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Blu-ray to Outsell DVD in 2012?

by June 26, 2008
Blu-ray to Outsell DVD?

Blu-ray to Outsell DVD?

There are two ways to look at a report filed by the Entertainment Merchant Association: 1) Somebody is really excited and optimistic about Blu-ray, or 2) The fact that everyone already owns a DVD player means that it will still take 4 more years before consumers are buying into new technology at a rate that exceeds the replacement rate for set-top DVD players - presumably including existing and new game consoles which sport the embedded technology.

Either way you look at it, 2012 is not exactly a number that breathes life into the trudging road Blu-ray is undergoing to achieve market saturation. The report states that nearly 9 million high-definition discs were sold in 2007, adding up to just over $260 million in revenues. Of course, while this number seems big, it must be compared to 2007 sales numbers of traditional DVD players: $16 billion. That's a 1.6 percent marketshare, meaning people are currently 98.4 times more likely to buy a DVD over a Blu-ray disc.

Still, one would think DVDs can't last forever. While there were 12,177 DVDs released in 2007, down from a peak of 13,950 in 2005, this may have something to do with a stalling economy rather than any sort of indication that the DVD is beginning to lose its luster. In the 2012 number, sales of Blu-ray discs are predicted to exceed those of standard DVDs, generating sales of $9.5 billion.

Fundamentally, I see a flaw in this logic. For one, I believe disc sales will continue to drop after 2008 due to the introduction of more online and downloadable content choices and an increased shift to rental markets. This will be especially true of the economy continues to stall. In 2007, traditional rental stores, dominated by the Blockbuster brand, accounted for 73% of the rental business. Online subscription rentals (such as Netflix and Blockbuster's Total Access) were 25% of the market. Look for that  ratio to change, increasingly into online rental's favor.

We can't predict the future, but we do see some contradictory information that seems to count some of these latest predictions as being somewhat optimistic. In what may sound as a surprise to some of you we do agree in part with some recent predictions that tell of a swift shift of unit sales of Blu-ray systems exceeding set-top DVD players. The reason this is actually believable is because there are hard numbers showing the, in Japan, Blu-ray Recorders are the dominant DVR format and are gaining a solid foothold with consumers. Domestically, Blu-ray - a new format - is competing against the U.S. DVD market which has all but achieved full saturation. That essentially pits an exciting new technology against those who are simply replacing existing DVD players. With those odds it's not too difficult to imagine that, if the PS3 is lumped in with Blu-ray players, then the new format may outsell DVD set-tops within a short amount of time.

About the author:
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Clint Deboer was terminated from Audioholics for misconduct on April 4th, 2014. He no longer represents Audioholics in any fashion.

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Recent Forum Posts:

JackT posts on June 27, 2008 19:38
I agree with many of the points BMX made in the above post.
BMXTRIX posts on June 27, 2008 17:22
Clint DeBoer, post: 427700
It's not confused at all - DVD player sales will closely drive levels of software sales. We simply integrate both numbers in the article. You can't possibly think they are unrelated or lack correlation?
Come on Clint! Last year DVD players finally surpassed the number of VHS players on the market.

By the statement you JUST made, this means that last year was likely the first year that DVD outsold VHS.

In fact, it was about FIVE years ago, about five years into the DVD market at which point DVD sales surpassed those of VHS, and it is consistent with the current adoption levels, and the price drops of Blu-ray have been equal to or surpassed DVD.

Clint DeBoer, post: 427700
Sorry that we're not drinking the kool aid on this… in fact, we seem to be one of the ONLY magazines that is taking such a skeptical approach to Blu-ray as a replacement to DVD… um, mostly because the studios don't seem to be taking any steps to market it as a replacement technology…
Strange that Blu-ray studios have stated openly that the profits they are seeing from BD are making up for the sales decreases they have seen from DVD. Don't get me wrong, DVD is king - and will be for a while more. But, it seems that people are ignoring the target numbers which BD manufacturers, and studios have been shooting for, and hitting. They are on track to see 8% of disc based revenue by years end, which represents a 400% increase in their market share. BD has seen the jump to near 100% support of the product, and we will see all the big blockbusters this year get released with DVD.

