Slow Blu-ray Adoption: A Threat to Hollywood's Bottom Line?

Lee Stewart · 11-04-2009, 01:45 PM

Slow Blu-ray Adoption: A Threat to Hollywood's Bottom Line?

Quote:

Viacom's (VIA) Paramount Films business makes money through box office ticket sales, DVD sales and TV licensing of its films. In recent years, the DVD business has been the most profitable part of the film industry with many films becoming profitable only after the film is released on DVD. Viacom's recent Q3 earnings indicated that DVD revenues declined 21% year-on-year for the quarter.

Historically, Viacom's US DVD pricing increased from $21 in 2005 to $22 in 2008. We currently estimate that pricing will continue to increase to $26 by the end of our forecast period due to on-going adoption of Blu-ray HD DVDs which are currently priced above regular DVDs.

However, adoption of Blu-ray DVD players has been slow to date, with only 7% of US consumers owning a Blu-ray DVD player, according to a recent poll conducted by Harris Interactive. Furthermore, DVD alternatives such as internet video (YouTube, Hulu) and video on-demand continue to gain consumer attention. For example, Comcast's (CMCSA) video on-demand views (both paid and free) have increased from 1.4 billion in 2005 to 3.3 billion in 2008, and we expect this figure to reach 9 billion by the end of the Trefis forecast period. Netflix (NFLX), the DVD rental company, has been investing heavily in on-demand delivery, both online and through digital boxes, in anticipation of the long-term shift away from DVDs.

Overall, upgrades to Blu-ray DVDs have not had the impact that the Viacom and other media conglomerates had hoped. With DVD sales stagnating or declining, a significant profit driver for big media is at risk.

http://seekingalpha.com/article/1712...-s-bottom-line

sweetjebus · 11-04-2009, 02:46 PM

Quote:

Originally Posted by Lee Stewart

Slow Blu-ray Adoption: A Threat to Hollywood's Bottom Line?

Quote:

Viacom's (VIA) Paramount Films business makes money through box office ticket sales, DVD sales and TV licensing of its films. In recent years, the DVD business has been the most profitable part of the film industry with many films becoming profitable only after the film is released on DVD. Viacom's recent Q3 earnings indicated that DVD revenues declined 21% year-on-year for the quarter.

Historically, Viacom's US DVD pricing increased from $21 in 2005 to $22 in 2008. We currently estimate that pricing will continue to increase to $26 by the end of our forecast period due to on-going adoption of Blu-ray HD DVDs which are currently priced above regular DVDs.

However, adoption of Blu-ray DVD players has been slow to date, with only 7% of US consumers owning a Blu-ray DVD player, according to a recent poll conducted by Harris Interactive. Furthermore, DVD alternatives such as internet video (YouTube, Hulu) and video on-demand continue to gain consumer attention. For example, Comcast's (CMCSA) video on-demand views (both paid and free) have increased from 1.4 billion in 2005 to 3.3 billion in 2008, and we expect this figure to reach 9 billion by the end of the Trefis forecast period. Netflix (NFLX), the DVD rental company, has been investing heavily in on-demand delivery, both online and through digital boxes, in anticipation of the long-term shift away from DVDs.

Overall, upgrades to Blu-ray DVDs have not had the impact that the Viacom and other media conglomerates had hoped. With DVD sales stagnating or declining, a significant profit driver for big media is at risk.

http://seekingalpha.com/article/1712...-s-bottom-line

Hmmm, I have a hard time believing anything in this entire article since:

1) they don't even know the proper terminology for the technology they are discussing (what are "Blu-ray HD DVDs"???), and

2) The Harris poll they cite was full of bad data, and actually stated that more people owned HD DVD than bluray, which is impossible. But yet here we have this seekingalpha article that is using that flawed poll as support. Not very good fact checking on behalf of seekingalpha.

In fact, the Harris poll was officially disputed by the BDA as being factually incorrect....I guess seekingalpha didn't come across that during the "extensive" research they did for this article about "Blu-ray HD DVDs"

.

Quote:

BDA, Adams Dispute Harris Survey on Blu-ray

By : Chris Tribbey | Posted: 25 Jun 2009
ctribbey@questex.com

The Blu-ray Disc Association is challenging the accuracy of a June 18 Harris Poll, which says that as of April, more Americans owned an HD DVD player (11%) than a Blu-ray Disc player (7%).

