OK, it’s mid-summer in the Northern Hemisphere, and the Olympics might well be soaking up the bulk of viewer’s leisure time, but sales of Blu-ray players are seemingly not setting the Consumer Electronics market aflame. Most forecasters expected a steady boost to sales following the demise earlier this year of HD-DVD. It isn’t happening.
Japan is Blu-ray’s natural home and early adopter market, and as such is seen as a benchmark for likely sales results for the rest of the world. But there’s a huge problem for Blu-ray, or a benefit, depending on whether you are a glass half full or half empty sort of person, and it concerns Sony’s Play Station 3 console devices which can also play Blu-ray discs (BD).

Stripping out PS3 sales and focusing instead on pure BD players/recorders, and other players/recorders, and the data suggests that back in January (when HD-DVD was in its last days) Sony held 66% of sales, and that market share has now shrunk to 33.6% of the BD recorder market in July. Close, with 32.8% of the Japanese market is Sharp, and in third place with 32.1% is Panasonic.

But – and here is the worry – the Japanese are still buying a huge number of “standard” DVD recorders, some 60% of the total market for recording devices. It is fair to say that standard DVD recorders are significantly cheaper than BD devices, and the overall market in terms of value has grown by 30% compared to a year ago, but this itself is hardly meteoric.

A study from ABI Research doesn’t help fill us with confidence. ABI’s study says there’s a widespread reluctance for buyers to commit to a Blu-ray player in the near future: over half of the 1000 respondents, citing "other priorities," say they have no plans to purchase one; a further 23% are likely to buy, but not until sometime in 2009. Principal analyst Steve Wilson says that much of the lukewarm response can be attributed to consumers' anxieties about BD’s value proposition – or lack of!

"Consumers were happy to embrace standard DVD when that format arrived because the improvement in quality over VHS videotapes was dramatic. Standard DVD didn't require the purchase of a new TV either. In contrast, while half of the respondents to our survey rated Blu-ray's quality as 'much better' than standard DVD, another 40% termed it only 'somewhat better,' and most are very satisfied with the performance of their current DVD players."

However, it is fair to also look at hard data from Blockbuster in the US, where every dollar’s worth of floor space has to earn its keep, and Jim Keyes, Blockbuster’s chairman/CEO admitted last week that sales of Blu-ray devices (pure BD units and PS3’s) had been disappointing, but now the retail chain was selling as may as 2000-3000 units a week. “That basically builds our customer base and our loyalty. Because once someone buys the Blu-ray device ... we think we're the best location for them to return and either rent or buy their Blu-ray products,” he added.

Ross Rubin, a senior analyst at market research specialist NPD, is more optimistic, at least as far as the US market is concerned. "We are seeing more momentum behind Blu-ray as HDTV penetration continues to grow. It should be a strong holiday for the format,” he told Wired magazine. “There's no more competition from HD DVD; there's no more consumer confusion; and more content is becoming available on Blu-ray. Even sales of up-converting DVD players that are competitive with Blu-ray are good for the format because it shows consumers are willing to invest more in output."

And there’s another factor, hinted at by Rubin. The introduction of so-called ‘super DVD’ up-scaling devices. In essence these are slightly re-engineered HD-DVD players/recorders, and are priced at barely $100. This autumn Toshiba (the main backer of HD-DVD) is promising a new DVD player with a higher HDTV spec. Hewlett Packard is reportedly finding no difficulties in selling laptop computers with HD-DVD technology built in. LG has available an all-in-one peripheral unit (its Super Multi-Blue) that can handle Blu-ray, HD-DVD, DVD, CD and audio CD, for $380 at Best Buy.

There’s little doubt that the studios – and retailers – will start seeing some sales clarity towards the end of this year. This pre-Christmas season there’s plenty of packaged BD software about, and falling prices for hardware. There are also plenty of homes with true 1080p HDTV sets, and consumers will buy even more sets this Christmas with the ending of analogue broadcasting being (then) just weeks away. But the likes of Sony, Sharp, Panasonic and the others will want to see some sales momentum on their BD players/recorders, otherwise the technology might well be consigned to the “novelty” shelves.

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