Stores expect slow Blu-ray player sales
Retailers to discount older set-tops
By Susanne Ault -- Video Business, 4/10/2009
APRIL 10 | The 2009 Blu-ray Disc set-tops are now launching, with such new features as Amazon Video on Demand streaming and wireless connectivity, but some retailers are concerned that the latest bells and whistles might not be heard by recession-weary consumers.
Retailers who believe consumers are holding back on making major electronics purchases because of the economy anecdotally paint a more conservative picture than many analysts who predict that Blu-ray set-top sales in 2009 will double last year’s total, which was 2.7 million units, according to Adams Media Research.
Some store sources believe that full-year Blu-ray set-top sales will reach the relatively modest 5 million unit range, representing a 5% to 10% drop from analysts’ estimates.
Texas electronics superstore Bjorn’s expects its own Blu-ray player sales will be just on par with 2008. The store’s overall January to March revenue was down by double digits over the same frame in 2008.
“Sales have definitely slowed in all categories,” said Doug Bravin, chief operating officer at Bjorn’s. Blu-ray players "aren’t setting the world on fire. But then nothing really is. We are planning on this being a tough year.”
Panasonic and Samsung are among manufacturers hoping their players now hitting stores will capture consumer attention with their stepped-up capabilities. Panasonic’s $299 DMP-BD60 and $399 DMP-BD80 will stream Amazon content this June, with no firmware updates required. The company also is selling the industry’s first dual VHS and Blu-ray player, the $399 DMP-BD70. Plus, Samsung’s $299 BD-P1600 introduces wireless Web access for a set-top.
The challenge: today’s consumers are most focused on price than enhanced feature sets, according to many retailers.
“Consumer electronics are nice to have, but they aren’t something that people need to have. These are discretionary purchases,” said David Workman, executive director of electronics buyer Pro Group. “Blu-ray is a great forward technology. But if consumers can delay making a purchase, they are going to. My expectations for Blu-ray are that the business will increase year over year, but I don’t know if it will meet everyone’s projections for it.”
Research firm NPD suspects that one factor potentially slowing year-to-date Blu-ray hardware sales is that consumers are buying flat-screen TVs ahead of the federal digital signal change, which takes place in June.
“There may have been some A/V dollars that shifted away from Blu-ray in February,” NPD analyst Ross Rubin said.
Pro Group’s Workman believes that Blu-ray demand might be stoked if manufacturers significantly drop pricing nearer to the $200 mark—a fourth-quarter benchmark credited for driving holiday set-top sales.
Futuresource expects average Blu-ray hardware prices to slide 25% to 30% this year, with most reductions hitting nearer to the 2009 holiday shopping frame.
In the meantime, as the latest models roll into retail, manufacturers and stores are currently discounting older set-tops. Samsung’s earlier BD-P1500 model is listed at $179.98 at Amazon.com, down from its original $249.99 tag. Crutchfield has slashed the BD-P1500 to $199.99.
Some consumers should be motivated to buy older models at the more attractive pricing, Workman said.
“Both [new and old] products are legitimate,” he said. “One hits a price point and the other one showcases the new technology.”
