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Panel: Blu-ray Faces Challenges

25 Jun, 2008 By: Erik Gruenwedel

The euphoria surrounding Blu-ray Disc and BD Live was tempered a bit June 25 when an industry panel cautioned that consumer adoption of the next-generation format was vital to home entertainment but hinged on a variety of factors, including education, pricing and retailer participation.

“It's a lot more critical that this take hold and consumers be educated about what is on a high-def disc,” said Scott Hettrick, moderator of the breakout session at the Entertainment Merchants Association's Home Media Expo 2008 in Las Vegas. “There's a lot more urgency.”

Dave Hoffman, VP of Nielsen Home Entertainment and VideoScan, said Blu-ray sales continued to be largely driven by suburban male video gamers under the age of 34 with high incomes. But, he added, updated data suggested that 40% of Blu-ray adopters also are over age 35 with families.

Hoffman cited 2007 data that said the average Blu-ray shopping basket was $162.36, which included $40.16 in DVD purchases and $61.53 in related products such as video games and food items.

By comparison, the average DVD shopping basket was $92.93, which included $19.79 in related product purchases.

“Blu-ray sales are over-indexing at some of the consumer electronics stores that stock higher ticket items, [compared to] grocery stores, where DVD is stocked next to food items,” Hoffman said.

Russ Crupnick, VP and senior industry analyst for The NPD Group, said the data underscored the early adopter phase of Blu-ray, and the reality that 40% of consumers didn't know which side won the format war.

He said NPD data suggested that 9% of HDTV owners intended to purchase Blu-ray in the next six months, which he said translated to 4 million new Blu-ray owners.

He said if each of those buyers acquires four titles at $25 a piece, the incremental revenue gain to the industry is $400 million.

“The purchase intent is there, it's improving, we can do better but it's not all that horrible,” Crupnick said.

The analyst said the advent of BD Live should create excitement for Blu-ray at retail in terms of how it differentiates from standard DVD.

Patrick Wahlquist with the Home Theater Forum said from an enthusiast's perspective, BD Live was “just not that important.”

He said early adopters were more interested in how a Blu-ray movie looked, sounded and was priced. He said enthusiasts were not looking for the “killer app” in movie watching.

Wahlquist said features such as GPS navigation on Transformers and Cloverfield was fun for “five minutes.”

He said Sony's PlayStation 3 continued to be the dominant Blu-ray player due to functionality, Internet connectivity and price.

The NPD said 43% of PlayStation 3 owners in the last month used the BD-drive to watch movies.

Tom Adams with Adams Media Research said bells and whistles such as BD Live and digital files were important to satiate early adopters.

“Keep in mind this is the early adopting crowd,” Adams said. “We don't care what the mass market ultimately does about Blu-ray this year.”

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