Home Entertainment Summit panels discuss Blu-ray, digital copy, downloads, etc.

[Grubert]

Studio Presidents: $1 Billion is Magic Number for Blu-ray in 2008

One billion dollars.

That’s the magic number for Blu-ray Disc sales this year, according to a majority of the home entertainment studio presidents at transFORMATions, the seventh annual Home Entertainment Summit, held June 16-17 at the Hyatt Regency Century Plaza. If they can hit that number, they’ll start opening the champagne.

And you can make that $2.5 billion by the end of 2009, they said.

[…]

With American household Blu-ray player penetration forecasted at 2.5 million to 3 million by year’s end, the studios don’t believe the figures to be that far-fetched.

“It shows consumers are really embracing the format,” Lionsgate president Steve Beeks said of the 7% to 10% market share that Blu-ray’s been taking away from DVD every week.

[…]

Kelley Avery, president of Paramount Home Entertainment, was a bit more conservative in her 2008 Blu-ray sales estimates, saying she’ll be happy if the industry hits $750 million. But with a giant slate of summer blockbusters looking at fourth-quarter Blu-ray street date, who knows, she said.

[...]

Home Entertainment Summit Covers 'transFORMATion' to Blu-ray

[…]

Eisuke Tsuyuzaki, VP of corporate development for Panasonic and GM of Panasonic’s Blu-ray Disc organization, put it simply: “Digital delivery is good, DVD is better, and Blu-ray is the best quality available. Thankfully, in the motion picture business, we don’t have the comparison to [music] singles.”

Just like the presidents of the home entertainment divisions of each major studio, Paramount’s Saito said that the last three months of 2008 will be critical for Blu-ray’s success, at least for this year.

“It’s all about education, and seeing is believing,” he said.

Tsuyuzaki added “We’re on track to reach a million people this year. … Once they see it, you get the ‘ah-ha’ moment.”

He said that it wouldn’t be shocking to see a more affordable Blu-ray player by year’s end.

“Whether it’s $299, $199, $99, I don’t know,” he said. “… It’s about finding the right value proposition. You have to give them a solid, robust reason to buy it.”

Video Business: Panel: More Blu-ray education needed

[...]

By 2009, Blu-ray title sales will offset losses of maturing standard-definition DVD, Walt Disney Studios Home Entertainment’s general manager North America Lori MacPherson said during a conference keynote. By 2015, Blu-ray will rank as the most popular way to enjoy movies at home, she predicted. At that time, global home entertainment consumer spending will reach $60 billion, with Blu-ray encompassing 56% of sales; standard DVD, 38%; and digitally delivered content, 6%, according to Disney estimates.

[...]

For now, however, the Blu-ray consumer is a limited group, NPD senior industry analyst Russ Crupnick said in his session. About 75% of Blu-ray software units are bought by men. Additionally, 45% of software buys come from consumers ages 25 to 34, Crupnick said.

Consumers also are bombarded with other options. In a recent NPD study of DVD purchasers and spending habits, respondents said they spent 36% of their discretionary income on movie tickets; 30% on videogames; 21% on DVD; and 13% on music.

[...]

“When we talked to the consumer eight months ago, they were still figuring out what they needed to go with their high-def TV,” said Ho, acknowledging the Blu-ray and HD DVD confusion. “And now they are saying, ‘We are going to get a [Blu-ray] player but it’s just a matter of when. This summer? Or this Christmas?’”

Panasonic has sold more of its Blu-ray hardware in 2008 than in 2006 and 2007 combined, added Eisuke Tsuyuzaki, the company’s VP of corporate development.

Tom Adams, president of Adams Media Research, said that today, 80% of U.S. PlayStation 3 users are playing Blu-ray movies on their. That has improved from 53% in September.

Also, in the next several years, penetration of Blu-ray set-tops within HDTV households will expand from about 5% in 2008 to more than 50% in 2012, Adams predicted.

In a sign of Blu-ray’s wide appeal, family titles are beginning to find audiences on the format, Adams said. With Disney’s Enchanted, a healthy 9.3% of its total $121.72 million in consumer sales came from Blu-ray copies, he said. By comparison, I Am Legend’s $140.35 million in revenue was 3.1% Blu-ray. [Grubert's note: I am sure the writer Susanne Ault got it backwards – I Am Legend BD has outsold Enchanted BD by over 3:1, and not the other way round, and also the BD/DVD ratio is higher for IAL than for Enchanted; see link ]

[...]

Panel: Electronic Sellthrough at Crossroads

Widespread consumer adoption of electronic sellthrough of movies and television shows is years away and in jeopardy unless digital files can be played on the TV, said a panel of industry experts.

Speaking June 16 at the seventh annual home entertainment summit, presented by Home Media Magazine, panelists said without cheaper and easier access of digital content across multiple devices, electronic sellthrough is destined to remain a niche market.

“From a domination standpoint, we are years and years away, if [it happens] at all,” said Russ Crupnick, VP and senior analyst with The NPD Group.

There are more juicy quotes by experts in the article.

Jason Kramer of Interpret LLC asked, “Is electronic sellthough really the right business model for digital content?”. Other panelists said electronic rental transactions and ad-supported content appeared to have stronger legs than electronic sellthrough going forward.