The BDA on June 25 said the Harris survey doesn’t mesh with actual shipping and sales numbers for Blu-ray, pointing to Adams Media Research data that puts the numbers closer to nearly 8% for Blu-ray and less than 1% for HD DVD. Calling the Harris data “grossly inaccurate,” the news release states that by the end of 2009, Blu-ray players will be in nearly 15% of American TV homes.

Tom Adams, president of Adams Media Research, blamed the survey findings on consumers’ inability to identify what exactly is next to their TVs.

"Some people believe a DVD player on an HDTV is high-def. There's just so much confusion out there," Adams said. "Everybody makes mistakes" he said of the Harris survey "but we have models that show those numbers just can't be true."

“This finding suggesting that HD DVD player penetration grew from 6% to 9% in the period since the Blu-ray victory in the format war simply can't be right,” he said. “Our research on shipments and retail sales of players suggests that some 340,000 homes had an HD DVD player by the end of 2008 vs. 3.1 million homes with a dedicated Blu-ray player, and 9 million homes with either a dedicated player, a PlayStation 3 or both.”

Adams’ research has dedicated Blu-ray players in 7.2 million homes by the end of 2009, and, with the PS3 included, that number jumps to more than 17 million.

“Meanwhile, HD DVD machines are long gone from store shelves and household penetration is shrinking dramatically,” Adams said. “By way of comparison to what had been the most successful format launch in consumer electronics history, at the same point in DVD’s lifespan, four years in, at the end of 2000, DVD-enabled homes, set-tops or game machines, numbered 13.7 million.”

The BDA also noted that the HD DVD Promotions Group, just 50 days before the HD DVD format went under, announced set-top sales of fewer than 1 million units.

A representative from Harris were not available for comment at press time. However, Milton Ellis, VP and senior consultant for media for Harris Interactive Technology, said findings show that Blu-ray is facing stiff competition from Internet and broadcast TV.

“In the near future, access to high-definition movies may be a download or streaming delivery of one’s favorite movies to a home media server,” he said. “That eliminates the need for a Blu-ray player and Blu-ray Disc.”

http://www.homemediamagazine.com/blu...-blu-ray-16189

Loves2Watch · 11-04-2009, 03:42 PM

Maybe the consumer is just plain tired of being bent over by big media.

The_Omega_Man · 11-04-2009, 06:43 PM

Yea, and we all know that the BDA is and has always been 100% credible on their information!

MikeRox · 11-05-2009, 05:23 AM

I remember 1997 also having the biggest recession since the Wall Street Crash too...

Kosty · 11-05-2009, 08:22 AM

Its already obsolete as the last 5 weeks of Blu-ray and DVD sales are already substantially up from last year. They don't even get that the last few months of the year are where most sales revenues occur for home media.

Most of us here, know more about this market segment than those writers do.

**PFC5** · 11-05-2009, 04:23 PM

Quote:

Originally Posted by MikeRox

I remember 1997 also having the biggest recession since the Wall Street Crash too...

Yup. That crash happened in 10/1997 too just like the crash of the financial industry in 10/2008. Something about October I guess.

Retail and everything else followed last year after that.

Chris Gerhard · 11-06-2009, 05:07 AM

Blu-ray HD DVDs, how do we take an article like this seriously? Does anybody know if Warner ever manufactured any of their highly touted TotalHD discs, Blu-ray on the A-Side and HD DVD on the B-Side. I sure wish I could get my hands on a few of those if there were ever any test runs. Otherwise as far I know there is no such thing as a Blu-ray HD DVD, which is not a very consumer friendly product name. The name bounces around sort of like roller skating on gravel so I am sure glad that isn't the product's name.

I do understand and accept that Blu-ray growth hasn't been what was hoped for, but Blu-ray continues to grow so maybe things will get better.

Chris

cbcdesign · 11-06-2009, 05:21 AM

I was talking about Blu Ray at a Party last weekend and people who are not yet into it that I spoke too are being put off by the potential that downloads offer. They see Blu Ray as being obsolete before it gets very far off the ground. Of course as soon as I pointed out the increased resolution Blu Ray offers coupled with the lidicrous amount of storage we would need to build a decent HD collection on PC, it made them think. People forget, even if 1080P downloads become a reality, we need double the storage space because they really need to be backed up.

