Will Blu-ray ever capture 50% of the market?

[stockstar1138]

Please don't take this as a chicken little post, those who know my posting record know that i am one of the most optomistic posters on this board.

I'm not so sure if blu-ray will ever hold over 50% of the home media market. Here's why.

1. Downloads are on the rise. Do I think downloads are a viable format? No. Do I think downloads will ever hold more market share than blu-ray? No. Will the download market continue to grow over the next decade? Yes, and this eats into the market share blu-ray can have. Downloads have decent support from companies, Apple supports downloads, Microsoft supports downloads, and don't be suprised if Sony doesn't jump in by the end of the year. Also, I'm pretty sure that every major movie studio has some form of digital download distribution. There will be plenty of people who say, that movie was alright I don't want to buy the blu-ray for $19.99, because I'm only going to watch it once more, but I'd be happy to download a 720p, dolby digital download for $4.99. Like I said earlier, I don't think that downloads will ever be bigger than blu-ray, but there is demand for them right now, and companies will improve their download services (more titles, faster download times, higher quality), and with in increase in the quality of the service there will be an uptick in consumer support for it. Downloads are not a threat to blu-ray. Its not a competitor, but simply another way for blu-ray/dvd owners to get movies, which eats into market share. Look at it as the next-gen rental solution, which some people will use as their way of getting media or at least their way of getting media the majority of the time.

2. DVD is not going away anytime soon. Roughly 1 in 4 households own an hdtv. It took us nearly a decade to get 25% of the market with HDTVs in their homes and while HDTV growth is on the rise, and on the rise fast, it is going to be another decade before 80% of the market has an HDTV though. This means that there is no need for blu-ray for 20% of the market and thats after a decade from now. and just to point out, we are going into a recession, and that will certainly slow both blu-ray and hdtvs growth for the next few years. You need to realize that when we break 50% adoption, which most likely will not happen til at least 2011, , we are going to be dealing (a majority of the time) with people who have a below average income. HT fans in the bottom half have already gotten in, because its worth it to them. So, we are going to be dealing with people who make below avg. incomes who don't care that much about home theater. The average tv for a J6P right now is 32 inches, 480i, and costs roughly $400. Until you can get an HDTV that is $400 (inflation adjusted of course) and roughly that size and doesn't look like total crap, its going to be difficult for HDTVs to keep increasing market share once we overcome the 50% adopition hurdle. Despite popular belief the move to digital from analog broadcasts is going to cause a massive surge in HDTV adoption, its not. The move is only for people who do not have dish, cable, etc. and the govt. is basically handing out the solution (converters) for free. People that don't have a service, probably don't care that much about home entertainment and if they are offered with a. a free solution or b. buying a $1000 hdtv, that i will feed a SDTV signal into, I think 90% will go with solution A.

Here is my estimation for HDTV growth in America.

Jan 1st 2008 - 1/4th of US households
Jan 2009 1/3
Jan 2011 1/2
Jan 2014 2/3
Jan 2016 3/4
Jan 2018 4/5

please note that this is only for a household to have 1 hdtv in their home, they most likely will still have at least 2 SDTVs too in the house, which they will still use DVD (besides PS3, do blu-ray players have AV outputs). please also note that just because somebody has an hdtv doesn't mean they will support blu-ray. If people have the option of blu-ray quality on 1 tv, but can't play it on their other tvs, or upscaled quality on 1 tv and the option to play it on the other tvs, people are going to go with the later option. also, upconverters will be good enough for many. and especially don't expect people to replace their catalog dvds with blus. For those that do support blu, new releases are all they will probably buy.

Here are my predictions for software adoption

2008 - Blu-ray 1%, Downloads 1%, DVD 98%
2009 - Blu-ray 5%, Downloads 2%, DVD 93%
2011 - Blu-ray 20%, Downloads 5%, DVD 75%
2014 - Blu-ray 35%, Downloads 10%, DVD 55%
2016 - Blu-ray 40%, Downloads 15%, DVD 45%
2018 - Blu-ray 45%, Downloads 20%, DVD 35%

by 2018 we should see a new format on the market, blu-ray will begin to decrease as dvd is at the present time. downloads will begin to level off, and unless some major breakthroughs are done in internet speed, i don't think downloads or streaming is a permanent answer for a long time to come.

as you can see blu-ray does become a very healthy format, that recieves quality titles such as LOTR, Star Wars, ET, Jaws, JP, etc, and near the end of its life it is the most popular format, but never eclipses the 50% mark.