But, at 4 or 5% market share, I hardly think that studios are quite ready to start releasing Blu-ray a week or two ahead of DVD titles to help spur additional Blu-ray sales…

On the other hand, I think by next holiday season, with the far higher profts studios get on BD titles, they may see 25% or so of their sales coming via Blu-ray and elect to do exactly that.

This site, as I've pointed out, has maintained far more than skepticism of the BD format, and while AH has clearly favored HD DVD, it is appalling, and remains so to me, that the site continues to nay-say the best HD video quality currently available on the market, and doesn't get behind the format openly with more player reviews, and title reviews, in combination with audio reviews of the products to see how they stack up.

Clint DeBoer, post: 427700
If we're wrong, I'll eat crow. If we're right then I hardly think we'll be even partially responsible given the vast sea of opposing viewpoints.
There are few opposing viewpoints except from those who work at Toshiba and are promoting their own product. Retailers are behind Blu-ray. All studios are behind Blu-ray. Major publications, like Home Theater have switched to exclusively reviewing Blu-ray titles, we are seeing BD players put front and center in retail stores, and we are seeing distributors completely unable to get stock for BD players such as Denon's $2,000 3800 player.

When all indicators point to a product doing well, it sure seems like AH has taken a stance to push the format down whenever possible.

Maybe I'm missing the pro reviews of HD audio discs released on BD to this point… Maybe I'm missing the reviews of the myriad of Blu-ray players currently available, including the just about to hit the floor BD50 from Panasonic.

I personally just don't get it. The numbers don't support the attitude presented. The studio, CE manufacturers, and retailers certainly don't either.

So, at what point does someone eat crow? I mean, if I tell you that VHS doesn't have a chance in the format war, then I'm right - because DVD came along and best it. If I tell you DVD doesn't have a chance, then BD or something else will beat it. If we say BD doesn't have a chance, then you better believe something will replace it some day. But, it sure doesn't seem like BD is in a world of hurt with the numbers it has been able to put up to this point.
JackT posts on June 27, 2008 15:54
Clint DeBoer, post: 427700
It's not confused at all - DVD player sales will closely drive levels of software sales. We simply integrate both numbers in the article. You can't possibly think they are unrelated or lack correlation?

Sorry that we're not drinking the kool aid on this… in fact, we seem to be one of the ONLY magazines that is taking such a skeptical approach to Blu-ray as a replacement to DVD… um, mostly because the studios don't seem to be taking any steps to market it as a replacement technology…

If we're wrong, I'll eat crow. If we're right then I hardly think we'll be even partially responsible given the vast sea of opposing viewpoints.

I'm down with the skepticism thing, except for the fact that you seemed MUCH less skeptical of HD-DVD. The only time Audioholics ever bothers to write something about Bluray is to write something negative. This signifies a bit more than healthy skepticism, IMO.
aarond posts on June 27, 2008 15:12
Clint DeBoer, post: 427700
Sorry that we're not drinking the kool aid on this… in fact, we seem to be one of the ONLY magazines that is taking such a skeptical approach to Blu-ray as a replacement to DVD… um, mostly because the studios don't seem to be taking any steps to market it as a replacement technology…

why would the studios do anything to piss off the people that spent 16 billion dollars last year on dvds. bluray is for the electronics industry not the studios. with dvd players at a saturation point the manufacturers need something to take up the slack. when the prices come down joe & mary sixpack will start looking at bluray for replacement players, but they're not rushing out to get one just because.
we are going to buy the movie no matter what format it is and thats all the studios care about
Clint DeBoer posts on June 27, 2008 13:23
BMXTRIX, post: 427553
The analysis of Audioholics on this seems to be a bit confused. The article does not claim BD players will be outselling DVD players, but makes the claim that BD MOVIES - the software - will be outselling DVD titles.
It's not confused at all - DVD player sales will closely drive levels of software sales. We simply integrate both numbers in the article. You can't possibly think they are unrelated or lack correlation?

Sorry that we're not drinking the kool aid on this… in fact, we seem to be one of the ONLY magazines that is taking such a skeptical approach to Blu-ray as a replacement to DVD… um, mostly because the studios don't seem to be taking any steps to market it as a replacement technology…

If we're wrong, I'll eat crow. If we're right then I hardly think we'll be even partially responsible given the vast sea of opposing viewpoints.
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