I think growth will come once the economic downturn reverses AND people realise that downloading movies is not really as practicle as it sounds.

Alan

**PFC5** · 11-06-2009, 04:02 PM

Quote:

Originally Posted by Chris Gerhard

Blu-ray HD DVDs, how do we take an article like this seriously? Does anybody know if Warner ever manufactured any of their highly touted TotalHD discs, Blu-ray on the A-Side and HD DVD on the B-Side. I sure wish I could get my hands on a few of those if there were ever any test runs. Otherwise as far I know there is no such thing as a Blu-ray HD DVD, which is not a very consumer friendly product name. The name bounces around sort of like roller skating on gravel so I am sure glad that isn't the product's name.

I do understand and accept that Blu-ray growth hasn't been what was hoped for, but Blu-ray continues to grow so maybe things will get better.

Chris

I think many articles/ads improperly use this term for BDs because they want the average person to KNOW it is HD and not like SD DVDs.

It is like not buying a BD360 just because an ad says BD HD DVD player in the ad selling it for only $50.00 brand new.

We forget that most people do not know what we know and many articles/ads play to the least common denominator in the terms they use. How many times have we seen the term "BD DVD" being used as well in articles/ads?

I sure hope BD takes off more than it has so far and no doubt the economy plays a part in it under performing, but the hype about downloads, and prices for BD catalog titles being so much more is also hurting the adoption as well.

Dare · 11-09-2009, 09:54 AM

Quote:

Originally Posted by cbcdesign

I was talking about Blu Ray at a Party last weekend and people who are not yet into it that I spoke too are being put off by the potential that downloads offer. They see Blu Ray as being obsolete before it gets very far off the ground. Of course as soon as I pointed out the increased resolution Blu Ray offers coupled with the lidicrous amount of storage we would need to build a decent HD collection on PC, it made them think. People forget, even if 1080P downloads become a reality, we need double the storage space because they really need to be backed up.

I think growth will come once the economic downturn reverses AND people realise that downloading movies is not really as practicle as it sounds.

Alan

Ideally, when you purchase a download, you'll have that title on your online account, and if you lose your local copy because of a crash, or more likely because you have once again formatted the wrong drive, you can go back to your account and download it again.

Also, disk space isn't as restrictive as you might think. The ~26GB files you typically see on Blu-rays are spectacular overkill. With MPEG-4-like codecs, you can get excellent 1080p quality in as little as 1.5GB per hour including audio, so that $120 1.5TiB hard drive will hold over 900 hours of material, or over 500 movies if they're 105 minutes on average.

The only limiting factor is how long it takes to download a 3GB file. At a typical broadband speed of 1.5Mbps, it's just under 5 hours. That's too long to wait on an impulse, but short enough to cue it up before you go to work and have it waiting for you when you come home.

Dare · 11-09-2009, 10:00 AM

Also, I agree with PFC5. No doubt the article's editors felt they needed to dumb down the terminology so kindergartners could understand it.

The_Omega_Man · 11-10-2009, 11:30 PM

With all of the terminology debate, did we lose sight of the real point within the OP's article? Optical Media as it's work cut out for it. The real format WAR is on!

sweetjebus · 11-11-2009, 07:15 AM

Quote:

Originally Posted by The_Omega_Man

With all of the terminology debate, did we lose sight of the real point within the OP's article? Optical Media as it's work cut out for it. The real format WAR is on!

How does optical media have it's work cut out for it? It is the default format for 99% of America. It is standardized.

If anything digital downloads have their work cut out for them - there is no standard, no cross compatibility, nothing.

Even the two standards agencies for downloads (DECE and now Disney's "Keychest") can't agree.

Apple and Disney refuse to join the DECE which everyone else is a part of.

So yes, there is another format war looming...between Apple/Disney and DECE.

**PFC5** · 11-12-2009, 07:59 PM

Quote:

Originally Posted by sweetjebus

How does optical media have it's work cut out for it? It is the default format for 99% of America. It is standardized.

If anything digital downloads have their work cut out for them - there is no standard, no cross compatibility, nothing.

Even the two standards agencies for downloads (DECE and now Disney's "Keychest") can't agree.

Apple and Disney refuse to join the DECE which everyone else is a part of.

So yes, there is another format war looming...between Apple/Disney and DECE.

I agree with this. Even downloads needs a standard when we are going to be storing what we buy, just like with DVD & VHS, and now BD. It is all about standards IMO. That also goes for 3D video too.

