Blu-ray has outpaced DVD adoption

U.S., Europe sales bolstered by PlayStation 3 console

By Danny King -- Video Business, 6/23/2008

JUNE 23 | The adoption rate of Blu-ray Disc drives has outpaced that of standard-definition DVD players almost a decade ago on both sides of the Atlantic because of gamers buying Sony's PlayStation 3 consoles, which include the high-definition disc drives, according to separate estimates.

As of the end of this year, Blu-ray's third on the market, Western European consumers will have acquired Blu-ray drives at more than six times the rate buyers had bought standard disc players by the end of 1999, U.K.-based Futuresource Consulting said last week. In the U.S., customers are acquiring Blu-ray drives at three times the rate they bought DVD players nine years ago, said Michael Youn, Lionsgate’s VP of strategic planning and business development, at a Las Vegas conference yesterday.

Studios and retailers alike are hoping that a higher consumer penetration of Blu-ray players will help reverse a drop in home entertainment spending last year. U.S. customers spent $23.4 billion buying or renting DVDs in 2007, down from $24.1 billion in 2006, according to trade group the Digital Entertainment Group. Studios such as Lionsgate are forecasting about $1 billion in Blu-ray sales this year.

“Longer term, as player prices continue to fall, title availability grows and awareness increases, Blu-ray Disc players will become the product of choice, given the fact that they also play DVD and CD media,” said Jim Bottoms, managing director of corporate development at Futuresource, which was formerly known as Understanding & Solutions. “There will come a time when the branded suppliers focus on this higher capacity drive, mirroring the trend we saw with DVD players replacing CD decks.”

With videogaming industry revenue booming, PlayStation 3’s inclusion of a Blu-ray player is likely the reason for the faster growth on both continents. Of the 15 million Blu-ray drives owned by U.S. consumers at the end of last year, 4 million were stand-alone set-top boxes, compared with 5 million standard-definition players installed by the end of 1999, said Youn. Western Europeans will have acquired 10.5 billion Blu-ray drives by the end of 2008, compared with 1.58 million standard machines by 1999, said Futuresource, which didn’t break out PlayStation or stand-alone player sales.

Blu-ray’s outpacing of standard DVD growth is expected to continue as manufacturers and retailers drop prices on both stand-alone Blu-ray players and PlayStation 3s.

Wal-Mart’s selling of its cheapest Blu-ray players at about $200 and a wider Blu-ray title inventory will help push U.S. Blu-ray disc sales to $1 billion this year and as high as $10 billion by 2013, said Youn.

In Europe, more than 30 million people will own either a Blu-ray set-top player or PlayStation 3 by the end of 2010, compared with the 17 million standard players owned there in 2001.

“The timing of the PS3 launch has clearly provided a big boost to the initial uptake of Blu-ray,” said Bottoms. “With a number of hot games titles now starting to emerge and console prices continuing to fall, we can expect to see continued strong uptake.”