NPD: Blu-ray will penetrate mainstream by next year

PHYSICAL: Set-top price tags expected to fall through Q4

By Susanne Ault -- Video Business, 9/24/2009

SEPT. 24 | PHYSICAL: Blu-ray Disc will penetrate the mainstream by next year, according to an NPD analysis of the demographics of set-top player buyers.

The research company analyzed the types of consumers using Blu-ray set-tops in February 2008 and those using Blu-ray set-top players this August. Over the months, the Blu-ray consumer base broadened beyond early adopters, which NPD calls “cutting-edge” consumers to “sensibles,” older people who can afford new technology but don’t rush to buy it, and “dreamers,” who want new gadgets but are deterred by price. If this trend holds up through the heavy holiday shopping period, NPD expects Blu-ray players will start getting described as mainstream products early next year, breaking them free of their current niche status.

Cutting-edge consumers make up just 20% of the U.S. population, according to NPD, and are not large enough of a group to move products into the mainstream. In early 2008, the cutting-edge made up 64% of Blu-ray users. By late this summer, that had tapered off, however, with cutting-edge consumers making up 38% of the Blu-ray base.

At the same time, Blu-ray use among more mainstream groups, sensibles and dreamers, grew. Though these mainstream consumers are considered vital to a product’s sales because they make up about 42% of the U.S. population, according to NPD, in 2008, they made up just a small fraction of the Blu-ray usage base, at 22% combined.

By August 2009, however, the mainstream sensibles and dreamers grew to make up a combined 37% of Blu-ray users. That is an encouraging sign for major Blu-ray acceptance, especially as companies keep rolling out price discounts to further spur mainstream adoption.

By September, not yet considered prime shopping season, many branded, Web-capable Blu-ray set-tops are selling for below $200. That tag should steadily fall through the fourth quarter, considering previous season’s downward trajectories.

“In the last year, we have made great strides toward becoming mainstream, but we’re not quite there yet,” said NPD analyst Russ Crupnick. “But going into the holiday season, we are seeing a combination of fairly reasonable price points on hardware and a lot of content. By February, after the holidays, it’s going to quickly look more and more mainstream. We are on that path.”

Crupnick says that Blu-ray can be prodded along this path by current format fans showing off their high-definition technology to friends and family. NPD research shows that such word-of-mouth is the most powerful way to encourage a Blu-ray set-top purchase. Store demonstrations are less effective.

“It can be difficult with demos in stores because there might be kids tugging at you or you’re trying to get groceries. It’s tough to get that immersive experience,” said Crupnick. “When I am at your house, there is much more opportunity for an immersive experience.”

NPD also tracks Blu-ray usage by so-called late adopters, described as ‘neutrals’ who are unimpressed by technology, and ‘anti-tech’ who believe new gadgets are a waste of money. Last month, Blu-ray usage broke down between 17% neutrals and 7% anti-tech.

Back in February 2008, that breakdown was 11% and 3%, respectively.