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Discs Meet the Internet in Next-Gen Blu-ray Players

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Old 09-03-2008
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Discs Meet the Internet in Next-Gen Blu-ray Players
Six years after its official launch, the consumer electronics industry's high-definition successor to DVD still hasn't taken off.
That's got manufacturers concerned enough to take action. Fortunately for consumers, the action will include lowering prices, adding features and integrating players into "connected ecosystems" that let users take advantage of increasingly popular online media as well as content that comes on shiny plastic discs.
Three main factors contribute to the perception that the now-dominant high-definition Blu-ray disc standard is stagnating: high overall prices, a general satisfaction with the current DVD format and buyer confusion in the midst of competing and multiplying technologies.
"The [Blu-ray format] is being adopted in a similar pattern as previous technologies, but it is not being adopted at the same [rate]," says Paul Erickson, Director of DVD and HD Market Research for DisplaySearch. While DVD also took years to become popular, he says, the adoption curve for Blu-ray is even longer and is fraught with bumpy obstacles, such as a few DRM security code and playback problems.
The two-and-a-half-year standards war with a competing high-def format, HD DVD, certainly didn't help. The battle ended in early 2008 when HD DVD's last major supporter, Toshiba, threw in the towel, but consumer confusion lingers. A tough economy has also slowed consumers' acceptance of the format.
At next week's CEDIA 2008 conference, an annual gathering of television and home theater manufacturers, retailers and installers, expect to see an orgy of competing Blu-ray players. Some will focus on low prices (like Philips and Netlogic), and others will highlight features that integrate their physical content with wireless systems to download content from the internet (such as BD Live).
Still, not everyone is convinced that these measures will help Blu-ray. Josh Martin of the Yankee Group says there are still too many "unclear messages" surrounding the format (such as unconventional BD spec profiles, which offer different versions of a player's capabilities) that throw that ecosystem out of whack.
There's also a value disconnect: Most people can't justify purchasing a Blu-ray player that costs five times as much as a DVD player -- especially if it's not five times better. "The opportunity lies in creating a simple, mass-market device," says Martin. So far, that device hasn't arrived, despite tries by everyone from Sony to Magnavox.
Until that device arrives, Martin says, a small price change (like Sony's recent 25 percent drop announcement), or even a cool spec upgrade won't make a difference. "Blu-ray will continue to struggle towards the end of [2008] because the format adoption is driven by price," Martin concludes.
Andy Parsons, a senior vice president at Pioneer and chair of the Blu-ray Association, sees a different side. He points to the 8 million Blu-ray players already sold this year (on pace to triple last year's sales) as an example that people are excited about Blu-ray and HD technologies in general, and will respond to more aggressive features:
"People say [low Blu-ray sales last year] were because of a lack of demand but it was really a lack of supplies. The demand was high," Parsons says.
The shortage wasn't caused by the difficulty and expense of creating Blu-ray discs and players, which many critics of the format often cite, but because manufacturers simply didn't expect to sell that many players in the first place, Parsons says.
Given the state of change, companies at CEDIA 2008 are focusing on developing the technology, regardless of the price. Pioneer will release a new Elite player next week that the company says will surpass every other high-end player in quality, but it comes with a heart-stopping $2,000 price tag. Yamaha is coming out with its own high-end player, as is up-and-coming Sherwood. And, it seems, every big-time audio maker at CEDIA is preparing huge systems to blow up the high-end sound produced by these players.
But that relative excess is the heart of the problem, says Gartner analyst Steve Kleyhans. For him, the entertainment ecosystem is simply too expensive to keep up with. In order to fully realize the value of a Blu-ray player's high-definition features, families also need to buy new HDTVs, new speakers and who knows, maybe an extra fluffy couch. Watching an HD movie on the 14-inch analog TV just won't cut it.
That's why Kleyhans predicts that more HDTVs will be sold as more Blu-ray players and other high-def media proliferates.
What about the threat from downloadable or streaming internet video? Interestingly, most manufacturers and analysts we talked with do not believe that online media is an immediate threat to optical discs.
First, the national bandwidth infrastructure is incomplete and can't come close to delivering HD movies on a wide enough scale to compete with physical discs within the next five years. Second, the market for set-top boxes that display internet video on your TV offers too many options, and most services are still incomplete (for example, Roku's set-top box only provides access to 10 percent of the Netflix catalog). And third, as Martin concludes, the experience is "still not as simple as popping in a disc."
It looks like for the majority of people, popping a disc in a slot for entertainment is proving too hard of a compulsion to let go. It's just going to take awhile before that disc is a Blu-ray one.


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