Could the Bad Economy Kill Blu-ray?

By  |  Monday, October 20, 2008 at 8:43 pm

After Blu-ray finally finished off HD DVD shortly after CES 2008, analysts rightfully asked whether the format could survive the wounds the format war had inflicted on it. While these concerns certainly were warranted, for awhile it had appeared Blu-ray could weather the storm.

That now may not be the case — and this time, it may be no fault of Sony. With the overall economy beginning to sour and technology going with it, Blu-ray’s moment in the sun may be over sooner than we think.

Simply put, all indications are that consumers will close their pocketbooks for the forseeable future. No one has confidence in this economy: consumer indicators are falling, which likely equals to more budget conscious shoppers who will not be as eager to drop large amounts of money for higher ticket items.

Bad news, Blu-ray fans.

Players generally are well above $200 yet (although before the legions of fanboys have heart attacks, yes, there are a few out there below $200), and discs still run on the average $5 or so above the comparable standard title. If Blu-ray was a hard sell in a decent economy, what makes you think it’s going to be any easier in a bad one?

In any case, economic troubles could be exactly what the rest of the industry needs to play catch-up. Streaming media seems to be the logical viable competitor, but it still needs probably another year or two yet before it is viable, both in better encoding technologies and more widespread availablity of ultra-high speed internet such as fiberoptics.

A streaming media solution would likely come at a dramatic cost savings, all the worse for Sony and its partners. Cost of entry into the Blu-ray world is its biggest obstacle — and with streaming media, the costs are less both for the content provider and the consumer.

Score one for the alternative.

One more point here, which is valid considering its the argument du jour from the Blu-ray camp. Format proponents like to point out that DVD took several years to take off, true but in this case thats a faulty analogy.

History lesson: commercial availability of DVDs took off in 1997. This was at a time when the US economy was at its probably its strongest point this century if not in its history, and we all had money to spend. These days, frankly we don’t.

Blu-ray is getting launched in a completely different economic environment. The only way Sony and family will be able to keep it afloat is to take one on the chin and slash prices.

If they don’t, I wouldn’t be suprised if the format has trouble lasting the “five years” that one industry executive gave it in last month.

 
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9 Comments For This Post

  1. Philip Trickett Says:

    You make assumptions about broadband penetration being incredibly widespread.

    Also, companies like Sony are hedging their bets with regard to streaming services, just look at the video download features of the Playstation Store.

    It seems popular at the moment to call HD disc standards ‘doomed’ and that download / streaming services will win the day.

    I live in Ireland, and I reckon if we all started to download ‘HD’ movies over our broadband connections, we would be in for quite a shock, mainly due to under investment in communications infrastructure.

    The other factor which you fail to mention, is the quality of the encoding of the media, which while this can vary on Blu-Ray, providers of download / streaming services can throttle the quality to reduce costs. Alot of people won’t really notice.

    I’ll stick with my PS3, and the odd Blu-Ray disc I get for ‚ā¨7 pre-viewed at the rental store for now.

    Phil

  2. Cathy Says:

    I agree with the comment above about broadband penetration. Comments like that are normally written by people who live near major cities! I just moved from an area where people parked their cars around the public library at night trying to catch their leaking wireless signal, it was the only game in town.

    And during an economic downturn we don’t need to re-purchase our movie collection yet again on another format to make the movie companies more money. DVDs are fine, and will be for a long time.

  3. jgoto Says:

    Blu-Ray is a premium item and premium items generally suffer in tough economic times. Just like people will start buying their morning coffee at McDonald’s rather than Starbucks, people will buy the less expensive DVD’s over the more expensive (but higher quality) Blu-ray. Streaming online content is also a big competitor. I haven’t purchased a single DVD over the past year but I’ve watched a bunch of movies off sites like Hulu.

  4. garyb Says:

    As i see there are many problems with Blu Ray adoption.

    1. Onerous DRM.

    2. Content. Hollywood is getting the failed box office junk out as titles first. (Few exceptions.)

    3. Content part 2. I don’t want to pay to watch an anti-piracy commercial every time I spin up a disc, or watch a series of trailers first. I have no objection to the trailers being user selectable from a Bonus Features section.

    4. It all comes down to treating the end user right. The content holders force 1, 2, and 3 on the customers and we are voting with our feet.

  5. Yacko Says:

    Bluray has the problems noted but I wouldn’t mind if it survives as a viewing medium. That means widespread adoption on PCs, which will be burners, and that means much cheaper blanks. While people are burning or attempting to burn HD, I will be happy with just large data disc storage.

    As to streaming of downloads, keep in mind ISP caps which will get worse. Nothing better an ISP would like but to be just another cable company for passive viewers. Official in house content is unlimited but the stuff you want to see on the web, ooo-la-la! Hear me Verizon?

  6. Ed Oswald Says:

    I did mention Broadband adoption as a problem in the pickup of streaming media. However, I think its safe to say within 12-24 months that fiberoptics will be much more widespread, and faster broadband elsewhere is all but a certainty.

  7. mikhailovitch Says:

    In Australia at least, the killer for BluRay is software costs. If the premium for a BluRay movie was two or three dollars, BluRay would rule. When it’s more like eight to ten dollars, it’s a hard sell.
    Hardware costs are a one off. expensive movies hurt every time!

  8. DWalla Says:

    Well… in my case I’m still buying 4-5 Blu-ray discs a month. I don’t see my purchases slowing down anytime in the near future.

  9. FG Says:

    I agree with the openening comment 100% . Hard times people are reluctant to shell out the $$$ . I personally still buy dvd’s and download alot of movies I watch through xbox360 . I see no need for anything bluray it came at a time when the technology has no gap to fill . Bluray is a extra item @ a extra cost . Bad business plan for sony , Sony has been losing it’s business mindset for the last 10 years. Not looking good for their future .

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