Just to clarify the downloads once again, these are not people who solely rely on downloads, but just total market purchases. for example in the future if their are 5 movies that I want, 4 that I think ill watch multiple times, and 1 that i just want to see once more, Ill download that 1 as a rental for 24 hours and buy the other 4 on blu-ray. Thus, 20% of my purchases are downloads and 80% are blu-ray.

There is only 1 way that blu-ray will become as successful as DVD, and that is, i cannot believe I'm saying this, Combo discs. I think combo discs are the solution to mass adoption, however, hd dvd jumped the gun to early, because they couldn't get the price down and studios still wanted cheap dvds for consumers. If studios only release in combo discs at a below 20 dollar price, blu-ray will take off like DVD did, but unless they do, I don't see blu-ray ever becoming really, really main stream.


thoughts?

[davidPS3]

Wow, great thread/post and alot of work you did on this.

I think that Blu Ray will own 50% of the market. DVD will slowly die out as the mass adoption of BR climbs. Down-loads will happen someday, but that I see is very far off indeed. The general public has not even embraced BR in mass and I see it still a couple of years off for this to happen. The average consumer is not going to get into down-loads now. There are just to many factors to consider that go against this trend to list out.

I think it safe to say that Blu is going to be in a fine position for quite awhile.

[BadAss]

My prediction is the studios pulling the plug on DVD in 2011. Thats in three years time every studio will switch from DVD to HDM forcing everyone to join the HD revolution.

I base this prediction on the way TV munufacturers pulled the plug on CRT tv's. Now where can you buy one of those anymore?

[JimPullan]

I'm glad you used terms like In my Opinion, Prediction, and Estimation, because that's all it is, pure speculation, whether optomistic or pessimistic on any of your points. The realities are just over the horizon, that which we cannot see yet, but will surface and become clear in time. This is my opinion. [Jim]

[dialog_gvf]

Are you talking about unit sales of owned media? Rentals + ownership? Revenue?

I think downloads/VOD will certainly take command in the rental space. If people accept waiting days/weeks for Netflix, then already having their queue on their rental box would seem to be a big plus. And new releases can be locked and downloaded well ahead of time (no wait on release day).

Owned media is an entirely different thing. CD still commands a big lead. And yet the storage requirements for compressed music are miniscule compared to video.

Microsoft and Apple are pushing downloads hard because that's where they can be leaders. It doesn't mean consumers will accept their worldview.

[stockstar1138]

Originally Posted by BadAss

My prediction is the studios pulling the plug on DVD in 2011. Thats in three years time every studio will switch from DVD to HDM forcing everyone to join the HD revolution.

I base this prediction on the way TV munufacturers pulled the plug on CRT tv's. Now where can you buy one of those anymore?

you can still buy CRT tvs at Best Buy and wal-mart too. sony, samsung, sharp, panasonic, etc. don't make CRT anymore, but plenty of cheap manufacturs do.

I think we will all agree that DVD will still hold a majority of the market in 2011 and I don't think studios have the balls to stop releasing on the format that holds the majority of the market. It will piss off millions of consumers and is too much of a finanical risk for the studios, as if it doesn't spur blu-ray adoption, they are out big bucks.

[stockstar1138]

Originally Posted by dialog_gvf

Are you talking about unit sales of owned media? Rentals + ownership? Revenue?

I think downloads/VOD will certainly take command in the rental space. If people accept waiting days/weeks for Netflix, then already having their queue on their rental box would seem to be a big plus. And new releases can be locked and downloaded well ahead of time (no wait on release day).

Owned media is an entirely different thing. CD still commands a big lead. And yet the storage requirements for compressed music are miniscule compared to video.

