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Blu-ray Drive Prices Drop But Adoption Still Low

For a long time, Blu-ray as a product category has been a joke. The problem was price elasticity, meaning that even when Sony finally got its way and HD DVD died, Blu-ray continued to lose market share -- to plain DVDs. Well, it looks like the Blu-ray manufacturers have realized that they can't get strong premium pricing from a public that largely doesn't know how to set up high definition on their TVs, because prices are starting to drop. However, don't hold your breath for a broad installed base that might give the needed payoff for the original investments because the price differentials are enormous and people don't seem to be in a hurry.

There is at least $99 model available. Checking on Google product search, you can find a Sony BDP-S300 Blu-ray disk player. Only, depending on where you go, the price (not counting shipping) ranges from $106 to $477. Samsung's BD-P1400 runs anywhere from $150 to $379. The Panasonic DMP-BD30K low is $169; high is $495.

So, how is penetration going? Depending on whom you ask -- not so hot. According to a Harris Interactive Poll, 7 percent of US households have a Blu-ray player while 11 percent have an HD DVD machine. That's right, the discontinued technology still has greater market share. Also, 9 percent said that they have Sony PlayStation 3s, which have Blu-ray built in, while 3 percent said that they have Xbox 360s with the add-on HD DVD drive. Now, more people own Xbox 360s than PSP 3s by about a third, so is that really saying a quarter of all Xbox owners get the add-on drive? Or could there be something off in the sampling?

Unfortunately for the high def industry, the Harris poll still has consumers on the average getting six standard format DVDs in the last six months, compared to on high definition DVD. The split between HD and Blu-ray of those disks was seven of the former to five of the latter.

One problem with getting people to switch to a new technology is helping them realize whether they can use it or not and, if they can, teaching them how to. Although this is a gut feeling based on talking to people and not an official study, I get the sense that fewer people than the industry would like really care about high def, at least partly because they don't know how to set up the combination of TV and set-top box correctly. If high def looks like everything else, why pony up the extra bucks?

I'll guess that a second big reason was distrust of format wars. Remember that the video and computer industries were forced into a single DVD format. Even at that, with the DVD video format appearing in the mid-1990s, it took six or seven years for U.S. market penetration to hit 40 percent. Given that consumer Blu-ray devices appeared in 2003, it looks like it could take a long spell of low prices for people to warm to the format. Getting Blu-ray movie title prices down to DVD levels across the board probably wouldn't hurt.

Of course, it could be that everyone else is wrong and Sony is right in claiming that 11 million Blu-ray devices are in American homes. Let me guess -- they're counting every PS3 as a Blu-ray player, right?

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