Digital-media sales stalled in Q1

Lee Stewart

They already have an "OTA" STB (82% of do) and they already have an optical disc player or two () and they have a PC though almost all of them are not attached to their HDTV. So the public has lots of STB's in their home. To get rid of all of them with one STB would be real nice - like Japan and now the UK are doing - but that isn't going to happen in the USA. That is the opposite of what the MPAA wants.

You are forgetting a very important fact - that of the sheer number of DVD titles - over 100,000 compared to BD's less than 1600. I can buy DVD's for $1 at my local 99 Cent store. And people do buy them cause they are constantly restocking the bins.

This "what happened to DVD will happen to BD" attitude is flawed IMO. It ignores too many things.

$2 at the manufacturing point is not going to be $2 at the retail point.

They don't seem to have a problem stocking 3 (or more) types of video game formats. But all of a sudden, they have a problem stocking 2 types of HV formats?

Great! So what good to the growth of BD as a format, is a BD player that never sees a BD placed into it? (HINT: PS3 )

What shelf space did they get rid of? For old catalog DVD's? How about CD's?

Sure they did - they stopped buying VHS and jumped into DVD. Whole ton of reasons to do so - other than PQ or AQ - the main resons for going from DVD to BD.

Ack - just face it - the majority of the public just isn't enamoured with the highest quality PQ and AQ like we are. Two different tiers of the market as a whole and we represent the smallest segment of the market.

Sure - like the gas companies would love to get rid of regular gas and have everyone buy premium - but that hasn't happened. DVD is just too big and too successful.

VHS had a two fold attack on it - DVD and the DVR. The combo of the two killed VHS as a format enough to stop support for it other than blank tapes.

VHS to DVD = apples to bricks

DVD to BD = apples to oranges

Kosty

Once Blu-ray market share gets consistently over 30% and Blu-ray players under $149 there is going to be a great tendency for Blu-ray titles to displace DVD and CD at retail. Top 20 DVD day and date new releases will stay prominent and so will TV box sets, but a lot of that slow moving DVD catalog on display will drop off the shelves and into discount closeout bins.

Lee Stewart

And? Displacing slow or no sale products has been going on for quite some time now. And it has to happen first. And IMO - your 30% is too low. Way too low.

HD Goofnut

Even if they wait on 50% that's fine as well. BD will be 50% or very close to it within the next 3-3.5 years.

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Kosty

Most of of those titles are not on display and do little individual volume and have trivial revenues.

probably not $2 now, but the cost of Blu-ray titles , unlike hardware is market driven not cost driven.

Sure . if they can move to a higher margin category that is physically smaller gets more sales turns and can be an adequate substitute for a consumer.

Kosty

Not at all.

Thats been the historical point when retailers start phasing out an older product category for its faster growing successor.

Not that means that the older category dies, its just thats the point that shelf and floor space is given priority to the newer products.

Thats consistent 30% of units moved in some way, either revenue, overall units or in the case of home media the new day and date titles. Or in overall gross margin or profitability.

Blu-ray is not at that point yet, its only teasing with the 30% mark of some individual titles. Gross profit on some new releases may be getting close since Blu-ray is more profitable per unit sold.

Its really closer to 30% than say 50% as retailers will have a strong tendency to support a growing category, especially if its higher margin.

Lee Stewart

A handful of titles doesn't show consistency. Just an anomaly.

BD is 3 years old - has over 10 million players in the wild and out of approx 1570 titles - two have broken 1 million units sold.

Sorry - not as impressed with the charts as you are.

DonnyDC

Well in that case you just proved that manufacturing has nothing to do with BD pricing. So whether theres 100000 titles or 1600 really doesnt matter...

DonnyDC

Didnt you predict that Dark Knight would take 2 months to sell 1 million?

Lee Stewart

They were shipping OVER 1 BILLION . . . repeat . . 1 BILLION DVD's per year.

It makes ALL the difference. Just look at Kosty's top 20 all time best BD sellers list. Focus on 18, 19 and 20.

Lee Stewart

And? What does that have to do with the discussion?

DonnyDC

You said you arent impressed. Thats funny when what actually happened blew away your expectations.

DonnyDC

And? the difference is still dollars and cents in manufacturing.

ack_bak

That is not what I was talking about. I am talking about the price to manufacture a BD disc vs a DVD.

Not in 2009. But by 2012-2014?

Because you are comparing apples to grapefruit. Most new release video games are priced from $49-59. Most new release movies are priced from $14-29. A bargain priced catalog DVD title costs $2.99-7.99. A bargain priced video game is priced around $19.99.

