Post-CES Observations on Blu-ray Disc Developments
January 16th, 2008By Paul Erickson, Director of DVD and HD Market Research
At CES, Warner Bros.’ announcement of Blu-ray exclusivity was the talk of the next generation segment, with Toshiba being taken by surprise before the show. The studio’s move has been covered extensively by a variety of outlets and has strongly boosted Blu-ray’s chances to win the format war. However, in the shadow of the Warner announcement, there are some other Blu ray-specific developments that perhaps deserve a further look.
At the show, the Blu-ray Disc Association focused on the announcement of new Profile 1.1 / Bonus View standalone BD players, with models from Panasonic, Philips, Sharp, Funai and Samsung among those featured. With typical street dates in the late first quarter and some in the second quarter, many of the models are realistically not expected to hit until major retailers have cleared inventory of current profile 1.0 players. A two-tier pricing structure is expected to emerge, with a mix of profile 1.1 and 1.0 players at the entry level, and nearer to the end of the year, Profile 2.0 / BD-Live compatible players entering at a higher-end price point. Several Blu ray CE companies commented that the lack of BD-Live content and consumer interest in connected features thus far makes BD-Live compatibility more of a priority for 2009.
With competitive pressure from HD DVD seemingly less of a concern to the Blu-ray camp, it appears many of the MSRPs for Blu-ray players will remain above the $300 level for much of 2008, with higher-end SKUs (such as Profile 2.0 / BD-Live players) returning to take the some of the spotlight around the $600 level or higher. While a boon for stabilizing price erosion for Blu ray member companies, given consumer conservatism demonstrated towards next generation player pricing thus far, the price stabilization may continue to keep overall next generation growth slow over 2008. It should be reiterated both that DisplaySearch’s findings noted significant increases in player sales only with significant price reductions, and also that NPD’s Russ Crupnick similarly found in consumer surveys that one of the two top reasons consumers were not buying next generation players was price. With format war “resolution” on many companies’ minds, the industry must remain mindful that consumers’ inhibitions have focused not on format war confusion, but entry price. For next generation DVD to grow as a segment in 2008, continued price competition among player manufacturers is expected to remain the most fundamentally effective way of reaching meaningful amounts of consumers regardless of any potential resolution to format confusion.
Also worth noting is the word that the world’s most popular Blu-ray device, the Sony Playstation 3, is expected to be fully upgradeable to Profile 2.0 / BD-Live capability. This highlights the potential for increasingly difficult positioning of non-Sony CE companies’ Blu-ray players against the Playstation 3. CES revealed that at least for 2008, Bonus View and BD-Live players will be priced in two tiers. Thus, it is likely that the Playstation 3 will remain not only among the cheapest Bonus View-capable players, but also the cheapest BD-Live-capable player through the end of the year. For many enthusiasts shopping for a Blu-ray player, the Playstation 3 has now strengthened its position as the most future-proof Blu-ray hardware available today.
Portions of this post are excerpted from the DisplaySearch Weekly Next Generation DVD Flash Report, covering weekly events within the next generation DVD market and tracking pricing and promotions at major US retailers. For more information on this report, click here.
www.displaysearch.com