Hi-def Discs Already Double Size of Download Market

[sj001]

http://www.hollywoodinhidef.com/blog_detail.php?id=164

Consumers spent more than $260 million on hi-def discs in 2007, according to my math based on the $170 million that Fox's Danny Kaye said during CES was spent on Blu-ray Disc software, which accounted for about 65% of all sales.
That does not count revenue from hardware sales (roughly anywhere from another $500 million to $1.5 billion, depending on how you count videogame players with hi-def disc capability).

Meanwhile, consumers spent less than half of hi-def disc software sales alone on Internet downloads in 2007 -- $123 million, according to Adams Media Research.

I mention that only to provide perspective.

Internet downloads and Web-delivered content are the hot topic these days.
As a consumer, I have no problem with that. In fact, I relish it.
The more ways and the more control we have in accessing and viewing movies the better. I love watching videos on the Web. The more companies, web sites, distributors involved, the better. The more portability the better.

I was pleased to see Apple's announcement this week that every studio is partnering with them in various iTunes initiatives. Hey, there are 24 million video iPods out there and tons more portable video devices so let's get as much product to them as possible.
And I like Fox's Digital Copy for iTunes strategy. (BTW, that plan requires that you start with a movie that has been purchased on a disc that can then be transferred free to your iTunes library -- a digital copy of a disc, not a copy of a VOD digital download.)

But as exciting as all these new technologies are, and as cool as the new gadgets can be, it's important, especially for market watchers and analysts, not to lose sight of where consumers are spending most of their money, where they will continue to spend most of their money for the foreseeable future, and where studio profits will continue to come from for many years.

Analysts and some bloggers often have a hard time with the concept of peaceful co-existence and strong revenue from multiple formats simultaneously. There seems to be the notion that only one format can be successful, that whatever is the hot new technology, every other technology must be projected to be obsolete or on the verge of death, regardless of the reality of where consumers are spending their money.

In fact, the beauty of all these new technologies is that they are wonderful additional ways to enjoy movies and TV shows but they do not negate or replace my primary desire of watching a movie, when possible, in full 1080p hi-def on my 42-inch and 65-inch plasma displays with surround sound.

By the way, I consider Blu-ray Disc to be one of the most exciting of the cool new technologies. For the first time I am seeing movies in stunning 1080p hi-def and uncompressed audio; for the first I can access the menu for scenes and bonus features without leaving the movie; for the first time I can access the Internet for additional trailers, blogs, commentaries and interactivities.

Meanwhile, I love also having the option of being able to find any movie I want easily on the Internet and quickly and easily downloading it to a portable device that I can then take with me to wherever I may have time to kill or might want to enjoy watching it outside of my home theater environment.

But that doesn't replace my desire to enjoy all the bonus features and interactivities offered on discs when I can do so.

Sure, I can start watching a hi-def movie download within seconds or just a couple minutes after clicking to do so, but it will still take a couple hours to have the whole thing downloaded.
When it does finish downloading, it is compressed and not in full 1080p and does not have uncompressed audio.
It takes up a ton of storage space.
It doesn't have the packaging -- at least not that I can touch and feel without making a printout.
It doesn't have chapter stops.
It doesn't have audio commentaries, making-of documentaries, bloopers, deleted scenes, trailers, etc.
It doesn't have interactivities.
It doesn't allow me to lend it to a friend or play it on more than a finite number of players.

And the reality is that far more homes have disc players (more than 90 million, according to DEG: The Digital Entertainment Group) than have high-speed Internet access. Adams says the number of homes in the U.S. with high-speed has grown to 61 million, about 53% of U.S. households and 74% of homes with PCs. Nonetheless, that's a very strong percentage. Adams projects that number to continue to grow and, with it, the revenue spent on digital downloads, which he shows eventually outpacing cable/satellite pay-per-view/video-on-demand. But that will take five years and will only then be overtaking a market that has taken decades to even reach the $1 billion mark.

Meanwhile, Adams reports that hi-def discs -- already at $260 million in the first full year despite being bogged down by a large-scale format war -- will provide a big spark for growth in the overall disc market, which already stands at a whopping $24 billion.

Sounds like there are a lot of formats and technologies to be bull-ish about -- not just one.

[Sonar5]

Oh I gotta go post this one....

Nice find...

[Kayne314]

Sanity prevails. Thank you for the insightful post.

High Def downloads will not rival Blu-ray for many, many years. I have no problem with it as an alternative to portable media, or rentals, and I think that is the line people should be taking it down.

It's nice to see the hard numbers once in a while.

[mystiksuicide]

In my Mr Burns imitation.

Excellent!!!!

[Kendall]

Note that with the Apple announcement, you can only get HD media with an Apple TV (only SD media with a computer) and can't yet get HD television shows at all. So that even further constrains how much uptake online HD media will have.

I think Apple will continue to do well with TV shows and also with the new rentals. But the rentals will mostly be taken up by very casual watchers, or at least casual users of the service - even if you were watching only about a movie a week Netflix is the same price for HD media of higher quality, and if you watch say two movies a week Netflix is far cheaper.

