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Cost, Content and Awareness Key to Blu-ray Disc Adoption

22 Aug, 2008 By: Paul Erickson

Blu-ray won the battle with HD DVD early this year, and consumer awareness of the technology is on the rise as the overall installed base of HD households grows. Despite this, high-definition disc adoption is being squeezed between upconverting DVD players, digital video-on-demand and the rise of digital video being delivered online.

Standalone Blu-ray Disc player sales have trailed standard DVD sales during their life cycles. While Blu-ray has prevailed over HD DVD, the battle against competing sources of digital video in the home has just begun.

What will be the key factors that will determine Blu-ray’s fate?

Cost, consumer demand and awareness, and content availability will help determine how long Blu-ray will take to supplant DVD, and how it will fare against newer, non-physical methods of delivering digital video to the consumer.

A major factor is cost.

What are consumers willing to pay for a Blu-ray player? Blu-ray players sell for about five times the cost of upconverting DVD players. As this differential decreases substantially over the next two years, mainstream consumer interest will improve.

Another factor is consumer demand and awareness. Consumers do not necessarily dislike Blu-ray, but many simply aren’t aware of the benefits Blu-ray provides. Still, the mainstream consumer will eventually invest in Blu-ray, but it will require more exposure, education, and price drops.

Content is king in the Blu-ray realm as well. Some consumers are hesitant to jump into Blu-ray given what is perceived as a limited availability of titles. The number of Blu-ray titles available still pales in comparison to the massive library of standard DVD titles available.

Mass consumer adoption will occur when there is an enticing combination of consumer awareness, a sufficiently large and appealing content library, mainstream-affordable hardware and software pricing, and a higher level of 1080p HDTV penetration. This environment will take time to arrive, but is nearly guaranteed to occur.

Video-on-demand and digital download growth have yet to meet expectations, but are expected to gain traction over the next two years. It will become increasingly important in the near term for the Blu-ray camp to firmly position Blu-ray Disc within the mix of an increasing number of ways to consume digital video, including DVD.

Will any of these methods prove superior for the consumer and kill off one or more of the others? Or will all these methods of consuming digital video coexist? It’s not likely the industry will have a clear picture of how this mix will shake out for at least another one to two years.

Paul Erickson is the director of DVD and HD market research at DisplaySearch.

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