ZDNET (blog): Blu-ray is dead - heckuva job, Sony!

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Blu-ray is dead - heckuva job, Sony!

Posted by Robin Harris @ 12:31 pm, October 28th, 2008

Blu-ray is in a death spiral. 12 months from now Blu-ray will be a videophile niche, not a mass market product.

With only a 4% share of US movie disc sales and HD download capability arriving, the Blu-ray disc Association (BDA) is still smoking dope. Even $150 Blu-ray players won’t save it.

16 months ago I called the HD war for Blu-ray. My bad. Who dreamed they could both lose?

Snatching defeat from the jaws of victory
Delusional Sony exec Rick Clancy needs to put the crack pipe down and really look at the market dynamics.

In a nutshell: consumers drive the market and they don’t care about Blu-ray’s theoretical advantages. Especially during a world-wide recession.

Remember Betamax? SACD? Minidisk? Laser Disk? DVD-Audio? There are more losers than winners in consumer storage formats.

It’s all about volume. 8 months after Toshiba threw in the towel, Blu-ray still doesn’t have it.

The Blu-ray Disc Association doesn’t get it
$150 Blu-ray disc players are a good start, but it won’t take Blu-ray over the finish line. The BDA is stuck in the past with a flawed five-year-old strategy.

The original game plan
Two things killed the original strategy. First the fight with HD DVD stalled the industry for two years. Initial enthusiasm for high definition video on disk was squandered.

Second, 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.

Piggies at the trough
The Blu-ray Disc Association hoped for a massive cash bonanza as millions of consumers discovered that standard DVDs looked awful on HDTV. To cash in they loaded Blu-ray licenses with costly fees. Blu-ray doesn’t just suck for consumers: small producers can’t afford it either.

According to Digital Content Producer Blu-ray doesn’t cut it for business:

Recordable discs don’t play reliably across the range of Blu-ray players - so you can’t do low-volume runs yourself.
Service bureau reproduction runs $20 per single layer disc in quantities of 300 or less.
Hollywood style printed/replicated Blu-ray discs are considerably cheaper once you reach the thousand unit quantity: just $3.50 per disc.
High-quality authoring programs like Sony Blu-print or Sonic Solutions Scenarist cost $40,000.
The Advanced Access Content System - the already hacked DRM - has a one-time fee of $3000 plus a per project cost of almost $1600 plus $.04 per disk. And who defines “project?”
Then the Blu-ray disc Association charges another $3000 annually to use their very exclusive - on 4% of all video disks! - logo.
That’s why you don’t see quirky indie flicks on Blu-ray. Small producers can’t afford it - even though they shoot in HDV and HD.

The Storage Bits take
Don’t expect Steve Jobs to budge from his “bag of hurt” understatement. Or Final Cut Studio support for Blu-ray. I suspect that Jobs is using his Hollywood clout from his board seat on Disney and his control of iTunes to try to talk sense to the BDA.

But the BDA won’t budge. They, like so much of Hollywood, are stuck in the past.

A forward looking strategy would include:

Recognition that consumers don’t need Blu-ray. It is a nice-to-have and must be priced accordingly.
Accept the money spent on Blu-ray is gone and will never earn back the investment. Then you can begin thinking clearly about how to maximize Blu-ray penetration.
The average consumer will probably pay $50 more for a Blu-ray player that is competitive with the average up-sampling DVD player. Most of the current Blu-ray players are junk: slow, feature-poor and way over-priced.
Disk price margins can’t be higher than DVDs and probably should be less. The question the studios need to ask is: “do we want to be selling disks in 5 years?” No? Then keep it up. Turn distribution over to your very good friends at Comcast, Apple and Time Warner. You’ll be like Procter & Gamble paying Safeway to stock your products.
Fire all the market research firms telling you how great it is going to be. They are playing you. Your #1 goal: market share. High volume is your only chance to earn your way out of this mess and keep some control of your distribution.
Time is short. Timid incrementalism will kill you.

Like Agent Smith delivering the bad news to a complacent cop: “No, Lieutenant, your men are already dead.”

Sounds to me like someone is still extremely bitter that HD DVD lost the war. That article is nothing but childish and immature ranting, and that means nobody will take it seriously.

"The sky is falling! The sky is falling!"

The one thing the author points to in order to make his doom-and-gloom case is that Blu-ray still has only a small market share, about 5-10% lately. The major studios have a ton of money invested in BD. They're not about to quit on it now. I think it was an off-news day for the writer, and he just needed something to talk about to stir up controversy.

John

I don't find it childish or immature at all. I made similar observations a few months ago. If they really want this product to survive, they need a swift kick in the anus. The hardware is falling slowly, but not soon enough. The price of media to this point is less than attractive. We all know that Blu is better than DVD, but sell that to the world. Point taken that no one is hardly buying other than users at this web-site. Prices are still to high other than the Amazon deal. But, ask many familes and they will tell you that, they DO NOT shop on-line. (Like we do)

I don't see how HD DVD, had anything to do with his argument. Were we reading the same article. He mentioned that Toshiba pulled the plug on it, but didn't blame Blu-Ray? Sony and the BDA were always a few steps behind what Toshiba and HD DVD were doing but, I don't think he was hyping that arguement. But, whatever...

He said it himself that he even predicted that Blu-Ray was going to win the war? I think like some of think here, that I myself am a little annoyed at the painstaking events that have happened and it still isn't where the product is supposed to be. That, I agree with.

This year will ultimately decide what happens. Wait for XMAS!

Reaggie, Reaggie, Reaggie.

How can anyone expect Blu-ray to take off like wild fire, which seems to be everyone's expectations, when NOT EVERYONE owns HDTV? That's the biggest issue holding it back from going to the next level, and yes, this x-mass will be a determining factor. Blu-ray is pointless without the HDTV and it IS the biggest expesne of the whole ordeal. Fortunate that prices on these sets are going way, way down for and after the holidays. The Panasonic Plasma I purchsed back in March for $2200 is already down to $999, and this is the one thing that's needed for ANY hi-def disc format to take off.

That hurts Tim. I know where you are coming from. We have all been burnt at one time or another. My first projo was $4000, and within 12 months new ones were twice as good and selling at $1200!

BTW, did you hear Blu-Ray is Dead?

The tips that were given were actually good points that could help Sony to regain some of their loses. Hopefully sony is listening before its too late.

Quote:
That hurts Tim. I know where you are coming from. We have all been burnt at one time or another. My first projo was $4000, and within 12 months new ones were twice as good and selling at $1200!

Actually, I'm really not that upset about it. It was expected to happen as the new technology moves its way into the market. I'm actually happy because now my parents, who are on a fixed income, can afford to pick up the same set I have. I told my pops to weigh the pros and cons, though. Plasma does crank up the elctric bill by $20 to $30, so it might not be a good idear fur fellers on that-them-there a fixed income -- plus you have to pay the cabel company more for hi-def service. They also live in a double-wide, manufactured home with windows on both facing walls -- this makes it a pain to fight screen glare. I told my pops to think about LCD in his situation, and prices are going way down on those, as well.

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[Post edited by Tim Raynor on Oct 29, 2008 - CDT 10:43 PM]

Tim,

You could always give your current TV to your parents and buy the new one for yourself. You and your parents both win.

John