Electronics specialists expect Blu-ray to outpace DVD sales

By Susanne Ault -- Video Business, 5/23/2008

MAY 23 | High-end consumer electronics retailers expect set-top Blu-ray players to begin outselling DVD players by August, as a wave of new models eases current supply problems.

Since the format war ended in February, demand for BD players by early adopters has been higher than that for standard DVD at Ultimate Electronics, Crutchfield and Bjorn’s. But there has been too little BD product available for the retailers to realize the format’s potential. The stores believe they should finally have adequate supply by August, as Sony, Samsung, Panasonic, Philips and Pioneer will be launching new BD set-tops.

Samsung’s first picture-in-picture model, the BD-P1500, rolled out at Best Buy this month, and should spread widely at retail soon. Sony’s first BD-Live player, the BDP-S350, and Panasonic’s first BD-Live model, DMP-BD50, will hit stores in July. Pioneer’s BDP-51FD and Elite BDP-05FD, the manufacturer’s first picture-in-picture models, are expected by the July-August frame as well.

Manufacturers, including Panasonic, have said that production hasn’t kept pace with demand because the war ended sooner than expected.

“People have been waiting weeks for Sony players, but it should get better later in the summer,” said Rick Souder, executive VP of merchandise at Crutchfield. “In August, it will be the first time that Blu-ray overtakes [standard DVD] sales for us on a unit basis.”

For some time, revenue on relatively higher-priced BD set-tops has trumped standard DVD at Crutchfield. Currently, the dollar split is 60% Blu-ray and 40% standard.

Besides consumers’ growing confidence in this one high-def format choice, retailers note the February 2009 digital TV transition also is sparking interest in Blu-ray.

“I think HD of any kind is experiencing a lift, as people become more cognizant of the DTV transition,” said Matt Duda, Ultimate Electronics merchandising director of video. “People wonder if they need a new TV, and it’s a great time for retail to capitalize on that. Just getting that footstep in the door is a great way to educate consumers about all high-def products.”

Ultimate Electronics’ BD revenue will surpass that of standard DVD for the first time by August, projects Duda. On a unit basis, BD sales still trail standard DVD at Ultimate.

“There should be a healthy supply by August and [manufacturers] should be caught up in production,” said Duda. “You’re getting five to eight new [BD] players in the market, and you’ll see Blu-ray catching up with standard DVD.”

The retailer is already planning to roll out in-store seminars about the new Panasonic players, as they will represent some of the first set-tops that can access Web content.

With this hardware ramp-up, Bjorn’s will be moving virtually all BD players within its home entertainment area. The upscale San Antonio superstore expects to shift from 70% BD unit sales/30% standard to 90% BD/10% standard by the end of the summer.

Bjorn’s recently carved out a Sony-branded store-within-a-store boutique. But Bjorn’s currently isn’t offering any Sony players. Also troublesome, Bjorn’s owner Bjorn Dybdahl and his team are fond of pumping profits by selling high-def TV and BD hardware together. But the retailer hasn’t been able to offer these bundle deals for much of this year.

“Everyone is trying to assure us the supply is going to get better,” said owner Bjorn Dybdahl. “Right now it’s a hindrance.”