Blu-ray buzzkill: the death-spiral

Will consumers upgrade to Blu-ray? The CEO & co-founder of fast growing Netflix believes mailed DVDs shall be replaced by web-sent movies.
Written by Robin Harris, Contributor

Will consumers upgrade to Blu-ray? The CEO & co-founder of fast growing Netflix believes mailed DVDs shall be replaced by web-sent movies. And a recent Harris [no relation, darn it] Poll finds that people today are less likely to buy a Blu-ray player than they were last year.

Now would be a good time to panic Forget the ever-optimistic "market research" reports blowing smoke up the BDA's hind end. And the "hold the course" counsel from Blu-ray marketers.

The Harris Poll numbers are damning. Purchase intentions dropped over 20% - from 9% in '08 to 7% in '09 - while the percentage of "not at all likely" prospects rose to 75% in '09 from 65% in '08.

Buzzkill: the lukewarm Blu-ray base But surely the early adopters who've experienced the joys of Blu-ray - superb picture quality, uncompressed audio and many new features - the people who - like me - have giant HD screens, surround sound systems and large movie collections, surely we love Blu-ray. Right?

Nope. Even the 16% of the polled who have a PS3 or a Blu-ray player aren't fired up.

51% won't wait for Blu-ray if the DVD comes out first. Fully 59% don't buy the most movies on Blu-ray. 65% won't replace their DVDs with Blu-ray.

In short, even the people who own Blu-ray are underwhelmed. Yes, it is better, and the people who like it buy more movies than average, but there isn't the "Wow!" factor that drove widespread adoption of CDs and DVDs.

The Storage Bits take The decline in buying intentions owes something to the worldwide depression recession, but the apathy of BD owners is ominous. If the players get cheap enough more people will buy them, but even that won't drive BD disk sales.

Unless drastic action is taken before this Christmas season, Blu-ray will join all the other failed consumer media formats like SACD, Laser Disk, DVD-Audio and the PSP's UMD. Most new formats fail - Blu-ray's claim to fame is that it will be, without a doubt, the costliest such failure in history.

What can the BDA and the vendors do to turn it around? How about:

  • Recognition that Blu-ray is a feature tweak and price accordingly.
  • Accept that Blu-ray will never earn back the investment.
  • Consumers will pay $50 more for a Blu-ray player that is competitive with the average up-sampling DVD player.
  • Disk price margins can't be higher than DVDs and probably should be less. The question the studios need to ask is: do we want to be selling disks in 5 years? No? Turn distribution over to your very good friends at Comcast, Apple and Time Warner. Ask Procter & Gamble about paying Safeway to stock products.
  • Fire all the market research firms telling you how great it is going to be. They are playing you. Your #1 goal: market share. High volume is your only chance to earn your way out of this mess and keep some control of your distribution.
  • Time is short. Timid incrementalism will kill you.

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