Blu-ray will fail
No two ways about it: Blu-ray will fail.
Now, before all the Blu-ray, Sony and/or PlayStation 3 fanboys get their panties all bunched up, let me elucidate what I mean by “fail.”
While the technical goal of the technology was to introduce a physical media format by which high definition video content could be delivered to the consumer, the studios that threw their weight behind Blu-ray were understandably hoping that Blu-ray would reinvigorate the eroding home video market.
The advent of new technologies through which people could download pirated movies, the rise of a new mail order rental service model pioneered by Netflix, and the introduction of alternative sources for movies such as Apple’s iTunes and video on demand offerings from cable and satellite providers combined to start a downward trend in DVD sales that never reversed or even flattened out.
Sony and the other members of the Blu-ray Disc Founders and later the Blu-ray Disc Association pinned all their hopes on repeating the successes from DVD’s golden years on Blu-ray, and it is this goal that Blu-ray will fail to accomplish.
The crux of the problem is that Sony and the other companies that supported Blu-ray simply didn’t get the consumer due either to a misinterpretation of market research, poor implementation of said research or simple wrong assumptions (or some combination of these), and this led to those behind Blu-ray going in with the wrong strategy and expectations.
The biggest mistake the BDA made was believing that consumers would be enamored with high definition video, or more appropriately enamored enough with it to pay any real premium. Several factors come into play here.
First, most people are content with “good enough.” Does 1080p content look great? Sure. Is it so mind-blowing and amazing that the typical consumer is willing to buy a brand new player and pay higher prices for the movies? Hardly. Yet that’s what Sony and their compatriots were expecting. They all thought that once people saw the difference between the high definition content available through Blu-ray and the standard definition content on limited DVD technology, they would be more than happy to shell out several hundred dollars for a player and $30-35 per movie.
The only problem was that most people at the time couldn’t even benefit from these increases. When Blu-ray first hit the market in June 2006, HDTV penetration was at only about 30% according to the Consumer Electronics Association - roughly 70% of all households couldn’t benefit from Blu-ray Disc technology!
Furthermore, most of the households in the 30% HD slice of the market likely wouldn’t have even experienced the full benefits of Blu-ray. This chart details the screen size and viewing distance necessary for the human eye to perceive differences between standard definition 480p and high definition 720p and 1080p images. A person with a 42″ HDTV would have to sit about 6 feet away from their television in order to be able to see even a slight improvement from 720p to 1080p. Considering that there were already DVD players that could upscale the standard definition image quality of DVD movies to a remarkably good high definition quality, one has to wonder why anyone other than a videophile enthusiast would bother investing in Blu-ray early on.
Couple that with the widespread availability of high definition television broadcasts over-the-air or from cable and satellite providers and a more dire picture for Blu-ray becomes clear. Still, only about half of all HDTV owners at the time were willing to pay even the small additional cost to enjoy high definition television programming – what would make them willing to dish out significantly more money?
The return on investment from Blu-ray just wasn’t in line with the typical consumer’s perspective. Why bother spending all that extra money when you could simply pay a few extra dollars per month for more than ”good enough” – assuming you’re even willing to spend that?
There’s almost the matter of one’s existing library of DVDs. In the ten years between the launches of DVD and Blu-ray, consumers are likely to have amassed a sizable collection of their favorite movies. How does the BDA convince people to buy the Blu-ray of a movie they already own on DVD?
Blu-ray fanboys will no doubt point out that you can play DVDs on Blu-ray players so there’s no need to repurchase a movie. While that is certainly true, it’s unlikely that your typical consumer would want to spend the money to buy into a new format only to view their favorite movies in a lower quality than newer movies that they paid more money for!
Fanboys will argue that Blu-ray’s handy defeat of rival format HD-DVD and higher rate of adoption than DVD at the same time in the format’s life contradicts what I’ve said. What they won’t point out is that the only reason either of these things occurred was because of Sony’s sneaky little “Trojan Horse” tactic of incorporating Blu-ray drives in each and every PlayStation 3.
