Blu-ray boon for digital copy

Dark Knight uptake passed 10% in one day

By Susanne Ault -- Video Business, 12/31/2008

DEC. 31 | Blu-ray Disc and digital copy look to be a winning combination, with consumers accessing digital copy from recent Blu-ray releases at twice the rate as from standard DVD.

According to Warner Home Video research, consumer use of digital copies on high-definition titles is double the uptake of digital copy on standard-def versions. The uptake rate (the percentage of buyers who access the included copy) also is measurably growing among Blu-ray consumers with successive Warner releases.

“The average take rate over the one month to eight month lifespan of BD titles prior to [Dec. 9] release The Dark Knight hasn’t exceeded 8%,” said Dorinda Marticorena, Warner senior VP of worldwide marketing and high-def. “But on day one, The Dark Knight hit above 10%. On this title, the consumer is clearly saying that the value is here, and I’m taking advantage of it.”

She added that “in general, the BD SKU has twice the take rate as SD SKUs. That’s not really surprising as we anticipate the Blu-ray consumer is technologically forward, where you have your early adopters in that population.”

Warner and most studios continue to offer most copies for both Blu-ray and standard def, however, in hopes of exposing as many consumers as possible to digital copy technology.

“We are trying to make digital copy as accessible and ubiquitous as we possibly can in the packaged media business,” said Marticorena.

At 19 to date, Warner Home Video has so far streeted the largest number of Blu-ray digital copy titles, according to VB sister publication Twice. That is followed by 20th Century Fox Home Entertainment (9), Lionsgate Home Entertainment (8), Universal Studios Home Entertainment (7), Walt Disney Studios Home Entertainment (3), Sony Pictures Home Entertainment (1) and Paramount Home Entertainment (1).

Sources indicate that digital copy usage overall is still low, with title uptake across studio titles ranging between 5% and 13%. Attaching a copy to a disc carries a significant expense, about $1.15 per unit, say sources, so studios are refining strategies to make sure their work is valued by consumers.

(One report from NPD Group showed about half of all respondents saying they had accessed a copy included in a title they had bought. However, information was gathered online and might have magnified the behavior of the most tech-savvy consumers.)

Retailers note that Blu-ray with digital copy hits best with their customers.

“We’ve seen most of the interest in digital copies accompany films that typically do well on Blu-ray,” Virgin Megastores buyer Chris Anstey said. “WALL-E, for example, had better sales on the Blu-ray version containing the digital copy than the standard Blu-ray version without it, even though the list price was slightly higher" on the one with digital copy.

Despite the light usage in general, Amazon.com started merchandising around the feature in September by launching a Digital Copy store within its movie home page.

“We wanted to provide customers with a resource to learn about what digital copy is and the benefits of the feature,” Amazon.com spokeswoman Tammy Hovey said. “We worked closely with the studios to create an easy to use, yet comprehensive destination for customers to learn about digital copy.”

Whether they actually access the files, Amazon customers are preferring titles with digital copy.

“Interest in digital copy DVDs continue to grow,” said Hovey. At the beginning of December, "digital copy versions of The Dark Knight and WALL-E [were] ahead of their non-digital copy counterparts in terms of their Amazon.com sales rank.”

Research also indicates that people want digital copy, whether or not they load it onto a media playing device. Futuresource Consulting, citing Warner research, said 64% of consumers perceive a DVD with digital copy to be a better value than the same DVD with no digital copy. Also 49% of survey respondents said digital copy made the DVD more interesting to buy.

To reconcile consumers’ apparent desire with this low usage reality, studios need to roll out heftier marketing campaigns, say retailers and analysts.

All the major studios are now offering copies compatible with iPods and their iTunes software, which control more than 80% portable media device market share, said NPD. Sony, one of the last studio hold-outs, will launch its first iTunes copy download with Jan. 6 release Pineapple Express.

“One of the things that we found with our study is that a lot of people came to this accidentally,” NPD entertainment industry analyst Russ Crupnick said. “It needs to be ratcheted up a bit. Otherwise, you’d hate to have this benefit that is a side thing. You want them to know that there is an incremental value proposition.”