HDTV, Blu-ray, and 3D Trends: 2011 Q1

[Woochifer]

The Digital Entertainment Group released the HDTV, Blu-ray, and 3D sales figures for the 1st quarter. Bill Hunt of the Digital Bits posted the summary a few weeks ago, but I didn't think much of this news, as it generally showed modest gains, but nothing hinting at any accelerated trends in any direction one way or another.

Yet for whatever reason, some download-obsessed tech bloggers, as usual, have taken select snippets of data, and spun some fantasyland scenario where Blu-ray is on its death bed and downloads have taken over. Naturally, as they have been for the past five years, they are wrong because they frankly don't care to tell the truth, so long as they keep up the happy talk about all things streaming and downloading.

On optical media, the bottomline is that sales slid by 18% compared to Q1 2010. But, the biggest factor to consider is that covered a period in which the movie box office was also off by 25%. If anything, the home video sales are following the trends established by box office.

BLU-RAY GAINS

Blu-ray by itself gained 10% during this period, yet some of the tech bloggers saw this as a sign that the format is dying, even though these sales were generated by movies that underperformed at the box office.

And if you look at the hardware side, over 30% of US households now have a Blu-ray player, with projections of close to 50% by the end of this year. Blu-ray player sales were up 13% compared to a year ago.

Despite these gains, my concern is that the growth curve is flattening out for Blu-ray. The format is still gaining steadily, but it does not show the accelerating "hockey stick" curve that we saw with the DVD format when it hit its fifth year.

I think the factor that might push Blu-ray over the top will be simply the phaseout of DVD players. All of the major players have pared back their DVD player models, and appear poised to discontinue them altogether within the next year or two, especially with list prices on brand name Blu-ray players now below $100.

HDTV NOW THE NORM

12 years after the first HDTVs came out, over 60% of US households now own HDTVs. Sales in the 1st quarter ran 11% ahead of last year. Again, not a huge gain, but a steady increase nonetheless.

3D TV GAINING

3D TV sales are now running about 50% ahead of the pace for HDTV. Both formats are similar in that the first year saw a dearth of 3D/HD programming, however the difference with 3D is that it is a simple extension to the existing MPEG-4 format already in use on Blu-ray players and most set-top boxes. Last year, the price premium charged between 2D and comparable 3D models was about $300. More recently, I have seen the price gap narrowing down to $100 to $200.

The DEG report mentions that 2015 projections show 3D TV penetration in 60%, and 3D Blu-ray players in 75% of US households. Both of these are very plausible scenarios, given that by 2015, 3D will simply be a standard feature on all new HDTVs, Blu-ray players, and set-top boxes.

[Sir Terrence the Terrible]

I am not that concerned about Bluray sales at this point. New releases have been just horrible lately, and let's face it, new releases are what drive the format. What is encouraging is that when there is a new big release, Bluray accounts for more than 40% of overall disc sales.

3D Bluray is really developing and growing, and I think it will do well once folks begin to upgrade or replace their current set. The 3D sets and projectors are excellent 2D and 3D performers, but the glasses need further development. The only problem I see on this front is Vizio trying to push passive polarized 3D set's with reduced resolution. Not only does their 3D set reduces resolution for 3D sources, but it does so for 2D as well. I don't think passive 3D technology by Vizio is ready for prime time. In a demo I sat in on, you could jaggies, reduced detail, and a softening of the picture when compared to active 3D.

[pixelthis]

All of the hardcore types have bought their BLU players, so
of course its slowing down.
BLU is really just an evolution of DVD, for all practical purposes,
and increased bandwidth will be its primary competition.
Collectors will keep it alive, but it is the last "hard" media
on the bus outta town to the net, where you will get , store,
and watch future media from.
The age of steadily improving "formats" coming out are over.
WHEN you can get your card hit for a few bucks and watch
anything on the planet, solid "media" just can't compete.

[Smokey]

Despite these gains, my concern is that the growth curve is flattening out for Blu-ray. The format is still gaining steadily, but it does not show the accelerating "hockey stick" curve that we saw with the DVD format when it hit its fifth year.

I think the main reason Bluray flattening out might be because DVD is still alive and doing well. Last year we talk about how DVD might be on death sprial and their shelf space in stores shrinking. But if you go to Walmart or Bestbuy, premium shelf spaces still seem belong to DVD discs. There seem to be thee rows of DVD shelves, where Bluray discs only occupy one shelf.

