Blu-Ray, Are You Ready for Your Close-Up?

It’s official. In the battle for high-definition video, Sony’s Blu-Ray Disc DVD beat out Toshiba’s HD DVD last week to become the industry’s single platform. In what has amounted to “VHS v. Beta-Max: The Next Generation,” consumers looking to purchase and watch high-def DVDs have spent the last two years confused over compatibility, and hesitant to purchase expensive equipment that could quickly wind up obsolete. Consumers can look directly to the Blu-Ray platform for their HD DVD needs now that Toshiba’s board voted to abandon its technology and bow out of the race.

Back in September, Mike Bailey investigated Blu-Ray and HD DVD preferences on Netflix (NFLX) for the Compete blog. Given recent events I thought I would revisit these data. First, I looked at interest in browsing movies by format type on NetFlix.

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• Blu-Ray interest averaged over 1.8X HD DVD interest during this time period
• Though values increased since October, interest in both platforms remains very low (less than 1% of all account managers online)
• NetFlix actually dropped HD DVD earlier this month announcing they would not carry any new HD DVD titles

This chart shows Blu-Ray having a clear advantage over HD DVD. Still, the trend for both platforms is mostly flat. Interest grew less than 0.2% in the last four months (including a holiday period). To investigate further, I looked at a popular video shopping site, Best Buy (BBY). While NetFlix provides insight into movies consumers are looking to rent for their current equipment, Best Buy can present additional insight into shoppers’ purchasing behavior and perhaps signal buying trends to come.

• Blu-Ray interest shows an increasing trend, almost doubling over the last four months
• HD DVD interest remains flat, similar to trends seen on NetFlix

With HD DVD out of the game, the industry now depends on Blu-Ray’s success for additional growth and revenue. Consumers should be more open to upgrading DVDs and equipment now that their confusion over platform survival and technical specifications is cleared up. But Blu-Ray sales have to date been sluggish at best. It will be interesting to see if interest and sales grow much quicker now with only one platform. Additionally, it’s time for marketing departments to convince consumers that regular DVDs just won’t cut it anymore; it’s time to upgrade. Can they do for Blu-Ray Disc DVD what others have already done for HD TVs?

Comments

[billddrummer]

The good news for consumers is that now hardware manufacturers can start offering lower-priced Blu-Ray players, which will do two things: Provide a new product cycle for CE retailers; and Stimulate interest for lower-income consumers. A sticking point for many shoppers is the entry price for a Blu-ray player, $400 or so. With the format war over, it will now make sense for manufacturers to offer lower priced players to serve the vast middle-income market.