Blu-Ray Sales Drop, a Victim of Being Both Too Early and Too Late

Last Updated Jun 2, 2010 12:20 PM EDT

Sony (SNE) is banking on 3D and Blu-Ray to move its video game consoles, but neither are looking pretty. The entertainment company is currently rolling out a currently content-less 3D update for its PlayStation 3 console and gearing up to push dated motion sticks at this month's Electronic Entertainment Expo, but its proprietary Blu-Ray format isn't bringing in new customers, either.

In fact, Blu-Ray may be both too early and too late -- too soon to have worthwhile content and too late in the face of downloadable media and a still thriving DVD format.

From Ryan Fleming at Digital Trends:

A new analysis from the UK-based Screendigest shows that international sales for packaged media is down across the boards. The sagging DVD market has been expected to decline, but blu-ray sales were expected to bolster the industry. A combination of slower-than-expected retail sales and the recession are to blame.

The hardware sales for Blu-Ray were down, but of the people that bought blu-ray players, including PS3s, owners bought a meager 1.5 movies per household. The report suggests that DVDs remain "good enough" for most titles, and the cost simply cannot be justified by most households.

Many had hoped that the record numbers of Avatar blu-ray disks sold would be enough to turn the trend around, but other factors, including reports that outside of the US, Avatar did not show significantly higher numbers than most other releases. From those that did buy it, the majority bought the less expensive DVD copy.

According to report author and Head of Video Helen Davis Jayalath, "The failure of the Blu-ray format to capture enough of the market in 2009 means this downward trend is now set to continue, with the short-term uplift in video spending that we had previously expect to see in 2010-2011 now unlikely to materialise."

"Assuming no change in studio pricing policies, BD (blu-ray disks) will account for 35 per cent of total international spending on buying physical video formats by 2014, spending which will have fallen by 22 per cent since 2007, from $18.6bn to $14.5bn," the report states. "By contrast, in the US BD will represent over 68 per cent of physical video purchasing by 2014, although that figure will have declined by 35 per cent since 2007, from $13.3bn to $8.6bn"

Does Blu-Ray still matter to the average consumer? It's a valid query for a few reasons:
  • Little reason to upgrade: Blu-Ray offers better audio and visual quality, but is it enough for customers to upgrade their entire catalogs? Based on stats, not yet. Worse yet, few movie studios are offering significantly more content on their Blu-Ray releases relative to the DVD editions.
  • Convenience versus clarity: At this moment, Hulu, Netflix (NFLX), Blockbuster (BBI) and several other online movie distribution channels offer free or low-cost entertainment. Wi-Fi is usually required, but the content is portable -- something that can't be achieved with Blu-Ray except through a relatively expensive portable player or laptop. The current iPad/tablet revolution hasn't helped.
  • 3D won't move units anytime soon: According to HD Guru, 20th Century Fox will soon offer an Avatar 3D Blu-Ray package with Panasonic (PC) 3D televisions. Criticism of Panasonic's plan aside, there simply isn't enough 3D content to encourage the leap. There are few solid 3D movies and Avatar already sold decent DVD and Blu-Ray units -- and it still wasn't enough to stimulate Blu-Ray sales. It's optimistic to believe the average fan will pay for the movie experience, the DVD/Blu-Ray experience and, again, for the 3D Blu-Ray experience within a few months.
Hardcore cinephiles will always appreciate the refined Blu-Ray experience, but most customers today are prioritizing the portability, affordability and accessibility of the streaming or downloading experience. It will take more than a 3D Avatar to change the trend.

Photo courtesy of everyone'sidle.

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