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Digital downloads, DVDs and DVRs slowing Blu-ray growth

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Old 09-19-2008, 02:02 AM   #1  
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Default Digital downloads, DVDs and DVRs slowing Blu-ray growth

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Consumer Electronics By Humphrey Cheung Wednesday, September 17, 2008 18:30

Los Angeles (CA) – Blu-ray is strangling itself with high prices and an old fashioned distribution system. That’s the conclusion we came up with while listening to industry analysts and executives at the DisplaySearch/NPD HDTV conference in Los Angeles. Sure, Blu-ray effectively vanquished HD-DVD back in January, but people just aren’t switching to the format quickly enough. The format faces stiff competition from DVDs, DVRs and digital copy and this has forced Blu-ray player. This has slowed Blu-ray adoption and has forced Blu-ray disc and player prices to remain high, according to Andy Parsons, chairman of the Blu-ray Disc Association.

NPD analysts believe prices are still too high for the average consumer and gave the industry a “D” grade for price. In an article we published earlier today, Parsons conceded that his coalition hasn’t dropped prices fast enough because Blu-ray still hasn’t reached an acceptable market share. However, he said people did the same amount of complaining about prices back when DVDs were first becoming popular.

But we don’t think the situation is the same with DVD because unlike the video cassette to DVD era, we now have digital video recorders and the availability of digital downloads. That combined with the fact that DVDs are entrenched in our living rooms makes Blu-ray a prohibitively expensive option for many consumers.

According to NPD, set top boxes are still dominated by standard definition with 60% of consumers owning an SD box and 29% owning an upconversion player. Only 11% say they have a next-generation HD player.

DVRs are taking "a lot of eyeballs" away from Blu-ray according to NPD analysts. An amazing 53% of HDTV owners have a digital video recorder and NPD expects this to rise to approximately 75% in the future.

The rise of digital downloads and digital copy is also hampering Blu-ray sales. NPD says the average HDTV owner purchased 2.5 digital downloads of television or movie shows in the past three months. These include shows purchased through video-on-demand services from the cable/satellite company along with so-called “digital copy” downloads. Digital copy is a hybrid format where someone buys a physical disc(s) and then is given a key to download the same movie for their computer or iPod. In some cases, the package can contain two discs – one for your set-top box and one for your computer.

Some would say digital copy doesn’t make sense, but Lori MacPherson, North America General Manager of Walt Disney Studios Home Entertainment says it has “exceeded expectations.” She told conference attendees that people still want a physical copy, but that they also want a computer friendly version to view as they please. She touted the film “Nightmare before Christmas” which broke previous Disney records for sales and digital copy installations. Nightmare packages contained an iTunes activation code to download a computer/phone-friendly version of the movie. MacPherson said the movie had more digital copy downloads than all of their previous pay-for-download movies combined.

But perhaps the most telling statistic was one showing that many consumers just aren’t familiar with Blu-ray. In mimicking a school report card, NPD analysts gave the industry an “incomplete” for expanding consumer awareness. One slide showed that 39% of HD consumers say they’ve never even heard of Blu-ray. 28% said they weren’t very familiar with the format. Only 34% said they were familiar with Blu-ray technology (16% very familiar, 18% somewhat familiar).

So while Blu-ray may have won its battle with HD-DVD, it certainly is having a rough time in fighting a modern war against all the options consumers have these days. There’s certainly no shortage of quality programming on television for those DVRs to suck up and future bandwidth improvements will make digital copy and downloads much more attractive. But despite the competition, don’t expect Blu-ray prices to drop dramatically anytime soon.

Last edited by The_Omega_Man; 09-19-2008 at 02:09 AM..
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Old 09-19-2008, 02:08 AM   #2  
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The media loves downloads for some inexplicable reason. Let me check, how popular the HD Download Provider forum here at HDF is: ...... Ups, not much happening there. Strange, since downloads are so popular. The fans must all be watching their downloads 24/7 and don't have time to post!
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Old 09-19-2008, 05:57 AM   #3  
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All will be well for HD downloads. Eventually.

Quote:
Blu-ray: Playing for a Limited Engagement?
The technology's staying power is in doubt now that Hollywood is working to expedite video downloads

Blu-ray, we hardly knew ye. Consumers are starting to buy video players for high-definition Blu-ray discs, and sales are expected to rise sharply in the next few years. But already some of the technology's backers say its days are numbered. "I think it has five years left," Andy Griffiths, a director of consumer electronics at Samsung, the second-biggest seller of Blu-ray players, told the media this month.

