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ESCA Confab Reveals Europeans Slower to Adopt Blu-ray

By Stephanie Prange | Posted: 02 Oct 2008

PRAGUE, Czech Republic — The European DVD market, like that in the United States, is essentially flat, with a few pockets of growth potential in the Eastern and Central European markets, speakers said at the ESCA Europe conference.

Meanwhile, Europe is waiting on the United States to help it move into the Blu-ray future.

“It’s fair to say that the United States is ahead of Europe in terms of high-definition adoption, particularly among retailers,” said Jim Bottoms, of research firm Futuresource, which he said was “disappointing.”

“People are waiting for the U.S. to develop the market,” explained panelist Will Morley, Deluxe Digital Studios, London, who outlined the more complicated learning curve of authoring Blu-ray Disc.

Dieter Daum, of Sony DADC, likewise looked to the United States as a leader in adopting Blu-ray, while urging European industry movers to help grow the market.
“Please help me to make the future Blu,” he urged. “I think in the United States it’s dark Blu. I think in Europe it’s light Blu.”

Bottoms said that there is tremendous potential for Blu-ray in Europe because “approximately one-third of all homes will have HD capability” by the end of the year.
Europeans are snapping up HDTVs because the flat-screens fit nicely in small quarters.
Meanwhile, HD content lags and is of lower quality then Blu-ray, offering packaged media an opportunity.

HD content in Europe, via cable and satellite, etc., is “nowhere as good in quality as Blu-ray,” Bottoms said, enjoining the industry to “take on education” of European consumers on the quality of the high-def disc versus other HD options.

Philippe Cardon, president, international, Warner Home Video, said the packaged media business is extremely important to the studio. DVD is Warner Bros.’ single largest business, helping to finance movie production, he said.

Blu-ray is an “enormous opportunity,” Cardon said.

Purchase intent more than doubled following the format war, he said.

The PlayStation 3 could be promoted more widely as a Blu-ray player worldwide if consumers had a better remote control, he said, adding that Warner was working with Sony to bundle content with the remote.

Replicators noted that Blu-ray AACS copy-protection made their job harder. “It’s expensive,” noted moderator James Steynor, an optical manufacturing consultant.

But Deluxe’s Morley noted interactive BD Live is a killer app. “I know there were some skeptics out there; I’m not one of them,” he said. “I think it is absolutely critical.”

Cardon said digital copies on DVDs and Blu-ray Discs are enjoying some success with consumers, with 64% judging it a better value than standard DVD, 49% more interested in buying DVD with digital copy and 75% considering it an innovative way to consume.
Still, Amy Jo Smith, of DEG: The Digital Entertainment Group, said while “digital copy helps to bridge packaged media into digital,” the industry must “keep its focus on DVD.”

Collectors’ editions and complete TV series are doing well on DVD, noted Cardon.
“There is real consumer interest in stepping up to those more expensive gift sets,” he said.

Steve Dahl, SVP, worldwide operations and IT, Walt Disney Studios Home Entertainment, said his studio had success with a special The Nightmare Before Christmas item packaged with the video to add value.

Aoden Coburn, EVP, worldwide operations, with Sony Pictures Home Entertainment, noted that his studio was able to design packaging for the complete “Seinfeld” series that satisfied the objectives of all the European markets, but that also satisfied environmental objectives.

Sustainability was a key focus of the conference, with Larry Wild, VP, worldwide operations, Walt Disney Studios Home Entertainment, discussing the many steps the DEG is taking to help the industry become more green. Recycling, new packaging and better supply chain efficiencies are part of the recommendations from the DEG.

Fighting piracy also is a focus internationally, with Cardon noting that legislative efforts have helped the studios partner with government and ISPs to prevent online piracy.

“Across Europe the trend is one of ISPs being asked to provide much greater cooperation to attack P2P piracy,” he said.

Piracy is also a problem in some of the potential growth areas for DVD and Blu-ray.
Eastern and Central European growth is expected to be substantial through 2012, Bottoms said.

But a panel on emerging markets pointed out problems in these territories, including piracy, varying languages that don’t support replication volume and newspaper stand DVD sales for extremely cheap prices of about $2 in the Czech Republic.

Christopher Marsh, of Walt Disney Studios Home Entertainment, said the way to combat bargain basement pricing was to offer “more high-value SKUs.”

“You have to differentiate your product,” he said.

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