Best Buy, Amazon maintain large Blu-ray market share

PHYSICAL: As format grows, Wal-Mart might dominate

By Susanne Ault -- Video Business, 5/8/2009

MAY 8 | PHYSICAL: Almost three years after the introduction of Blu-ray Disc, retailers Best Buy and Amazon continue to account for a much larger share of sales of the new format than they do for standard DVD. But Wal-Mart is poised to expand its market share quickly as Blu-ray’s consumer base broadens, according to analysts.

Best Buy is the dominant retailer of Blu-ray by a large margin, claiming a market share of 40% to 50%—even larger than the share Wal-Mart holds in standard DVD, according to research sources. Wal-Mart is the runner-up with 20% to 30% market share. Amazon.com clocks in at 15% to 20%, and Target rounds out the leading Blu-ray retailers with about a 10% share.

The retail rankings are turned around when analyzing the overall DVD market, with Wal-Mart maintaining its long-time dominance with a 40% share. Second place is a virtual tie, note sources, with Target and Best Buy hitting 12% and 11%, respectively. Amazon trails at around 6% to 7%.

Best Buy has topped the retail field in Blu-ray since around the time the format launched. Research analysts believe that Best Buy’s ongoing Blu-ray strength makes sense considering its core electronics customer base matches perfectly with early adopters. Best Buy has merchandised to that fact, placing Blu-ray titles in heavily trafficked areas.

The chain also heavily emphasizes Blu-ray titles in advertising. In its April 28 newspaper insert, for instance, Best Buy featured the Blu-ray versions of the week’s major releases—Paramount Home Entertainment’s Hotel for Dogs and The Uninvited and 20th Century Fox Home Entertainment’s Bride Wars—with pictures much larger than those for the titles’ standard DVD versions. A week earlier, Universal Studios Home Entertainment’s April 21 release Frost/Nixon was shown only in Blu-ray form, with small writing underneath the image stating that the title is also available on standard DVD.

“Best Buy supports the format more aggressively than Wal-Mart and Target,” said one retail analyst. “Best Buy has been aggressive with its first-week pricing for new release titles and offering catalog promotions. And its placement of Blu-ray titles is typically at the front of the store, compared with the back of the store at some Target and Wal-Mart locations.”

Similarly, Amazon has lavished Blu-ray with a lot of merchandising and promotion attention, helping the online retailer grab a much larger share in the format than it has on DVD.

However, research analysts predict Blu-ray retail shares will begin mimicking standard DVD shares in the near future, as the high-definition format becomes more mainstream. U.S. Blu-ray player sales will generate $765 million in 2009, tripling 2008 revenue, according to firm SNL Kagan.

“Wal-Mart goes after the mainstream, female consumer,” said another retail analyst. “And as Blu-ray becomes more mainstream, you can certainly envision a time where Blu-ray’s market shares look not too different from DVD market shares.”