Blu-ray surge to test disc supply

[teamerickson]

Expected Blu-ray surge to test disc supply - 3/13/2008 - Video Business

MARCH 13 | LA QUINTA, Calif.—Movie studio executives speaking at the Content Delivery and Storage Assn. conference here last weekend had little doubt that Sony’s victory with Blu-ray Disc in the high-definition format war will spur sales of packaged media. Supplying the discs necessary for such a surge may be another story.

With some studios and analysts expecting Blu-ray spending to triple this year as Warner Home Video, Universal Studios Home Entertainment and Paramount Home Entertainment all switch away from Toshiba’s discontinued HD DVD format, some disc replicators who can’t change HD DVD lines will have to invest in building new Blu-ray facilities.

Executives from Sony’s DADC division, which expects to triple its North American Blu-ray disc production to 160 million discs this year, and Bertelsmann’s Arvato unit said they won’t have trouble meeting the increased demand, though Sony allowed that there could be temporary shortages if demand spikes.

“As with all formats that are growing in popularity, there is the potential to have spot shortages during peak seasons,” said Jim Twiggs, VP of strategic development at Sony DADC Americas. “At this point, there are no shortages, and the market is adding capacity as fast as possible to ensure adequate capacity for all.”

“We have just invested in more Blu-ray capacity,” Bertelsmann spokeswoman Simone Biermann said, adding that the division will “quickly be able to expand capacity in accordance with the customers’ demand.”

Other replicators are taking more of a wait-and-see approach.

“HD DVD lines cannot be switched over to make Blu-ray discs,” Cinram International spokeswoman Lyne Fisher said, estimating that the company’s annual Blu-ray capacity is 28 million discs. “We are still in discussions with the studios and are looking at industry data points to obtain a clearer picture so that we’re able to better assess how we’re going to invest in the Blu-ray business going forward.”

Replicators will have to ramp up after a slow start for high-def discs. After two years on the market, as much as 6% of discs purchased in the U.S. are high-def. Standard-def DVD, introduced as a replacement to VHS, accounted for as much as 12% of the market after two years, said Dave Hoffmann, VP at Nielsen Home Entertainment, at last week’s conference.

That rate is likely to accelerate, said Eric Rodli, executive VP and general manager of entertainment at software-licensing firm Macrovision, at the conference. U.S. spending on high-def discs will triple to about $1 billion this year and surge to about $8 billion in 2011, while standard DVD spending will fall to $16 billion from $22 billion during the same time period, said Rodli, citing consultant Understanding & Solutions statistics.

 

[meStevo]

Would be refreshing if they came out and said that they will make all standard new releases just $20 tops, with special editions exceeding that by no more than $5 or something.

Not going to pay $30+ for a new release, until then I don't think demand will be there for BD titles outside of sales, which isn't much more than a marketing effort usually and not really a profit generating exercise.

 

[diogen]

After two years on the market, as much as 6% of discs purchased in the U.S. are high-def.

What metric does this guy use? If it wouldn't be Nielsen, I'd say it comes straight from Blu Shill Bill.

BD sold 5.6 mln discs in 2007 as opposed to 1700 mln regular DVDs. One third of a percentage point. Combined - HD+BD - 0.5%

Where does 6% come from?

Even if he is talking about at-the-moment sales, how did they manage to increase 12 times (0.5 to 6) in some two months?

Standard-def DVD, introduced as a replacement to VHS, accounted for as much as 12% of the market after two years...

In 1999 DVD had 6% of the movie market, money-wise. Were DVDs at that time half the price of VHS tapes? I don't think so.

U.S. spending on high-def discs will triple to about $1 billion this year...

Triple? It was 170 mln and goes to 1 billion - that is 6 times.

...and surge to about $8 billion in 2011, while standard DVD spending will fall to $16 billion from $22 billion during the same time period, said Rodli, citing consultant Understanding & Solutions statistics.

Ahhh... Understanding and Solutions again. That explains a lot. Those prostitutes will say anything to get paid...

Diogen.

 

[mike123abc]

Perhaps the 6% comes from money spent verses unit volume. Average selling price of DVDs is probably much lower than HD media, but still it is a stretch.

Why do people keep thinking that BD media prices are going to come down to DVD levels? The whole point is that the studios need to raise prices. Inflation happens and the studios have in effect been losing money on DVD every year since prices are not going up and inflation is. If BD sales get close in $$ to DVD, DVD will get dropped just because the margins will be so much better on BD. Studios could make the DVD release lag 6+ months behind BD if they thought they could milk the BD margins that long. If they can sell a movie for $35-40 on BD for 6 months then release it to DVD for $25 and have the price settle down to $15 on DVD they would love that model.