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For Most at ESCA the Future is Blu

23 Jun, 2009 By: Chris Tribbey

Paulette Pantoja, founder and CEO of BluFocus, shows off the company’s BD Touch application.

LOS ANGELES — Ashwin Navin, former president of BitTorrent, stood before a packed crowd of people from the home entertainment industry June 23 at the Entertainment Supply Chain Academy Conference and warned that Blu-ray Disc could be living on borrowed time.

His presentation showed how the CD business peaked in 2001, at the same time personal computer hard drives nearly doubled in capacity, becoming capable of holding music from 350 CDs. Then DVDs peaked in 2007, the same year an average computer could handle 350 movies, he said.

Using the same barometer, Navin said, in 2013, average computers will be able to hold 350 high-def films, potentially making disc obsolete.

Most of the other speakers at the conference were more upbeat about the format.

Chris Cookson, president of Sony Pictures Technologies, pointed out that a DVD purchased in 1997 will most likely still work in a DVD player made in 2009, while much of the electronically delivered content people purchased just a few years ago won’t work today. And Andy Setos, president of engineering for The Fox Group, said virtual content sitting on a hard drive lacks the security and permanence of physical disc.

Tony Korkunis, SVP of retail development for 20th Century Fox Home Entertainment, said, “I don’t think the future [for Blu-ray] is gloomy at all.”

Paul Scott, EVP of Sony DADC shared stats that showed sales of Blu-ray Discs are up 212% this year. “By 2012, 500 million Blu-ray units will be sold. By 2013 we expect [hardware prices] to be $50.”

Futuresource research projects DVD unit sales will drop 11% in 2009 compared to 2008, with DVD revenue dropping 13%.

“There’s a lot of downward pressure on retail pricing,” said Alison Casey, Futuresource’s head of global content. “Blu-ray will be absolutely vital to keeping volume and value healthy.”

Futuresource projects 75 million Blu-ray Discs will be sold at retail this year, up from 24 million in 2008. By 2012, Blu-ray household penetration in America could be at 50%, she said.

Blu-ray is playing nicely with the Internet, said speakers.

Dorinda Marticorena, SVP of worldwide marketing and high-definition for Warner Home Video, shared that of the 2 million The Dark Knight Blu-ray Discs purchased, 22% of the owners, or 440,000, took advantage of the digital copy included.

“In my marketing career, I’ve never seen a redemption rate like this,” she said. “It says consumers are loving this.”

Kristopher Brown, VP of worldwide high-def market expansion for Warner Home Video, said more than 90% of Warner Blu-ray Disc owners access available BD Live features. He also said the upcoming Facebook application included with the Watchmen Blu-ray won’t be the last time Warner partners with a social network for Blu-ray.

And Tracey Garvin, SVP of Sony Pictures Home Entertainment, called the studio’s new MovieIQ BD Live feature, debuting in September, the “killer app” the industry has been waiting for.

Meanwhile, a Blu-ray Disc Association task force for 3-D standards on Blu-ray will meet for the first time at the end of July, according to Tony Jaskionowski, senior group manager for Panasonic, and a standard could be accepted by the end of the year.

Despite Blu-ray’s promise, studios need to keep an eye on electronic delivery, speakers said.

Chris Cookson, president of Sony Pictures Technologies, said that the easier the studios make content available to consumers, the less likely they’ll be to steal it. “But not everybody makes content available in as many ways as possible,” he said.

Art Hair, CTO for Walt Disney Studios, said there are both pro pirates and casual pirates, with the latter less likely to steal content if they’re able to get their hands on it easily — for the right price, of course.

“We need to make sure that consumers who [access] content on the Web actually pay for it,” said Paul Scott, EVP of Sony DADC. He said no one in the business believes that physical product will be completely replaced by electronic delivery, at least not any time soon.

Alison Casey, head of global content for research firm Futuresource, said that internationally, high-def content broadcast into people’s homes is lagging behind the number of HDTVs those people are buying. “It’s a fantastic opportunity for the industry to get Blu-ray into people’s homes,” she said. By 2012, electronic delivery revenue will still only account for 29% of home entertainment revenue, she said, with DVD and Blu-ray still making up the bulk.

“It’s really tough out there for people with digital services,” she said. “In the online world, it’s all about free content.”

Doug Reinart, EVP of worldwide operations for Paramount Home Entertainment, said that even with all the focus being put on electronic distribution, “there will be a physical supply chain. There will be physical product.”

Certainly the supply chain is under pressure in hard economic times, speakers said.

“Even if we do make mistakes, we want to keep product in the marketplace, mark it down, get it sold,” said Dan Miron, EVP of worldwide supply chain management for Warner Home Video.

“It’s clear to us that we must increase efficiencies in the supply chain,” said Ron Sanders, president of Warner Home Video.


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