Every video gamer who bought a PlayStation 3 became a de facto Blu-ray adopter whether or not they actually watched Blu-ray movies with their console, artificially pumping up Blu-ray’s rate of adoption. When you look at only sales of standalone players, however, HD DVD bested Blu-ray until the tail end of its official life – Blu-ray didn’t have any sort of sales advantage until the PlayStation 3 came along.
Of course, this victory turned out to be a double-edged sword for Sony because the inclusion of yet another brand spankin’ new technology (Sony also pushed its cutting edge Cell processor) in the PlayStation 3 drove up the price causing the PlayStation 3 to fall into third place in this generation’s “console wars,” a spot from which they have not been able to climb even with huge spikes in sales from price drops and the launches of top tier games.
And this risky gambit has not paid off for Sony or their partners in crime. While Blu-ray did enjoy significant growth from both hardware and software sales perspectives, it still has a very long way to go to becoming a truly mainstream technology. These Nielsen VideoScan sales charts for the Thanksgiving holiday weekend show that only seven of the hundreds of Blu-rays available in stores had more than a 10% share of disc sales, and half of those succeeded based only on incredible Black Friday deals with prices at or near $10. Yet even with sub-$100 prices for Blu-ray players and ridiculously low prices for movies 3 years after launch, Blu-ray can only manage an average market share far less than 10% (remember that there are hundreds of titles that you can’t see on those charts).
Still, Blu-ray fanboys would have you believe that Blu-ray will persevere nonetheless, succeeding despite all odds, based on the idea that at some point everyone is going to have to switch over to Blu-ray as hardware manufacturers cease production of DVD players and retailers cease stocking them.
It seems a logical assumption at first since if companies stop producing DVD related goods, most consumers won’t be able to get their hands on them. Unfortunately, that assumption is itself based on the shaky assumption that consumers will continue to focus all of their resources on improving their home video experience.
On the contrary, consumers’ attention will have shifted to streaming and downloadable video content well before Blu-ray has the chance to become entrenched enough to be considered “the new DVD” (an accomplishment Blu-ray may never achieve since many will simply skip over disc-based high definition and jump right into online content).
I’m not saying that streaming and downloaded video content is going to somehow “replace” Blu-ray. Who knows when the United States, the biggest home entertainment market in the world, is ever going to have the network infrastructure to support the high bandwidth needed for quality high definition online content? The United States is so far behind Europe and Asia when it comes to network infrastructure that it would be funny if it weren’t so pathetic. But I digress…
Standard definition streaming content is a high-growth sector of the home video industry. Netflix has offered streaming movies and television shows for quite some time now with video game consoles and new set top hardware able to handle high definition content. With such video on demand offerings widely available and the ability to TiVo hours of television content, one has to wonder how long the average consumer will even bother with physical discs.
But that’s just one piece of the puzzle. There’s also the rise of portable media players to consider. More and more people are taking advantage of the convenience of watching television shows and movies not in their living rooms on big screen high definition televisions but on the small screens of their iPhones, Zunes or PlayStation Portables.
RoughlyDrafted Magazine goes into further detail as to why “low def” is the new HD and also discusses some of Blu-ray’s flaws that I didn’t even bother to touch upon, such as DRM security measures. The author points out that while the less-than-standard resolution video offered for consumption on mobile devices doesn’t directly compete with the high definition content available on Blu-ray discs, consumers will favor low definition content for pretty much the same reasons that they jumped at MP3 while ignoring the Super Audio CD and DVD-Audio formats.
While Sony can finally say that they created a proprietary format that actually “won” the right to be called the standard for its class, it really was too late a time to introduce this technology. The future lies in an entirely different direction with a focus on convenience and portability over fidelity, and any hopes from the studios that Blu-ray will be the new magic technology that brings them back to the golden age of massive sales throughput and vast profits is little more than a pipe dream.