Why the dire forecast? After all, Blu-ray triumphed in the battle for a high-definition standard with HD DVD less than a year ago. But now consumers are warming to the idea of getting movies and other video off the Internet, and for the first time, major studios and their partners are rushing to accommodate. On Sept. 12 a consortium of some of the biggest names in tech, including Intel (INTC) and Hewlett-Packard (HPQ), announced they would collaborate with Hollywood on standards to make it easier for consumers to download and view copyrighted content on all manner of devices. "It's all about consumer freedom and consumer choice," says Mitch Singer, president of the consortium, the Digital Entertainment Content Ecosystem.

Getting movies off the Net involves plenty of hassles today. Downloads can take forever, selections are limited, and piracy-protection schemes make it tough to move a movie you get on a PC to a TV. But the consortium intends to work out these issues as quickly as possible. "The traditional content owners had an epiphany and realized they could no longer afford to dillydally in moving their businesses into the Internet Age," says Carmi Levy, senior vice-president at consultant AR Communications.

Blu-ray has a bright short-term future. Research firm Gfk predicts sales of Blu-ray hardware and discs will quadruple this year, to $1.5 billion and hit $8 billion in 2010. Sony (SNE), the technology's main backer, predicts the strong demand will continue. Blu-ray will be the best choice for high-definition content "for the foreseeable future," says Chris Fawcett, a Sony Electronics vice-president.

But it may get increasingly difficult to persuade people to buy Blu-ray players, which run about $300, as they find it easier to get high-quality movies off the Net. "Blu-ray is probably going to be the last physical [product] where you walk into a store, get a movie in a box, and bring it home," says Levy.

Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.
http://www.businessweek.com/magazine...f+the+magazine
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Old 09-19-2008, 06:01 AM   #4  
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Originally Posted by Nikopol View Post
The media loves downloads for some inexplicable reason. Let me check, how popular the HD Download Provider forum here at HDF is: ...... Ups, not much happening there. Strange, since downloads are so popular. The fans must all be watching their downloads 24/7 and don't have time to post!
Of course they are! I'm watching digital downloads on my PC all the time, thing is the studios never see a dime of my money!
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Old 09-19-2008, 06:13 AM   #5  
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Hmmm.

At the time of writing:
High Definition Movies & Video Clips (135 Viewing)
HD Download Providers (4 Viewing)

What's wrong with the (paid for) HD download world, that hardly anyone cares about it. Even though it MUST be the future, as the press tells us? When will it begin?

Last edited by Nikopol; 09-19-2008 at 06:17 AM..
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Old 09-19-2008, 06:14 AM   #6  
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Originally Posted by Nikopol View Post
Hmmm.

At the time of writing:
High Definition Movies & Video Clips (135 Viewing)
HD Download Providers (4 Viewing)

What's wrong with the HD download world, that hardly anyone cares about it. Even though it MUST be the future, as the press tells us? When will it begin?
That's because HD Downloads are perfect Niko. There is nothing to complain about like there is for Blu-Ray.

So no one is complaining and no one is defending. It is Nirvana for movie watchers! You should try it.

Trust me, you'll love it!
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Old 09-19-2008, 06:24 AM   #7  
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Old 09-19-2008, 06:26 AM   #8  
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Originally Posted by railven View Post
That's because HD Downloads are perfect Niko. There is nothing to complain about like there is for Blu-Ray.

So no one is complaining and no one is defending. It is Nirvana for movie watchers! You should try it.

Trust me, you'll love it!
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Old 09-19-2008, 06:31 AM   #9  
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Downloads do seem to be the darling format for the media, and I guess it makes some sense since most of the "media" consists of tech Blog-type sites that are Internet based. I have not tried Vudu, but I have tried Xbox Marketplace and it was terribly unimpressive. I am sure downloads will improve over time, but they have a long way to go for me. And as far as barriers go, I think downloads have more barriers to overcome than Blu-Ray right now:
- Internet bandwidth
- You still need an HDTV
- DRM
- Lack of ownership (rental-type model)
- Costlier than traditional optical media rental models
- Worse PQ/AQ than Blu-Ray
- Lack of extras
- If your Internet goes down you cannot watch a movie unless you previously downloaded it
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Old 09-19-2008, 06:49 AM   #10  
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Quote:
Originally Posted by Nikopol View Post
Hmmm.