Microsoft and Apple are pushing downloads hard because that's where they can be leaders. It doesn't mean consumers will accept their worldview.

units sold.

[Fozziwig]

Originally Posted by BadAss

My prediction is the studios pulling the plug on DVD in 2011. Thats in three years time every studio will switch from DVD to HDM forcing everyone to join the HD revolution.

I base this prediction on the way TV munufacturers pulled the plug on CRT tv's. Now where can you buy one of those anymore?

True, but CRT's had a good long run - about 70 years!

I can't see studios dropping DVD support unless sales fall drastically in 3 years. More likely is that all players will have Blu-ray playback as standard leading to consumers adopting Blu-ray as the natural successor to DVD. It's very likely that by 2011 all new day/date sales will be divided between SD and Blu-ray fairly evenly - maybe with Blu-ray having the better share.

Remember, there are millions of people buying DVD players this year, only because the one they bought in 2002 has finally broken down.

[stockstar1138]

i do think that Sony Pictures will dump DVD, once DVD gets under 40% of the market, in an attempt to get more and more people into blu-ray, which they will make royalties off of.

[KretzJ]

I can understand where you're coming from, but one thing hasn't been finished yet... the fabled "last mile" between ANY telco and your house.

Sure I have a nice fat cable connection from Cox here in Phoenix, but is it good enough to stream movies? Nope. Is it good enough to burst download a movie to a set top box? Nope. The cable infrastructure is by nature shared between all residents connected to that local "node". I get fast service because I live in a neighborhood of people who are clueless about technology and don't use it like I do. If 50% of the people in my neighborhood streamed movies every night my bandwidth (and theirs) would be a drip compared to the drainage pipe I enjoy today. And DSL, while it is point-to-point, is hobbled to incredibly slow speeds unless you live next door to the LEC distribution point for your neighborhood.

Verizon is doing Fiber to the Doorstep back east, but it's just a test. And it's one company... others might be doing some testing but I've not heard anything as far along as Verizon.

And... you have cable providers looking to charge people for the bandwidth they USE. Am I going to stream movies every night when I'm paying by the GB? HELL no.

Bill Gates and Steve Jobs can afford, literally, to live in some future state where movies are that simple to get. I don't, as 99% of Americans do not. Gates / Jobs WANT downloads to win because it's more money in their pockets, not because it's the best thing. I want to BUY a movie and OWN it to watch over and over again. Do you think VoD systems will work like that? Do you have a 4 TB drive array laying around the house to store your "movie collection" you've downloaded, assuming the DRM-infested files will not come with a "drop-dead date"?

The real battle for Blu-Ray is now with SD-DVD. We need to finish off HD-DVD FAST and make next holiday season the FIRST season where people have a single choice... SD or Blu. Get the prices down on stand-alone units to get people in lower economic positions a way to participate ("Wal-Mart" and "$199 Blu-Ray Player" go great together IMHO). Get the studios to publish their best from their catalogs on Blu and quickly (Star Wars, the entire Star Trek catalog, Matrix, etc...).

I predict downloading movies will go precisely nowhere fast. By 2020 perhaps the infrastructure will be there but Blu had better own 50% of the market by then... if not we've not done our jobs as evangelists.

-John K.

[york weir]

With HDTV not even near 50% in homes no way Blu can pass DVD especially since the RPTV is going away leaving a huge gap where affordability is.

It may get to 30%

All guessing of course.

[ottscay]

Assuming projections about HDTV penetration are correct (90% of US households by 2011) then yes, I have little doubt that it can. I do worry that the soft economy will slow that down, but hopefully we'll have a soft landing (don't count on it).

I think the OP's projections about HDTV adoption are too low; these things usually have an accelerating rate of adoption as consumer interest rises and prices lower to release that demand. There is a lot of pent-up demand for Hidef TVs and programming.