And since we are on the subject of video games, look what retailers do with concerns to previous generation game console shelf space. Compare the shelf space for the Xbox 360 vs the original Xbox, the PS2 vs the PS3, the Gamecube vs the Wii. Retailers are very quick to phase out the previous generation of games and hardware for the newer generation.

Why do you think that is? I mean there are far more PS2's out there than any other current gen game console. Companies are still making games for it. Yet when I go to my local stores that are pushing PS3, Wii, and 360. The PS2 gets little shelf space.

And look at the shelf space at Target/Walmart/Best Buy. Compare the video game section to the home video section. They are not even close to being the same size. Home Video has a much larger presence. In other words video games have smaller shelf space but have higher margins.


So you see the PS3 as a failure with regards to being a BD player and I just don't. Look at the Nielsen numbers. Somebody is buying movies on the BD format.

But you once again missed my point. BD players play DVD's. Once the price of BD players drops to under $50 there is little incentive for retailers to promote and stock DVD players and little incentive for consumers to buy a DVD player when they can get a better player for slightly more money. Even if they have an SDTV, why not spend the extra money and get a player that supports HD for down the road. At some point that person will most likely have to buy an HDTV when their SDTV breaks. Again, we are talking 2012+ here. I can barely find SDTV's now in any of the stores I go to.

And lets also put this into perspective. Lets say in 2014 that 80% of US households own an HDTV. The 20% that is left clinging to SDTV. Do you think these are the people that are the core demographic that studios, retailers, and CE's are worried about? That this demograhic makes up the types of people who rush out to buy movies on release day?

CD and DVD. And they have expanded their Blu-Ray and video game sections. Is your local Wal-mart/Target/Best Buy not doing this? What about Blockbuster? Are you not seeing Blu-Ray being expanded at the expense of DVD?

The general public is not enamored with PQ and AQ and extras like many people are. But the general public will also fall in line and buy what is being offered to them if it is priced right.

I would venture to say that many people upgraded to DVD from VHS simply because it made sense to them when their VHS player broke or they bought a new TV, and especially when DVD players hit critical price points. If your VHS player broke back in 2002 it just made sense to buy the DVD/VHS combo player because that is what the stores carried and were pushing.

The writing was on the wall for VHS back in 2001-2003 and consumers knew it. It was pretty obvious to them that VHS was being phased out and DVD was taking its place.

So the question is this. What will the consumer see when they walk into Best Buy in 2012-2014 and they need to buy a new DVD player. Do you think that DVD will have equal or more shelf space for hardware/software? Do you think the retailer and studios will be marketing and promoting the two equally? Do you think that $49 will be too steep a price to pay for a BD player vs a $19 DVD player?

Time will tell if DVD will continue to capture the majority of the market over the next 3-5 years.

I have my doubts. I think by 2014 DVD will be on the way out. I think there will continue to be support for it for another 5 years after that, but it will be limited new releases, bargain bins, and super cheap generic players. I think you will see a huge push for Blu-Ray once players hit the $99 and under price point and that it will just be an afterthought for anybody that has an HDTV and needs/wants a new optical disc player.

Dare

It takes both? Well, I suppose nobody can buy anything if nobody is selling anything, but that's as far as you can take it. The consumer decides what is bought. The consumer can refuse anything the seller offers. And most importantly, all the seller cares about is making the sale. If the consumer doesn't want the new thing and prefers the old thing, guess what the seller pushes? You guessed right, the old thing.

You're talking about the time when DVD players came down in price to the point where everyone and their dog got a DVD player for christmas. Of course DVDs were front and center by then. Consumers were demanding them loudly. The handwriting was already on the wall for VHS, because fewer people wanted them, and they were less of a priority for shelf space by then. That change was driven by consumers.

I go into Best Buy and Wal-mart today (but not Circuit City because they're dead and gone ), and I don't see Blu-ray front and center. My Wal-Mart puts them off to the side out of the way (at least they aren't locked up anymore), and my Best Buy gives them a shelf in the back. And Target... I had to walk through the video department twice before I found the Blu-ray shelf. Maybe that'll change when or if consumer demand goes up enough, but the consumers will have to make the stores put them up front. The stores aren't going to do it on their own. There are priorities that are dictated by consumer activity. Oh, they'll do what they have to do to clear the inventory from their stockrooms, but they can't make people buy. Look how well the marketing effort for UMD worked.

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