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Blu-ray Disc Sales up 35% in 2011

6 Dec, 2011 By: Erik Gruenwedel

Sales of Blu-ray Disc movies in the last four months of the year have skyrocketed, eclipsing what had been a sluggish year for the high-definition packaged media format, an analyst said.

BD disc sales in the United States will reach about 115 million units in 2011, compared with 85 million units in 2010 — spearheaded by the Star Wars: The Complete Saga boxed set release, Jim Bottoms, analyst with Futuresource in London, told Home Media Magazine.

In Europe, BD disc sales will balloon 42% to 63 million units, compared with 44 million units last year — driven by strong adoption in Germany.

Global BD disc sales will increase to 234 million units, up 45% from 161 million units in 2010.

Bottoms said that in addition to growing appeal for catalog titles in Blu-ray, consumers are less resistant to purchasing content in HD, despite the higher price compared with DVD.

“Blu-ray buy rates are starting to nudge up here in the United States and in Europe,” he said, adding that premium pricing on BD titles declining more quickly in Europe than in the United States.

Futuresource found a 50% price premium compared with DVD on the top 10 releases in the United States. The average new-release BD title sold for $25, compared with $16 for DVD. In France, the price difference between BD and DVD new releases is about 20% — a level Bottoms said needs to be emulated domestically.

By comparison, German retailers charge 36% more for BD titles compared with DVD — a benchmark Bottoms said underscores the country’s strong market for high-definition packaged media.

“Sales of discs in Germany are outstripping sales in the U.K., which is almost unheard of,” he said.

Bottoms said a mixture of scant HD programming on German TV combined with strong retail support have pushed BD sales.

Meanwhile, price reductions on Blu-ray Disc players, including a $39 player sold by Best Buy on Black Friday (and British e-commerce retailer Asda, which is owned by Walmart, sold a player for $59) have prompted consumers to revisit the format.

“We’re getting to the price point now where CE manufacturers won’t make a DVD player and a Blu-ray player,” Bottoms said. “There’s no point in having double inventory.”

The analyst said that while media hype about streaming and subscription VOD services such as Netflix, Hulu Plus and Amazon Prime won’t abate anytime soon, 80% of consumer spending on video entertainment in the United States ($17 billion) is being spent on packaged media.

Non-packaged media revenue of $4 billion includes transactional and subscription VOD via online, cable and satellite TV, Bottoms said.

“That pendulum will swing, but outside of big cities like Los Angeles and New York, the whole middle of America still finds disc distribution important,” he said.

Bottoms said Hollywood has to realize that the margins generated by packaged media greatly exceed margins derived through streaming and transactional VOD.

He said efforts to launch digital locker UltraViolet, whereby consumers can own both physical and digital copies of a movie, are imperative.

“It’s important that the industry keeps that alive for as long as possible,” Bottoms said.

Indeed, Futuresource projects that by 2015, 30% of video consumption will occur online, followed by Blu-ray Disc (29%), transactional VOD (21%) and DVD (20%).

About the Author: Erik Gruenwedel

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