[stockstar1138]

Originally Posted by ottscay

Assuming projections about HDTV penetration are correct (90% of US households by 2011) then yes, I have little doubt that it can. I do worry that the soft economy will slow that down, but hopefully we'll have a soft landing (don't count on it).

there is no way that 90% of households will have HDTVs by 2011. maybe if those figures include computer monitors, but other than that there is now way that we will hit 90%. given that the US population is 300 million and 25% of those people have hdtvs in there homes that is 75 million hdtvs sold in 10 years. to get 90% of households with hdtvs in homes by 2011 that means that roughly 200 million hdtvs will have to be sold to NEW households in the next 3 years. no way thats going to happen. i think its much more realsitic to say that it took 10 years to sell the first 75 million, it will take 3 years to sell another 75 million. there is the acclerated growth. and out of those new 75 million owners how many are going to go blu or simply stay with upconversion dvds or use a downloading service.

[Geech]

Originally Posted by ottscay

Assuming projections about HDTV penetration are correct (90% of US households by 2011)

Never Going to Happen

[Dragonraine]

Its going to take a long time. Too many people are happy with DVD and dont even own HDTV's! At least 5 years if not more.

[LynxFX]

Interesting prediction that is pretty well laid out. Thought I would help you with your numbers though.

Originally Posted by stockstar1138

Here is my estimation for HDTV growth in America.

Jan 1st 2008 - 1/4th of US households
Jan 2009 1/3
Jan 2011 1/2
Jan 2014 2/3
Jan 2016 3/4
Jan 2018 4/5

We are already over 1/3 of US households have an HDTV. It was predicted to be 36-39% after the holiday season of 07. Still waiting on official numbers. So that already puts us past the the Jan 2009 of your growth chart. There is a good chance we'll hit 1/2 by this time next year or roughly 55m HDTV's out there and the number of sets sold rises each year.

I think Blu-ray has a chance at 50% but not for at least 5-6 years probably longer. The download numbers are going to be hard to count since most of these will be rental only. I could see that taking off enough to hurt Blockbuster and even Netflix unless their VOD keeps customers. The download sales though will probably remain a niche. Curiosity will mostly keep it alive for awhile, but ultimately consumers like physically own and be able to resell items. Plus there is no download standard which will be its biggest obstical.

[181]

HD Downloads aren't going anywhere. It's a marketing fad -- the studios have nothing to lose; they only need to spend money building a website and some regurgitated DRM scheme. The cost to produce the movies is nothing since it is a digital copy. It can't hurt to offer movies through different venues and media formats. The problem is, the internet is not ready for movie downloads.

Blu-ray will eventually capture 50% of the market and more when studios stop producing DVD's for new movies much like they stopped producing VHS tapes for new movies.

[hellmonkey]

i dont think it will.. maybe.

i think what will happen is when blu finally wins, everything will be a combo disk. that way u can still watch it in minivan tvs and that crap. who the hell wants a 9" screen hooked up to a bd player? plus, its just HD, i think thats a minority for home media.

[mystiksuicide]

I am sure somebody said this when dvd's first came out and when cd's first came out.

The answer is simple, of course they will with time and cheaper and better players.

[stockstar1138]

Originally Posted by LynxFX

Interesting prediction that is pretty well laid out. Thought I would help you with your numbers though.

We are already over 1/3 of US households have an HDTV. It was predicted to be 36-39% after the holiday season of 07. Still waiting on official numbers. So that already puts us past the the Jan 2009 of your growth chart. There is a good chance we'll hit 1/2 by this time next year or roughly 55m HDTV's out there and the number of sets sold rises each year.

I think Blu-ray has a chance at 50% but not for at least 5-6 years probably longer. The download numbers are going to be hard to count since most of these will be rental only. I could see that taking off enough to hurt Blockbuster and even Netflix unless their VOD keeps customers. The download sales though will probably remain a niche. Curiosity will mostly keep it alive for awhile, but ultimately consumers like physically own and be able to resell items. Plus there is no download standard which will be its biggest obstical.

curious on how you are getting your numbers. are you doing

total hdtvs/population

or

population with an hdtv in their house via some poll.

because how many of us have multiple hdtvs? lots. and that greatly skews the numbers on how many households have hdtvs in them.

i don't think we are near 1/3 yet.