Blu-ray on pace for $1 billion mark this year
Upconverting players, downloads could drag progress
By Susanne Ault -- Video Business, 6/17/2008
JUNE 17 | LOS ANGELES—The industry is on pace to achieve $1 billion in collective Blu-ray Disc revenue this year, said most studio presidents at Monday’s Home Entertainment Summit here, but they wondered how upconverting player popularity and competing digital formats might complicate that milestone.
With new Web-enabled Blu-ray players hitting shelves just prior to the studio’s biggest 2008 blockbusters streeting in the format this fourth quarter, Blu-ray demand should be strong. That will likely offset maturing DVD sales dips, said executives.
Coinciding with this positive market outlook, presidents at Warner Home Video, Walt Disney Studios Home Entertainment, Lionsgate, 20th Century Fox Home Entertainment, Sony Pictures Home Entertainment and Universal Studios Home Entertainment were in agreement about reaching that $1 billion mark.
“We will be flat this year, where before we were thinking we might be down a few points" from 2007, Warner president Ron Sanders said, citing Blu-ray’s contributions.
He believed 2009 would more than double this year’s Blu-ray sales, hauling in $2.5 billion in collective studio revenue.
However, he admitted that relatively cheap upconverters are a problem for Blu-ray, noting that in 2007, 3.5 million upconverting units sold versus just 500,000 Blu-ray set-tops.
The lone conservative prognosticator, Paramount Home Entertainment president Kelley Avery, believed $750 million in Blu-ray revenue would be generated in 2008.
Avery and other executives talked about consumers being “more fragmented” than 10 years ago, when DVD was becoming the overwhelming way to watch movies at home. Executives are grappling with how to rally around Blu-ray physical media while also paying attention to consumers’ growing appetites for digitally delivered content.
“They key is managing it so you have content available ubiquitously,” Universal president Craig Kornblau said. “It will not be a clear world like when we converted from VHS to DVD. It will be fragmented. We want to make sure we’re there with content that people can collect, rent, physically or online.”
Fox president Mike Dunn added, there is a huge cultural gap between young adults now and young adults during DVD's heyday.
“The 18- to 24-year-old audience is different from any generation previous to them,” he said. “They use their laptop as a communication tool, to do their homework and an entertainment device, all at the same time.”
Executives are hopeful they can balance consumers’ evolving needs through DVD/Blu-ray-embedded digital copy, which they view as a bridge product between physical media and downloads.
“You have physical and digital lines that are starting to blur,” Disney president Bob Chapek said, adding that embedded copies enjoy speed and easy storage advantages over traditional online film downloads.
Regardless of potential upcoming Blu-ray market wrinkles, studios anticipate that the format will make big inroads this year.
“The growth story will come from Blu-ray,” Sony president David Bishop said. “It has already rapidly grown year over year. And the consumer electronics companies didn’t have enough machines to satisfy demand [earlier in 2008]. So to grow this much is phenomenal and sets the tone for the rest of the year.”
