Panelists: No end yet to high-def war
Player sales climbing, but consumers still confused about competing formats
By Susanne Ault -- Video Business, 3/8/2007
Early adopter of next-gen DVD content: Male; ages 25-34 and 55+; Hispanic skew; $100,000+ income; Pacific/South Atlantic regions; action-adventure fan
MARCH 8 | SAN DIEGO—The good news-bad news message that high-definition DVD is a real market but neither HD DVD nor Blu-ray Disc is likely to win the format war this year was woven throughout the DisplaySearch Flat Panel Display Conference 2007, held here March 5-8.
On the positive side, sales of stand-alone high-def DVD players in both formats on a dollar basis combined to represent 8% of the conventional DVD player market during January—twice high-def’s share during the fourth quarter of 2006—said Ross Young, DisplaySearch founder and president. Also during January, monthly PlayStation 3 sales on a dollar basis surpassed those of standard-definition DVD players.
Sharply growing adoption of HDTV sets in U.S. homes have pushed consumers to seek out accompanying next-generation players. The ongoing DVD format war compounded by consumer confusion, however, will work to curb HD DVD and BD adoption for some time, speakers said.
For the last two months, twice as many Blu-ray discs have sold as HD DVD discs, noted conference speaker Vito Mandato, an executive consultant to Paramount Home Entertainment. But he does not see that as a sign that the end of the format war is imminent.
“Some studio chiefs have claimed to have won, but quite honestly the war continues,” said Mandato, who led his speech with the disclaimer that his views may not represent the views of Paramount.
Mandato predicts the number of hardware units in homes by the end of 2007 will be at 1.7 million for each format. On the HD DVD side, that includes 1.2 million stand-alone players and 500,000 Xbox 360 add-on drives. For BD, Mandato is counting only 22%, or 1.2 million, of the 5.5 million PS3 units projected to be sold during the year, plus 500,000 stand-alone players, because his analysis suggests that just 22% of PS3 households purchase movies regularly.
Industry sources say both BD and HD DVD stand-alone player sales were about equal in February. BD stand-alone sales were miniscule compared to sales of the PS3, which one source said surpassed 150,000 units during the month.
Sales are likely to grow slowly until consumers have a better understanding of what high-definition DVD and the two separate formats are, said Russ Crupnick, NPD Group VP-senior industry analyst of entertainment.
A recent NPD survey showed 83% of DVD buyers said they had bought HD DVD titles, and 69% said they had bought BD titles. NPD determined that most had actually bought neither, based on the fact that the titles they reported purchasing were not released in either format.
“So in consumers’ minds, next-generation is closing in on a 2% share of all DVD sales,” said Crupnick. “But in fact, [HD DVD and BD sales] are less than 0.5%.”
Crupnick added that there is stiffening competition for BD and HD DVD as other media forms gain steam. Currently, iTunes’ TV and movie digital sales are 10 times the size of high-def title sales.
Fewer than 10% of DVD buyers said they intend to buy HD DVD or BD in the next six months, when accounting for both HDTV owners and non-owners.
“Research, not speculation, shows that consumers are wildly confused,” said Crupnick. “We need to clarify and educate in order to get that purchase intent from 10% to over 50%.”
Jennifer Netherby contributed
