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Blu-rays Market Dominance Will Be Delayed

It has been a quarter since HD DVD lost its contest with Blu-ray, and the market has absorbed the consequent impacts while remaining open to changes. To clear inventory, HD and universal players are selling at deep discounts; HD and universal drives will no longer ship after 2008, leaving HD DVD discs orphaned, and Best Buy has removed HD DVDs from its shelves to make room for more standard DVDs and Blu-ray titles. But the Blu-ray player and optical drive markets must undergo further evolution before reaching their full potential.

“BD player prices remain high, and supplies are limited,” says ABI Research principal analyst Steve Wilson. “This is good for the market because most current players do not support all the functions that studios place on the discs. Lacking support for – or upgradability to – BD Live! or Bonus View (picture in picture), consumers cannot utilize all the available options. Manufacturers would rather sell more fully-featured models.”

It will be 12 to 18 months before this market kicks into gear. Consumer electronics manufacturers need to introduce full-featured players and then get prices down to the $200 level. Until then, non-HDTV owners will certainly favor standard definition DVD players. A depressed economy in the United States could also lead HDTV and prospective HDTV owners to opt for upconverting standard players as they delay buying higher-ticket CE items. In addition, Blu-ray packaged media comes at a heavy premium over standard DVDs, although studios have brought prices down to the low $20-range for some titles.

Optical disc drive manufacturers have lowered their prices for computer BD-ROM drives in an effort to kick-start adoption in the PC market. But BD drives, priced three to four times higher than red laser drives and requiring an advanced graphics IC, will struggle for support in entry-level products.

In 2008, PlayStation 3 players will make up over 85% of the BD players in the field, and PS3 sales are picking up steam. This lead will continue until 2013 when the installed base of CE- and PC-based BD players finally overtakes the installed base of PS3s.

ABI Research’s recent study, High Definition DVD for the PC Market, examines the market for high-definition DVD support in the PC market, segmented into consumer and business class machines.

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It forms part of two ABI Research Services: Consumer Video Technologies and Home Networking.

ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets. Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives. For information, visit http://www.abiresearch.com, or call +1.516.624.2500.

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