11-04-2009, 03:42 PM	#3
Loves2Watch SPAM Police Join Date: Aug 2007 Location: AZ, NM, TX, MX Posts: 13,972	Maybe the consumer is just plain tired of being bent over by big media. __________________ Theater 1 - Panasonic TH-85PF12U Plasma TV, 6 Conrad Johnson LP275M Amps, Anthem Statement D-2 Pre/Pro, 6 Thiel SCS4 Speakers, 2 REL T-1 Subs, Infinity Interlude 120S Sub, Simaudio MOON Orbiter Universal Disc Player, ELP Laser Turntable, 2 Dish Network ViP 622 DVR's, Oppo BDP-83 Blu-ray Player, Onkyo DV-HD805 HD DVD Player.

11-05-2009, 05:23 AM	#5
MikeRox Blu Blu Skies! :D Join Date: May 2007 Location: Huddersfield, United Kingdom Posts: 12,417	I remember 1997 also having the biggest recession since the Wall Street Crash too... __________________ REGION B 4TW! Latest HD additions - I Love You Man - 17 Again - Born on the 4th of July - Paul Blart: Mall Cop - Monsters, Inc. HD Movies - Um... Lost count >_< bout 250 Latest Gaming Additions - Mirrors Edge - Scene It BOS - Wartech: Senko No Ronde - Lego Indiana Jones/Kung Fu Panda 2 pack - Silent Hill

11-06-2009, 05:21 AM	#9
cbcdesign High Definition is the definition of life. Join Date: Sep 2007 Location: North Somerset, UK Posts: 1,314	I was talking about Blu Ray at a Party last weekend and people who are not yet into it that I spoke too are being put off by the potential that downloads offer. They see Blu Ray as being obsolete before it gets very far off the ground. Of course as soon as I pointed out the increased resolution Blu Ray offers coupled with the lidicrous amount of storage we would need to build a decent HD collection on PC, it made them think. People forget, even if 1080P downloads become a reality, we need double the storage space because they really need to be backed up. I think growth will come once the economic downturn reverses AND people realise that downloading movies is not really as practicle as it sounds. Alan __________________ 63 HD DVD's Latest Buy: The Big Lebowski & An American Werewolf in London 48 Blu-rays Latest Buy: Dances with Wolves

11-09-2009, 10:00 AM	#12
Dare I moon you. Join Date: Jul 2007 Location: Phoenix, Arizona Posts: 4,437	Also, I agree with PFC5. No doubt the article's editors felt they needed to dumb down the terminology so kindergartners could understand it. __________________ LG GGC-H20L Super Multi Blue Blu-ray & HD DVD ROM Drive 58 31

11-04-2009, 06:43 PM	#4
The_Omega_Man Don't touch the remote! Join Date: Apr 2007 Location: Encino,CA Posts: 3,431	Yea, and we all know that the BDA is and has always been 100% credible on their information!

11-05-2009, 08:22 AM	#6
Kosty High Definition is the definition of life. Join Date: Aug 2007 Posts: 1,594	Its already obsolete as the last 5 weeks of Blu-ray and DVD sales are already substantially up from last year. They don't even get that the last few months of the year are where most sales revenues occur for home media. Most of us here, know more about this market segment than those writers do.

11-06-2009, 05:07 AM	#8
Chris Gerhard High Definition is the definition of life. Join Date: Nov 2005 Posts: 8,211	Blu-ray HD DVDs, how do we take an article like this seriously? Does anybody know if Warner ever manufactured any of their highly touted TotalHD discs, Blu-ray on the A-Side and HD DVD on the B-Side. I sure wish I could get my hands on a few of those if there were ever any test runs. Otherwise as far I know there is no such thing as a Blu-ray HD DVD, which is not a very consumer friendly product name. The name bounces around sort of like roller skating on gravel so I am sure glad that isn't the product's name. I do understand and accept that Blu-ray growth hasn't been what was hoped for, but Blu-ray continues to grow so maybe things will get better. Chris

11-10-2009, 11:30 PM	#13
The_Omega_Man Don't touch the remote! Join Date: Apr 2007 Location: Encino,CA Posts: 3,431	With all of the terminology debate, did we lose sight of the real point within the OP's article? Optical Media as it's work cut out for it. The real format WAR is on!