Netflix Picks Blu-ray, Analysts Ho-Hum11 Feb, 2008 By: Erik Gruenwedel
Online rental pioneer Netflix has turned Blu.
Citing the decision by a majority of major movie studios to publish high-def DVD titles only in the Blu-ray format, Los Gatos, Calif.-based Netflix said it will purchase only BD discs going forward.
The company will continue renting movies in the rival HD DVD format limited to stock on hand, according to a spokesperson. It will no longer purchase new HD DVD titles.
The decision mirrors rival Blockbuster Inc., which last summer said it would only offer Blu-ray titles at its company-owned rental stores.
Warner Home Video last month said beginning June 1 it will release HD titles exclusively in the Blu-ray format, joining Sony Pictures Home Entertainment, 20th Century Fox Home Entertainment, Lionsgate and Walt Disney Studios Home Entertainment. The two remaining majors, Paramount Home Entertainment and Universal Studios Home Entertainment, publish exclusively in HD DVD.
Netflix said the industry's stated preference for Blu-ray made it clear to transition to a single format.
“The prolonged period of competition between two formats has prevented clear communication to the consumer regarding the richness of the high-def experience versus standard-definition,” said Ted Sarandos, chief content officer for Netflix. “We're now at the point where the industry can pursue the migration to a single format, bring clarity to the consumer and accelerate the adoption of high-def.”
Michael Pachter, media analyst with Wedbush Morgan Securities in Los Angeles, doubts Netflix's decision will bring enlightenment to consumers.
“Not many consumers are flocking to Blu-ray or HD DVD,” Pachter said. “Probably 3% of U.S. rental households rent HD.”
Netflix spokesperson Steve Swasey said the company doesn't reveal rentals by format, but admitted the percentage of HD rentals was not big.
“It's a small amount, consistent with the rest of industry,” he said. “It looks like the format war had been won by Blu-ray for the benefit of everyone. We wanted to put an exclamation point behind that.”
Netflix stocks several hundred titles in each format.
Rob Enderle with The Enderle Group in San Jose, Calif., said Netflix's decision wouldn't have much impact due to the limited number of HD players and titles in the market.
“Netflix was one of the best values out there because they didn't charge a premium for HD content and you could get both Blu-ray and HD DVD,” Enderle said. “But outside of Netflix customers, few rent HD movies today, largely due to poor player penetration.”
Russ Crupnick, VP and senior entertainment analyst with the NPD Group, said Netflix's announcement was good PR.
“It sounds like another a drop in the bucket,” Crupnick said. “One more thing leading up to Blu-ray's current market status.”