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Sonic Eyes 'Blu' Christmas

26 Feb, 2008 By: Erik Gruenwedel

Sonic Solutions is projecting significant software revenue increases in 2008 due to the end of the format war and Blu-ray's widespread adoption by the major studios.

The Novato, Calif.-based software manufacturer currently licenses Blu-ray professional-authoring software to content creators, including most studios. Sonic discontinued marketing HD DVD pro authoring software last month.

Sonic recorded $1.6 million in HD pro-authoring revenue in the third quarter (ended Dec. 31), up 8% from the same period the previous year. The company posted revenue of $34 million for Roxio consumer software, which includes authoring, editing and burning software.

Sonic posted net revenue of $35.6 million for the quarter. The company said the preliminary financials, which did not include net income, would be updated while it deals with restating previous fiscal quarters.

In a call with investors, Sonic CEO Dave Habiger said he expects hardware manufacturers aligned behind Blu-ray to begin bringing multiple Blu-ray-enabled products to market.

“As they scale Blu-ray devices, price points will continue to decline and we expect to see an increase in sellthrough signaling to the major distribution studios that the format is reaching critical mass,” Habiger said.

He said when standalone Blu-ray players surpass $2 million in revenue, studios would increasingly commit a broader number of catalog titles to production.

“As the studios open up their catalogs for Blu-ray, demand of these professional tools will increase, especially as holiday titles for 2008 go into production,” he said.

He said implementation of Blu-ray technology in CE devices would result in improved revenue for Sonic's advanced technology group. Habiger said recent announcements that Sony, Adobe and Broadcom would incorporate Sonic's BD authoring tools, he projects additional large-scale traffic.

“We expect other customers to follow, resulting in per-unit royalties and other revenue ramping in anticipation of a Blu Christmas,” he said.

Habiger said there already is an up tick in BD authoring by the studios, following the departure of HD DVD from the market. He said wide scale adoption of BD players will be the next catalyst.

“We are seeing that already take place,” Habiger said. “We expect to see that at the end of the summer and into fall as studios get titles out for Christmas.”

Finally, Sonic remains bullish on its Qflix download-to-own software available for both professional and consumer applications.

The CEO said Sonic's goal is to provide a software infrastructure that allows its partners to drive adoption of Qflix through all online and brick-and-mortar retail sellers of DVD, including kiosks.

“We project 66.2 billion blank DVDs are purchased annually for non-commercial use and when Qflix becomes the standard on-demand technology, we stand to benefit from consumer adoption of download-to-burn,” Habiger said.

He said Qflix and BD pro tools are based on the premise that consumers are looking for content on multiple devices.

“Consumers shouldn't see an iPod or other portable device any different than a DVD,” Habiger said. “We are encouraging adoption of digital media through the PC.”

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