[pixelthis]

I think the main reason Bluray flattening out might be because DVD is still alive and doing well. Last year we talk about how DVD might be on death sprial and their shelf space in stores shrinking. But if you go to Walmart or Bestbuy, premium shelf spaces still seem belong to DVD discs. There seem to be thee rows of DVD shelves, where Bluray discs only occupy one shelf.

IN MY walmart BLU is taking over, and theres quite a bit of content,
from a shipped display type cardboard box with six dollar BLU discs
to twenty four dollar new releases.
I GOT THE ORIGINAL FAST AND FURIOUS, and the sound and
pic was amazing, for ten bucks. WHY THE HECK buy a DVD?
DVD is doomed, if for no other reason than the low price of BLU players.
THERE will always be a market for 25$ DVD players, but why
get a fifty dollar one when a BLU player that is quite good is 60 bucks?
ITS a truism that upconverted DVD has no res increase, but
the DVD presentation on most BLU players is magnificent.
So why buy a DVD player? And having a BLU player at hand, why buy a DVD when quite often the BLU disc is not much more expensive.

[Woochifer]

I think the main reason Bluray flattening out might be because DVD is still alive and doing well. Last year we talk about how DVD might be on death sprial and their shelf space in stores shrinking. But if you go to Walmart or Bestbuy, premium shelf spaces still seem belong to DVD discs. There seem to be thee rows of DVD shelves, where Bluray discs only occupy one shelf.

Well, on the hardware side, the DVD format is now very much in a death spiral. The first tier manufacturers have pared their DVD player lineups down to one or two bare basic standalone models. Blu-ray players have been outselling DVD players for more than two years, and midlevel and higher end DVD players have all been discontinued.

Quite the contrary, I don't think the DVD is alive and well. The DVD still outsells Blu-ray, but the real decline was with disc media as a whole. That 18% decline occurred with a 10% year-to-year increase for Blu-ray, which means that the decline for the DVD format was over 25%. Blu-ray is the only segment of the disc media market that's actually growing.

I can tell you from shopping at my local stores, the most visible shelf space goes to Blu-ray and the amount of shelf space is getting very close to the DVD. Recall that the DVD format had not yet achieved a majority market share when stores began clearing out their VHS inventory.

I am not that concerned about Bluray sales at this point. New releases have been just horrible lately, and let's face it, new releases are what drive the format. What is encouraging is that when there is a new big release, Bluray accounts for more than 40% of overall disc sales.

Very true, but the Nielson/Videoscan YTD figures had Blu-ray at 21% market share as of late-April. This is running about ~5 percentage points higher than a year ago, and those numbers will inch higher as the summer tentpole releases make their way to home video in the fall quarter. But, I expected the numbers to be closer to 25% at this juncture, especially with hardware sales showing Blu-ray now in more than 30% of US households.

I think the pricing disparity at this point is primarily what holds Blu-ray from achieving majority status.

3D Bluray is really developing and growing, and I think it will do well once folks begin to upgrade or replace their current set. The 3D sets and projectors are excellent 2D and 3D performers, but the glasses need further development. The only problem I see on this front is Vizio trying to push passive polarized 3D set's with reduced resolution. Not only does their 3D set reduces resolution for 3D sources, but it does so for 2D as well. I don't think passive 3D technology by Vizio is ready for prime time. In a demo I sat in on, you could jaggies, reduced detail, and a softening of the picture when compared to active 3D.

I saw that Costco is now offering a 42" 3D 1080p Panasonic plasma for ~$650. That's no different than the street price for Panasonic's 2D model, and that kind of price parity is where I think the entire market will end up within the next year or two. The transition's so simple, and for manufacturers using the shutter glasses, they can still make a decent margin on their sales with just the glasses.

Some manufacturers will try to push the price envelope with passive 3D (LG's been pushing passive 3D the hardest, and it wouldn't surprise me if they're Vizio's 3D TV contract manufacturer), while the opportunity at the premium pricing end will be with glasses-free 3D sets.