Tony Knight, senior product manager at Macrovision, said that electronic sellthrough would only take off if the user experience replicated DVD, which he said could happen in the next five years. And he added, “We haven’t seen that perfect package of consumer value demonstrated in a way that validates [$15 to $20] for [an] electronic sellthrough movie.”

Actually, Interpret found that consumers expected electronic sellthrough movies to retail for less than DVD, and less than what Apple ($14.99), CinemaNow (from $17.99) and others currently charge. Consumers would pay about $7.75 for new movie releases electronically.

NPD's Russ Crupnick said that the electronic business model thus far dominating the Internet has been underscored by free content.

[Blu Titan]

Thanks for the info Grubert. Very good point on the IAL / Enchanted comparisons

[Fozziwig]

Excellent post Grubert.

Assuming average price per disc of $30 (MSRP), the target for 2008 is to sell approx. 35 million units (North America) in order to hit the $1 Billion sales mark.

To achieve that Blu-ray would need to be around 10% of DVD sales by Q4 on a consistent basis. Seems reasonable to me.

[WickyWoo]

I think people are starting to see the problem that non-physical media is seen as inherently worth much less by consumers than the physical.

One of the many reasons digital will dominate rental, but never take over the physical. Rental by its very nature is transitory and non-attachment

[Tok]

Originally Posted by WickyWoo

I think people are starting to see the problem that non-physical media is seen as inherently worth much less by consumers than the physical.

One of the many reasons digital will dominate rental, but never take over the physical. Rental by its very nature is transitory and non-attachment

Exactly. There are too many reasons to list why consumers don't view a digital file's value at the same as a physical copy. Plus what happens when your digital server takes a dump. Ask users of Microsofts shutdown music service how they feel? Consumers should fear this end of physical media BS that is bombarded us in the media. When physical media is gone, fair use from a consumer standpoint will be gone forever.

I don't have a problem with digital downloads as long as it is not my only option. What I do have a problem with is guys like Steve Jobs and Bill Gates trying to convince people physical media is dead. My motto is always question the source. Ask yourself, do Jobs, Gates and other media companies have a vested interest in physical media going away? Yes, they own the technology and the pipes so their wallets get bigger everytime you click play.

Consumers must keep physical media alive as an option or we lose the few fair use protections we have left.

[blu2]

Originally Posted by Fozziwig

Excellent post Grubert.

Assuming average price per disc of $30 (MSRP), the target for 2008 is to sell approx. 35 million units (North America) in order to hit the $1 Billion sales mark.

To achieve that Blu-ray would need to be around 10% of DVD sales by Q4 on a consistent basis. Seems reasonable to me.

35 Million units requires a HUGE 2nd half.

There were only 5-6 Million Blu Ray discs sold in the 1st four months of this year (extrapolating from info here: http://www.hollywoodinhidef.com/blog_detail.php?id=201)

20-25 Million seems a more reasonable target (so I'll side with Paramount's view)

[tron3]

Originally Posted by WickyWoo

I think people are starting to see the problem that non-physical media is seen as inherently worth much less by consumers than the physical.

One of the many reasons digital will dominate rental, but never take over the physical. Rental by its very nature is transitory and non-attachment

It's been said many ways, but you hit a homer, Wicky.

While some people relish the thought of a media server, yet another box, any smart person will wonder what happens when the hard drive eventually dies. IT IS INEVITABLE THAT IT WILL DIE.

Hey, TIVO is a great technology for recording HD content. But it has a ZERO backup contingency. As an IT guy, I find that scary. So does any smart consumer.

If stored and used properly, BD remains playable for decades after creation just like any vynil record.

[Grubert]

Originally Posted by blu2

35 Million units requires a HUGE 2nd half.

There were only 5-6 Million Blu Ray discs sold in the 1st four months of this year (extrapolating from info here: http://www.hollywoodinhidef.com/blog_detail.php?id=201)

20-25 Million seems a more reasonable target (so I'll side with Paramount's view)

Media Control Gfk says $888 million:

http://www.videobusiness.com/article...?desc=topstory

[Terjyn]

Originally Posted by blu2

35 Million units requires a HUGE 2nd half.

There were only 5-6 Million Blu Ray discs sold in the 1st four months of this year (extrapolating from info here: http://www.hollywoodinhidef.com/blog_detail.php?id=201)

20-25 Million seems a more reasonable target (so I'll side with Paramount's view)

20 million means that you think that roughly the same number of sales would occur in the first 1/3rd of the year as the last 1/3rd. If that happens, then anti-Blu pundits were right. Blu-Ray adoption is not taking off, and the format will probably be relegated to LD status.

I agree 35 million is a large number, but if Blu-Ray doesn't hit at least 30 million I'll be shocked.

[J_UNTITLED]

More (or the same) here from The Hollywood Reporter.

[Krandor]

Originally Posted by tron3

Hey, TIVO is a great technology for recording HD content. But it has a ZERO backup contingency. As an IT guy, I find that scary. So does any smart consumer.

ummm... yes it does. You can transfer programs from tivo to your PC.

[MarekM]

Originally Posted by Grubert

Media Control Gfk says $888 million:

http://www.videobusiness.com/article...?desc=topstory

how many units is $888million ?

I still think that it will be well over 25mil units this year...
Q4 will explode ! with several million sellers

Marek