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Analyst: Blu-ray Player to Supplant Set-Top Box

15 Dec, 2009 By: Erik Gruenwedel

In an increasingly connected home entertainment universe, the Blu-ray player is emerging as successor to the set-top box and conduit between packaged media and digital distribution.

New research from The Diffusion Group indicates the market for Web-based set-top devices such as the Roku media player, Vudu, Popcorn Hour and Boxee Box, among others, with be non-existent by 2014.

The Dallas-based research company said the 30 million set-top boxes sold by 2014 would represent just 3% of all Web-enabled CE devices purchased over the next five years.

Instead, CE manufacturers and Hollywood studios, beginning next month at the cavernous Consumer Electronics Show in Las Vegas, will push consumers toward adopting connected Blu-ray players and video game consoles such as the PlayStation 3 and Xbox 360 in an effort to hedge slipping disc sales while future-proofing the roughly 50% household penetration of recently acquired, non-connected, flat-screen televisions.

In addition, with retail prices for connected Blu-ray players continuing to fall, the devices are seen as an attractive alternative to a premium-priced Web-enabled HDTV just entering the market.

“While consumers may be driven to buy a new game console or Blu-ray player to play disc-based games or watch disc-based movies, they soon will discover that by simply connecting these devices to the Internet, an entirely new world of entertainment is opened,” said Colin Dixon, author of the TDG report.

The analyst said early support for the set-top box was premised upon the belief that consumers were eager to network their PC and Internet media with their TV and home entertainment system.

“In reality, mass interest in this type of media sharing failed to materialize and, consequently, the digital media player has languished,” Dixon said.

With more manufacturers at CES to showcase lines of Web-enabled Blu-ray players, many with embedded widgets for Netflix streams, Amazon VOD, Blockbuster On Demand, YouTube, Pandora music downloads and related content, Michael Hurlston, VP and GM for Broadcom’s home and wireless networking business, believes a greater percentage of mainstream consumers are gravitating toward movie rental gratification via electronic means.

“The digitization of video is happening, but generally at a slower pace than with music,” Hurlston said. “The studios have been more careful than the record labels were about protecting content.”

Indeed, TDG’s Dixon said the Blu-ray player would probably outsell the Internet set-top box by a margin of 10-1, spurred in large part by plummeting prices for BD content.

“I don’t see Hollywood moving away from packaged media anytime soon,” Dixon said in a recent interview.

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