The 3D hardware will be ubiquitous no matter what the naysayers claim. The bigger issue will be content. How many releases will we get in 3D, and how much broadcast programming will be produced in 3D? On that latter point, I read that the CBC is dialing back their 3D production plans (they broadcast the Stanley Cup Finals in 3D last year, but won't this year) until the audience grows some more and production costs go down.

[Smokey]

DVD is doomed, if for no other reason than the low price of BLU players.

I would say DVD players are doomed, not DVDs since DVDs can be played on Bluray player.

Both Samsung and Sony DVD players with HDMI output are priced around $60. An LG Bluray player is only $20 more. Thus this might be the last year we probably see DVD player with HDMI output from major brands.

And having a BLU player at hand, why buy a DVD when quite often the BLU disc is not much more expensive.

The reason is one word: Content. There is still more content and movies on DVD than Bluray discs as not everybody looking for new releases.

[pixelthis]

I would say DVD players are doomed, not DVDs since DVDs can be played on Bluray player.

Both Samsung and Sony DVD players with HDMI output are priced around $60. An LG Bluray player is only $20 more. Thus this might be the last year we probably see DVD player with HDMI output from major brands.



The reason is one word: Content. There is still more content and movies on DVD than Bluray discs as not everybody looking for new releases.

not by much. THE ONE AREA that DVD excels in is tv shows.
BLU is playing catch up, but catching up fast.

[Woochifer]

I would say DVD players are doomed, not DVDs since DVDs can be played on Bluray player.

Both Samsung and Sony DVD players with HDMI output are priced around $60. An LG Bluray player is only $20 more. Thus this might be the last year we probably see DVD player with HDMI output from major brands.

The writing's on the wall. All of the major players have reduced their standalone DVD player lineups to one or two basic models. All the network connectivity and media reader functions have gone over to the Blu-ray players.

The reason is one word: Content. There is still more content and movies on DVD than Bluray discs as not everybody looking for new releases.

But, new releases represent the vast majority of sales, and that was the case even when catalog DVD releases still generated significant buzz. And it's the new release market that has been trending the most towards Blu-ray, especially among the top box office performers. Catalog titles are where the DVD still has a decided advantage, but that represents only about 1/4 of the market.

The success or failure of Blu-ray will be decided in how it fares with new releases. It won't matter one bit that the DVD format has more titles, because if Blu-ray's market share gets closer to 40%, stores will begin closing out their DVD inventory. Stores hate supporting multiple inventories, and they would rather dedicate their valuable shelf space to the format that's growing and provides a higher margin. The DVD is already a low margin product, and if sales volumes continue to decline, the retail orders will follow suit. Remember that at one time, VHS had a far more content, but that didn't stop the DVD from pushing VHS out.

[pixelthis]

The writing's on the wall. All of the major players have reduced their standalone DVD player lineups to one or two basic models. All the network connectivity and media reader functions have gone over to the Blu-ray players.



But, new releases represent the vast majority of sales, and that was the case even when catalog DVD releases still generated significant buzz. And it's the new release market that has been trending the most towards Blu-ray, especially among the top box office performers. Catalog titles are where the DVD still has a decided advantage, but that represents only about 1/4 of the market.

The success or failure of Blu-ray will be decided in how it fares with new releases. It won't matter one bit that the DVD format has more titles, because if Blu-ray's market share gets closer to 40%, stores will begin closing out their DVD inventory. Stores hate supporting multiple inventories, and they would rather dedicate their valuable shelf space to the format that's growing and provides a higher margin. The DVD is already a low margin product, and if sales volumes continue to decline, the retail orders will follow suit. Remember that at one time, VHS had a far more content, but that didn't stop the DVD from pushing VHS out.

THE SUCCESS or failure of BLU depends on collectors,
both casual and serious. On Ondemand, quite a few new releases are "same day and date" as DVD, and the HD quality is quite good . And the only rental source for discs is increasingly Redbox
a lot are not going to buy a disc for a casual viewing .
And the VHS/DVD situation is no comparison, the reason DVD beat VHS was that it was a great deal better.
VHS was so bad, but people were used to it, after the relatively
huge increase in q nobody could go back to it.
DVD has been eclipsed by much better viewing options, we all
forget how amazingly good it looked when it first came out,
better than laser and broadcast, VHS was like looking through a screen door by comparison. It wasnt content but quality (or lack thereof) that killed VHS.