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Is it time to kiss the conventional DVD format goodbye?

Thirteen years was a nice run, but it’s time to move on. We don’t need two optical disc formats anymore, especially now when DVD sales have been declining steadily since 2005.

Recent press releases from the Digital Entertainment Group estimated that Blu-ray players had achieved 11% market penetration in Q1 2010. Concurrently, BD player prices have been steadily dropping, helping to drive demand. A quick check on the Best Buy Web site showed 15 models all priced under $200, with the company’s Insignia model taking low price honors at $129.99.

Of that group, eight models offered Internet connectivity, with six of them making the connection through Wi-Fi. That’s a very important feature as the market moves towards fully Web-connected TV sets and media distribution moves more towards online streaming and away from packaged sales in brick-and-mortar stores.

Lower prices for BD players are helping spur interest in other market sectors. An interesting report was just released by Nielsen Gaming Research. The report, which can be found here, shows that customers are primarily buying PlayStation 3 consoles for their Blu-ray capability, and not for playing video games.

The recent release of the God of War III video game was accompanied by considerable media hype, so Nielsen decided it was a good time to interview more than 700 active gamers, aged 7-54, who do not currently own a PS3, but were “definitely or probably interested in acquiring the system in the next six months.” These interviews were conducted over a three week period prior to, during and after the release date.

The results? 65% of respondents stated they wanted to buy a PS3 console for its Blu-ray playback feature, and only 12% wanted to pick up a PS3 to play a specific game. 62% said recent price decreases had brought PS3 consoles into their range of affordability.

In a related story, Wal-Mart reported strong sales of DVDs during the fiscal quarter ending April 30, but noticeable declines in sales of video game consoles and software. No doubt the release of 20th Century Fox’ Avatar had something to do with that – numerous retail outlets sold the BD version for $19.99, and BD disc sales through mid-May accounted for almost one-third of all discs, or about 6.5 million copies. Not too shabby! Similar results are expected when Disney’s Alice in Wonderland hits the shelves shortly.

Given that all BD players are compatible with red laser DVDs (although they don’t upscale RL discs; they only convert 480i to 480p output) and that there are now BD player models from Sylvania and Magnavox available for less than $100, it makes no sense for retailers to sell red laser DVD players anymore. Cost simply isn’t an issue.

The widespread availability of Wi-Fi connections on BD players should also drive sales. Let’s face it, Netflix streaming is what’s captivating home audiences now, not optical discs. LG’s addition of a DVR to their BD player line is also a smart move – every BD manufacturer should add that feature to at least one model.

Shutting down production of red laser DVD players will have no effect on consumers who rent DVDs from Redbox – they’ll still play just fine on BD players.  Besides, there are millions of DVD players already sitting in American homes, not to mention notebook computers and portable DVD viewers (currently being forced into extinction by iPods and other handheld devices).

At the Hollywood Post Alliance Technology Retreat a few years ago, an executive from Disney told me that, if Hollywood REALLY wanted the Blu-ray format to succeed, they should just stop releasing any more movies on red laser discs. Period.

Well, it may not be time to shut down RL disc pressing, but it’s definitely time to pull the plug on RL players. ‘Nuff said!

Posted by Pete Putman, May 20, 2010 8:56 AM

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About Pete Putman

Peter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.

Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.