There is more than enough room in this world for a mix of virtual and physical media.

[seto]

Hetterick's article was originally posted earlier in this thread: https://forum.blu-ray.com/showthread.php?t=32456

[ERPGURU]

Hiya..longtime lurker on here, first post. First, had to admit, I am a blu fan since its introduction and have both a BDP-1200 and a PS3, so have been rooting for blu from the start.

That said, there has been a lot of discussion about HD downloads being the possible next 'medium' for videos. One thing I think a lot of people are overlooking is that although people use broadband connections at home now, there is a limited amount of bandwidth for their provider. Providers are getting crunched because users are now downloading gigabytes of information at a time - even if you have a OCT12 switch, bandwidth does run out.

As such, many providers (Time Warner just announced it as a 'pilot' for new customers) that they are now going to charge based on the volume of data that people download rather than a flat charge. There was mention of either doing it through a tiered system - cost for the highest tier, and what that volume of data is, was not stated.

In short - if service providers start charging for the volume of data downloaded, I think it will kill Video on demand at least from the internet - at least in the high def arena. I don't know of any codec that can place a two hour 1080p movie into 100mb...

Thoughts?

John

[miokti]

Originally Posted by ERPGURU

Hiya..longtime lurker on here, first post. First, had to admit, I am a blu fan since its introduction and have both a BDP-1200 and a PS3, so have been rooting for blu from the start.

That said, there has been a lot of discussion about HD downloads being the possible next 'medium' for videos. One thing I think a lot of people are overlooking is that although people use broadband connections at home now, there is a limited amount of bandwidth for their provider. Providers are getting crunched because users are now downloading gigabytes of information at a time - even if you have a OCT12 switch, bandwidth does run out.

As such, many providers (Time Warner just announced it as a 'pilot' for new customers) that they are now going to charge based on the volume of data that people download rather than a flat charge. There was mention of either doing it through a tiered system - cost for the highest tier, and what that volume of data is, was not stated.

In short - if service providers start charging for the volume of data downloaded, I think it will kill Video on demand at least from the internet - at least in the high def arena. I don't know of any codec that can place a two hour 1080p movie into 100mb...

Thoughts?

John

You hit it right on the nail... I'm bummed about Time Warner Cable's decision because I am one of their customers. This will discourage me even more to download movies through the internet, specially HD ones, which will be 15 to 25GB at the very least. You're not just paying for the movie, you're paying to download the movie also...

[Clark Kent]

Microsoft is right and downloads will be the main home video delivery format...in twenty years when everyone has fiber running to their homes and bandwidth is ultra-cheap. That's fine as I will already have about 5000-6000 BDs by then.

[FilmmakingFiasco]

This title is VERY misleading. There have been more movie downloads (iTunes movie purchases alone outsold Blu-ray and HD-DVD since 2006) than high def disc sales.

The article refers to revenue of disc vs. downloads (which from a financial standpoint and P&L, is a good thing). When you factor in the price of a high def disc (around $35.00 is the avg. MSRP) compared to a downloaded film (usually $10-$13) then it's easy to see how HD disc bring in more money than a downloaded film.

So, high def disc are making roughly twice the money compared to equal sales (which is easily explained by their prices). Factoring in production, replication and packaging vs. server bandwidth, I wonder how close a download vs. a high def disc makes a profit for studios.

[cdmoran]

http://www.foxnews.com/story/0,2933,323551,00.html

NEW YORK — Time Warner Cable will experiment with a new pricing structure for high-speed Internet access later this year, charging customers based on how much data they download, a company spokesman said Wednesday.

The company, the second-largest cable provider in the United States, will start a trial in Beaumont, Texas, in which it will sell new Internet customers tiered levels of service based on how much data they download per month, rather than the usual fixed-price packages with unlimited downloads.

Company spokesman Alex Dudley said the trial was aimed at improving the network performance by making it more costly for heavy users of large downloads.


Dudley said that a small group of super-heavy users of downloads, around 5 percent of the customer base, can account for up to 50 percent of network capacity.

Dudley said he did not know what the pricing tiers would be nor the download limits. He said the heavy users were likely using the network to download large amounts of video, most likely in high definition.

It was not clear when exactly the trial would begin, but Dudley said it would likely be around the second quarter.

The tiered pricing would only affect new customers in Beaumont, not existing ones.

Time Warner Cable is a subsidiary of Time Warner Inc., the world's largest media company.

This does not bode well for HD downloads. No matter how often downloads are proclaimed as the future of HD the Internet infrastucture just does not yet exist to support it.

[Weez_Dawg]

Movie downloads are so lame and filled with so many restrictions it is pointless to think they will succeed. I know on most services you pay around $3-7 to "rent" a movie, than you only have 2 weeks in which to watch the thing, and then if you do start the movie you only have 24 hours to finish it. I am sorry but this is very inconvenient for everyone and it will not work. You cannot even buy movies from download sites as far as I know.