of file size limits and the magical fairy will bestow everyone with a 400Mb/s home connection and gigabit internal network. The incoming caps will destroy this theory.
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Old 02-02-2009, 07:43 PM
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Quote:
Originally Posted by Ben View Post
It sounds like "Analysts" are struggling to remain relevant.
August 20, 2008 Futuresourse:

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Futuresource Consulting has released projections for Blu-ray disc sales, and is forecasting 45 million sold in the U.S. during 2008.
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Old 02-02-2009, 07:53 PM
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Quote:
Originally Posted by Ben View Post


I have a problem with this quote


At least in my area there is no projections by providers about
quickening of broadband speeds. Nada. Except for increase in
rates. At current limitations inherent with broadband it would
take a massive investment in upgrading the infrastructure. I don't
see that happening anytime soon.

http://www.lightreading.com/document...71196&site=cdn

Quote:
Charter Debuts Docsis 3.0

ST. LOUIS -- Charter Communications, Inc. (NASDAQ: CHTR) today announced the launch of 60 Mbps Internet service, the fastest residential service available from any multiple system cable and telecom provider. The initial deployment of Charter High-Speed Internet Ultra60 is in the St. Louis metropolitan area, with additional markets to follow. Nationwide, the Company will soon boost Charter High- Speed® Internet Max from 16 Mbps to 20 Mbps.

“Not only are we delivering the fastest speed today, but our infrastructure has the capacity to support even higher speeds as demand and usage grow,” said Ted Schremp, Charter’s Chief Marketing Officer. “Charter’s ability to provide increasingly greater bandwidth is critical to our customers’ use and enjoyment of the Internet and delivers greater value. It also highlights our growing superiority over DSL service.”
The battle between the cableco's and telco's will surely result in increased investments/speeds over the next few years... for major markets at least.
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