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Nattering Nabobs of Negativism

Nov 3rd, 2008
The threat of gloomy pundit prophesies



I honestly don’t understand the motivations of writers who insist on declaring Blu-ray Disc dead. Are they inspired by the negativity of the presidential campaign? Are they bitter HD DVD owners? Do they think they can attract more readers with controversy?

The problem with these declarations is that they might scare off otherwise enthusiastic consumers poised to take the Blu-ray Disc plunge this holiday season. After all, Blu-ray Disc is the best thing that’s ever happened to home theater, and there’s simply no equivalent quality substitute coming in the foreseeable future. But if this FUD – fear, uncertainty, and doubt – keep people from buying into the format, the consequences could be dire; the negative pundits might force the result they predict.

I subscribe to a few of periodicals, The New Yorker, SCUBA Diving, Sport Diver, Sound & Vision (I let Perfect Vision lapse when the magazine abandoned empirical reviews for observational), and PC Magazine. The last is a product of Ziff Davis Media, Inc., which is currently owned by Willis Stein & Partners L.P. after Ziff-Davis failed and had to sell its assets. Within the pages of PC Magazine, columnist John C. Dvorak is almost always an enjoyable read. He’s accumulated considerable knowledge about personal computers and associated products, and can always be expected to be candid and outspoken. But when it comes to home theater, that computer professional can be quite off the mark.

When DVD was just getting started, Mr. Dvorak objected strenuously, citing DVD’s image dimensions as not conforming to any standard PC screen dimensions. He apparently felt at the time that this was a huge fallacy in the DVD standard and while I can’t quite remember if he predicted DVD’s doom due to this horrific oversight, he certainly wasn’t a DVD supporter at the time. Now comes another pessimistic computer professional from another spinoff of the Ziff-Davis organization, ZDNet. (It was purchased by CNet, which was subsequently acquired by CBS.) In an October 28th column by Robin Harris, his title succinctly declares, “Blu-ray is dead…”

Mr. Harris is an information technology professional who happens to own a “large video collection, 10 foot HD home theater, [and a] Blu-ray player…”, which he apparently believes qualifies him to comment with authority that “Blu-ray is in a death spiral.” After suggesting that “the Blu-ray disc Association (BDA) is still smoking dope” and that “Delusional Sony exec Rick Clancy needs to put the crack pipe down and really look at the market dynamics,” he begins to make his case.

He asserts that BD has “only a 4% share of US movie disc sales…” That’s not an accurate view of the forces that are driving the marketplace. Here’s a graph of Neilson point-of-sales statistics that demonstrate the percentage of discs sold of the top 20 best sellers attributable to Blu-ray Disc.


As you would expect, the sales fluctuate substantially from week to week, but a linear regression yields a trend line that provides a running average. The trend is positive; BD market share has increased by 67% over the course of the data, and that the current market share based on the trend line is about 9.5%. These numbers do not reflect web vendor sales.

When The Dark Knight was offered for preorder by Amazon, for an initial period the Blu-ray disc was ranked as the number one best-selling disc of both formats. At that time, the DVD version was ranked as number three. An examination of Iron Man’s total unit sales vary based on retailer, but Video Business reported an average of about 20%. Individual retailers reported Iron Man’s BD market share to range from 10% to 50%. Amazon and DeepDiscount reported Iron Man’s Blu-ray Disc selling more than the film’s DVD version.

There may be some consumer reluctance to repurchase content that they currently own on DVD (there will be exceptions, of course, I expect film’s like the six episodes of Star Wars will sell extremely well on BD); any films repurchased in the higher resolution format would have to have a high rewatchability factor. But newer films that are not yet owned on DVD certainly seem to be doing well. And lest you think that DVD sales are declining and that makes deceptive the growing BD market share shown in my first graph, here’s a look at the sales of DVD’s best sellers.


Once again, you’ll notice a positive trend line. Even though it’s not as steep as the Blu-ray Disc trend line, the graph still confirms that Blu-ray Disc’s growth is real and substantial.

I find it interesting that this growth is occurring at a time of severe economic distress, another factor that Mr. Harris suggests spells doom for the Blu-ray Disc format. But history and research teach us a different lesson. During the great depression, the motion picture industry thrived. Patrons flocked to the motion picture theater for a bit of escapism, a few hours of not having to think about economic hardships. More contemporary market research indicates that during an economic downturn, consumers are more likely to invest in electronics.

