Doggie Howser Posted July 20, 2007 Posted July 20, 2007 I think this is a much more balanced article that considers both sides of the coin... Futurists: Both formats will grow HOME MEDIA EXPO: Consumers still confused about Blu-ray, HD DVD By Jennifer Netherby -- Video Business, 7/18/2007 JULY 18 | LAS VEGAS—Both HD DVD and Blu-ray Disc will have a place in home entertainment’s future and a big one at that, according to research presented at Wednesday panel “The Future of Retail and Home Entertainment” at the Home Media Expo here. By 2012, high-definition DVD will reach $10 billion in annual sales, surpassing DVD sales, which are expected at $8 billion, according to Adams Media Research projections. Adams believes that high-def sales will be split equally between HD DVD and Blu-ray. Firm principal Tom Adams said the industry is “slowly getting used to the idea that Toshiba’s not going away.” But high-def DVD won’t grow as fast as standard DVD did. Part of the problem is a lack of consumer high-def knowledge. “Consumers are entirely confused,” said Russ Crupnick, NPD movies and music analyst. NPD research shows that 10% of consumers think they already have a high-def player, while research says that closer to 1% actually do. One of the complaints of consumers is that they don’t understand why they should upgrade to high-def. “More than price, people don’t see a big difference,” he said. Crupnick said there’s an opportunity for smaller retailers to educate consumers about high-def, but he cautioned them away from heavily investing in it, saying many consumers will buy players and high-def movies at big box stores. The typical high-def consumer is male, ages 18 to 34, reads men’s magazines such as Maxim, probably owns an iPod, drinks imported beer and makes most of his movie purchases at electronics and game specialty stores, according to Nielsen Media Research. Other new technologies such as movie downloading and video-on-demand are expected to grow in the next five years, but not as fast as high-definition. Adams projects that movie downloads could reach $160 million in revenue this year, but he said that is optimistic. Crupnick said NPD has seen a significant drop in movie downloads in the last year. DVD sales continue to be an important part of the business. The most important thing retailers can do is focus on customer service. Crupnick suggested retailers look at what companies that score high on customer satisfaction are doing, such as Amazon and Netflix. Music consumers, who behave similarly to movie consumers, shop an average of five stores for media, according NPD. Over the last three years, consumers have shifted where they are buying DVDs. Between January and May 2004, 54% bought discs at video stores, compared with 42% this year. Purchases at online stores doubled in the same period, from 11% to 21%. Store loyalty, he said, is a thing of the past. But consumers are buying more DVDs at video specialty stores, according to Nielsen. In 2006, 28% of video purchases were made at specialty stores, up from 23.4% the prior year. DVD purchases at Wal-Mart slid from 21% to 17%. At an afternoon panel about DVD manufacturing on-demand, execs from MOD companies said the business is just getting started, but it may offer opportunities for retailers to carry a broader range of content. Amazon CustomFlix VP of content acquisitions Larry Smith said at his company, some smaller titles sell one or two copies, while others can sell even more.
1AngMoh Posted July 21, 2007 Posted July 21, 2007 Thanks for the post. I hope the Media Research projections are right and that by 2012 sales of High Def (HD) will surpass SD-DVD! I hope, but early indicators of take up rates for both HD-DVD and Blu Ray are sadly unimpressive. Software sales growth is way behind hardware sales growth and this might suggest that owners of HD HW (incl. PS3) are not investing that heavily in their HD libraries. Some analysts are now bemoaning the slow take up rate of HD and point out that customers are jumping from SD-DVD to HD DVD far slower than they did from VHS to SD-DVD. I've noted that executives from both sides of the HD divide whilst talking up a storm about who is selling the most - become real coy when asked to compare HD to SD sales. I note the Life section of The Straits Times today carried an article related to this topic which quoted a sales exec from Sony indicating that the sales ratio is one BD to twenty SD-DVD's. Part of the acknowledged challenge according to the article is that BD is prices between $49.90 to $59.90 which is $10 - $20 more than SD-DVD. While the sales ratio looks a tad generous the point about volume rise equating to price drops makes sense - at least it does so long as SW sales really do scale. Talking to some retailers here in Singapore (HMV, Gramophone) they are very disappointed with their HD sales volume. Seems the locals prefer to order from Amazon. I'm not surprised when i see some of those eye-poping $70 price tags.
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