Replicators Are Experiencing Growing Pains in Going Blu

[Blu Titan]

A very informative article on the Blu-ray replication process. I am sure that Penton will post if he finds any errors in the report. From Home Media Magazine:

Replicators Are Experiencing Growing Pains in Going Blu
Author: CHRIS TRIBBEY

Small and mid-sized disc replicators were rooting hard for HD DVD.

A quick adjustment to existing DVD replication lines was all it took to pump out HD DVDs, while Blu-ray Disc requires all-new equipment.

Now that Blu-ray has won, manufacturers are left with the daunting question of whether or not to invest in new production lines for Blu-ray right away.

“We were all pulling for HD DVD to win, for obvious reasons,” said Steve Sheldon, president of replicator Rainbo Records. “It didn’t work out that way.”

Now that there’s only one high-def choice, and studios such as Universal Studios and Paramount are expected to add their movies on Blu-ray, some fear the load may be too much too quick for existing production lines.

“By the time we get into the fourth quarter of this year, there will be a problem with capacity,” Jim Bottoms, co-managing director of research firm Understanding & Solutions, said earlier this month. U&S estimates an investment of $250 million and 80 new Blu-ray production lines will be needed in the next two years to meet demand. That’s what it’ll take to meet the demand of not only Blu-ray movies, but also games for the PlayStation 3.

Workers at Sony DADC have been swamped since August, Michael Mitchell, CTO and EVP of Sony DADC said this month. More than 115 million total Blu-ray Discs have been made by Sony DADC’s production lines, he said, 80% of which are 50GB. He added that Sony DADC is also offering more authoring support to independents.

With AACS encryption, mastering, authoring and compression, replication and packaging, the costs pile up quickly to make a Blu-ray, replicators emphasized, and can be especially risky for independents.

“The biggest concern from an indie standpoint was the initial investment, as it is a very expensive process,” said Tony Perez, president of Phoenix Entertainment Group, which just this month announced its first two Blu-ray titles. “Obviously we are not a major label.”

More than one manufacturer put the cost to content owners at $4 to $5 per disc for a “small” run of 25,000 discs. That’s compared to less than $1 each for the same amount of DVDs.

The costs for manufacturers to install Blu-ray lines can be just as daunting. One replicator, who asked to remain anonymous, pegged the figure for a 50GB BD line at nearly $2.7 million and a 25GB BD line at between $1.5 million and $1.7 million.

“The cost of the equipment seems almost prohibitive for small to mid-size replicators,” said Paula Tait, EVP of sales and marketing for Precise/Full Service Media, which does replication, packaging and distribution. “The question is how quickly will other manufacturers start offering Blu-ray?”

Sheldon said another concern facing replicators about Blu-ray is yield, how many usable discs actually come out of the production lines. Early on, he said, only half of the discs from Blu-ray production lines were coming out correctly. It’s about 75% now, he speculated.

“Blu-ray is not easy to make,” he said.

But Ed Virgie, president of Media Services Group, which sells replication equipment and helps with replication plant set-up, said DVDs weren’t easy to make at first either.

“The same yield issue existed when we went from DVD-5s to DVD-9s,” he said. “As you perfected it, perfected the equipment, the yield got better. It can take years to get yield up into the 90s (percentage), but it will happen with Blu-ray.”

Yet another issue is the onset of electronic delivery of content, and the decline in physical media.

“The issue here now is the market for physical media is declining, and the life-span for a format is declining,” Tait said.

VHS launched in the late 1970s, and wasn’t overtaken by DVD in terms of sales until 2003. DVD launched in 1997 and less than a decade later, Blu-ray hit the scene.

Tait added that capacity at existing Blu-ray production lines may be full for the next year and a half, even with reported plans by Sony DADC, Cinram and Technicolor — the three major Blu-ray Disc manufacturers — adding dozens of new lines in the coming years.

But more demand than capacity can be construed as good news for the Blu-ray format, replicators said, an issue that will work itself out, if history has anything to say about it.

“I think it’s a market force issue,” said Andy Parsons, SVP of product planning for the home entertainment group at Pioneer Electronics and marketing director of the Blu-ray Disc Association. “If you have capacity and demand in imbalance, the market responds. This happened with every new format that’s shipped, back to laserdisc and CD.”

Tait remembers back to the launch of DVD.

“It was just WAMO and Nimbus (later bought by Technicolor) that invested in the lines,” she said.

Now that there is a winner, more companies on the manufacturing side of home entertainment are testing the waters.

“We studied it for a year before we got into it,” said Troy Burlage, VP of sales for authoring and compression house Post Modern Group. “I think this will be a breakout year for Blu-ray.”

“Now that we don’t have a format war, it’s clear what needs to be adopted,” Parsons said.

But Sheldon said companies such as his will have to wait for now.

“No one knew which format would win out, and we couldn’t afford to play around with either,” Sheldon said. “I imagine the bigger guys are ramping up, but for now, for the smaller guys like us, getting into it is out of reach.”

http://www.homemediamagazine.com/

[Blu Haze]

That was the only advantage of having them coexist was the cost of the machines used.

[dakota81]

This article just means Kosty will be back up on his high horse.

Other than that, I don't see how any of it (either true or false) affects me in the least.

[Blu Titan]

Originally Posted by Blu Haze

That was the only advantage of having them coexist was the cost of the machines used.

The demand for Blu-ray is expected to increase tremendously by Q4. where there's demand, There will be sufficient investment for supply.

[Blu Titan]

Originally Posted by dakota81

This article just means Kosty will be back up on his high horse.

Other than that, I don't see how any of it (either true or false) affects me in the least.

Kosty is just about the biggest: ___________. Well others can fill the blank (in their minds).

[plee]

Darn...I thought we would go a week or two without our favorite (Kosty/DV) replication issues appearing again