Strategy director at Futuresource Consulting Sarah Carroll said, “Sharp rises in unemployment, falling house prices, low wage growth and faltering business confidence are all the hallmarks of a stumbling global economy, though in times of economic hardship we've seen consumer electronics and in-home entertainment weather the storm. Indeed, expenditure in these segments can even increase. Rather than going on vacation or dining out by candlelight, consumers see the purchase of hot new ‘must have’ electronics items like Blu-ray players, flat panel TVs or smart phones as a far better value-for-money option. The tangible benefits of these products can be enjoyed for a long time to come and are seen by many as essential items once consumers begin the retreat into their living rooms.”

And one cannot ignore the international market. A recent report by the Japan Electronics and Information Technology Industries Association indicates that Blu-ray Disc players and recorders achieved a 31% market share in Japan from October 2007 through September 2008. BD’s growth in the Japanese market is 10,700% higher than it was the year before.

Mr. Harris explains that even $150 BD players won’t save the format because disc prices are too high; he cites the substantial premium one must pay for a BD over a DVD. In a second column, he states, “Blu-ray disks are, on average, about 4x the average DVD price once you factor in the $5.99 back catalog specials.” Back catalog titles? Let’s look at pricing a little differently. I chose a random handful of popular 2008 films and checked street prices for BDs and DVDs (with similar supplementary content) on DeepDiscount, a popular web vendor that offers excellent pricing and free shipping:


Title
BD
DVD
Chronicles of Narnia: Prince Caspian
$27.85
$25.87
Hancock
$26.85
$24.91
Hellboy II: The Golden Army
$26.85
$26.25
Iron Man
$25.85
$25.79
Kung Fu Panda
$27.85
$25.87
Speed Racer
$22.83
$18.87
The Dark Knight
$27.83
$24.96
WALL-E
$26.66
$25.76
Wanted
$26.85
$26.25

The average premium within this group is $1.65 per disc. That’s not bad for six times the number of pixels and the higher fidelity of lossless audio. Is it worth saving $1.65 per film to watch DVD’s halo-contaminated images that look like they were filmed with Vaseline on the camera lens? I don’t think so. In fact, going forward, it would be foolish not to embrace the Blu-ray Disc format.

Let’s consider the question of perceived quality. Mr. Harris asserts, “…the advent of low cost up-sampling DVD players dramatically cut the video quality advantage of Blu-ray DVDs. Suddenly, for $100, your average consumer can put good video on their HDTV using standard DVDs. When Blu-ray got started no one dreamed this would happen.” Two points… First, any flat screen display or solid-state imaging chip projector will scale incoming images to the display device’s native dimensions, so no additional investment is required to up-convert DVDs. Second, OPPO scaling DVD players have been around for years. They are inexpensive and very reasonably priced; they could have been bought for about one-fifth the cost of the earliest BD players, but any substantive price differential no longer exists. I’m quite confident the BDA and its members were aware of both technologies when the Blu-ray Disc format was being developed and introduced.

As I’ve written in several of my columns, you cannot recover lost image data; all a scaling or up-converting DVD player or display can do is remap pixels, almost always further softening the images. All the MPEG-2 artifacts remain: edge halos; mosquito noise; and, macroblocking. You are simply left with a smoother looking presentation that still obscures the details that would evoke a more emotional response to the film, and audio that suffers from lossy compression.

I don’t think I need to repeat myself concerning the disappointing HD quality available from download services. I covered that in my column Of Resolution, Bit Rates, And Scaling. And I’ll remind you that Apple refused to allow me to review its TV Appliance required to download Apple’s “high definition” offerings, not a good sign. And I’ll again state that I’d be somewhat nervous about trusting hard drives to house my high definition film collection.

Parting Thoughts

Am I a Blu-ray Disc advocate? Yes. Am I a Blu-ray Disc “cheerleader”? Yes. Why? Because I love motion pictures as an art form, and the Blu-ray Disc format delivers such high quality to the home that with the right equipment, the experience will exceed that of the motion picture theater. Blu-ray Disc will replace DVD. It will overtake DVD no later than 2012 and will keep growing for no less than an additional eight years. Netflix CEO Reed Hastings agrees that BD will replace DVD. Almost every consumer market research firm agrees. And Disney Vice President of Blu-ray and DVD Creative Production David Jessen thinks that BD will overtake DVD in only two years. Pricing for players has dropped to remarkably reasonable levels and the premium for high definition discs of new films is negligible. Don’t let the naysayers frighten you. If you’re interested in the superb experience of Blu-ray Disc, this holiday season is an excellent time to make the investment. Already made the investment in Blu-ray Disc; consider your money well spent.

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