At the time of writing:
High Definition Movies & Video Clips (135 Viewing)
HD Download Providers (4 Viewing)

What's wrong with the (paid for) HD download world, that hardly anyone cares about it. Even though it MUST be the future, as the press tells us? When will it begin?
Is the the same "press" that tells there is NO FUTURE because of global warming?
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Old 09-19-2008, 07:59 AM   #11  
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Originally Posted by ack_bak View Post
Downloads do seem to be the darling format for the media, and I guess it makes some sense since most of the "media" consists of tech Blog-type sites that are Internet based. I have not tried Vudu, but I have tried Xbox Marketplace and it was terribly unimpressive. I am sure downloads will improve over time, but they have a long way to go for me. And as far as barriers go, I think downloads have more barriers to overcome than Blu-Ray right now:
- Internet bandwidth
- You still need an HDTV
- DRM
- Lack of ownership (rental-type model)
- Costlier than traditional optical media rental models
- Worse PQ/AQ than Blu-Ray
- Lack of extras
- If your Internet goes down you cannot watch a movie unless you previously downloaded it
Yep, I have been telling people I know this for the last few years. I bolded the parts I feel are the most important as well.
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Old 09-19-2008, 08:33 AM   #12  
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We have to keep in mind, that in the parallel universe that exists but can't be discussed in detail on this forum, there is a very, very large number of people who all have overcome these problems already. They are downloading the illegal rips. And they are accepting e.g., that you have to wait for hours and that you don't get a physical copy, except if they create them on their own. Now. Today. In vast numbers.

Offering legal music download services seems to have worked for the movie industry, that imo has successfully tapped into the vast download market. Why doesn't it work for movies?

Or is it, that all the pirates in the illegal stage never switch over to the legal providers? Once a pirate, always a pirate? And the barriers have still to be lowered for the law-abiding consumers to enter the market?

Looking at the iTunes customers, they are all new to downloads and never were part of the p2p world? I find that hard to believe.

I would think that at least a fraction of the music pirates would have switched to the legal services. Why doesn't that seem to happen with movie downloads? The services are here, yet they seem to be unsuccessful compared to legal music d/l.
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Old 09-19-2008, 10:25 AM   #13  
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Originally Posted by Nikopol View Post
We have to keep in mind, that in the parallel universe that exists but can't be discussed in detail on this forum, there is a very, very large number of people who all have overcome these problems already. They are downloading the illegal rips. And they are accepting e.g., that you have to wait for hours and that you don't get a physical copy, except if they create them on their own. Now. Today. In vast numbers.

Offering legal music download services seems to have worked for the movie industry, that imo has successfully tapped into the vast download market. Why doesn't it work for movies?

Or is it, that all the pirates in the illegal stage never switch over to the legal providers? Once a pirate, always a pirate? And the barriers have still to be lowered for the law-abiding consumers to enter the market?

Looking at the iTunes customers, they are all new to downloads and never were part of the p2p world? I find that hard to believe.

I would think that at least a fraction of the music pirates would have switched to the legal services. Why doesn't that seem to happen with movie downloads? The services are here, yet they seem to be unsuccessful compared to legal music d/l.
Good question. I think the answer is DRM related more than anything (and probably price). With iTunes, if you download a song you own it. You can save it as an MP3. You can burn it to a CD. You can play it on multiple computers and multiple iPod's easily. It is your personal copy with minimal DRM. With movies you cannot own HD movies from iTunes only SD movies and those are expensive. You are not authorized to download an HD movie and burn it to a Blu-Ray disc. The studios need to work this out IMHO. They also need to work on the price. It is cheaper to rent movies via Netflix/Blockbuster than to rent or buy via downloads from the offerings I have seen.
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Old 09-19-2008, 01:24 PM   #14  
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I don't think I know anyone who pays for a digital download of a movie. Most people I know never download movies, and those few that do get them off pirate websites.
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Old 09-19-2008, 01:34 PM   #15  
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Originally Posted by eapleitez View Post
I don't think I know anyone who pays for a digital download of a movie. Most people I know never download movies, and those few that do get them off pirate websites.
Downloads are in a lose-lose situation at this time(and most likely for long time)

No one wants to buy movie downloads for $15-20(for reasons already outlined above)
But studios will never allow that price to drop since the margins will be lower than what they can make from DVD/BDs. They cant support a product that makes them less money, therefore prices stay high until people perceive downloads to be worth as much as packaged media.
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