OPINION: Next for Blu

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The MSRP on bluray movies needs to drop also unfortunately.

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Whatever else you can say about PS3, it isn't driving Blu-ray hardware penetration and whatever it is contributing on that score is not driving sales of Blu-ray software.

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If Blu-ray is going to succeed, it needs to succeed on its own, as a single-purpose, playback-only home movie format.

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From the point of view of the consumer, Blu-ray offers incremental improvement over standard DVD, in the same form-factor but no compelling new functionality. Nor does it deliver the sort of game-changing new consumer proposition that DVD delivered by establishing a purchased-based home video economy to replace the largely rental-based VHS economy.

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The studios' biggest challenge right now is that consumer spending on physical media is falling faster than spending on new digital delivery formats is growing.

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The end of 2008 is not like the end of 1998. Blu-ray is launching into a world of far greater consumer choice than was the case for DVD.

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Purists may scoff at the notion that high-def streaming over consumer broadband connections could be an adequate substitute for the quality of Blu-ray, and they would be right. But they would also be missing the point.

The quality of MP3 files doesn't match the quality of CDs, let alone DVD-Audio or SACD. But it has become the dominant music format because it met other consumer needs more effectively than the optical disc alternatives.

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The strategic goal with Blu-ray should be to maintain (and hopefully expand) consumer spending on optical media until new delivery channels can achieve scale, not to milk the format for margin.

That means pricing Blu-ray discs such that consumers aren't left fearing that an initial investment in the format will mean ongoing higher costs for using it.

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I really hope bluray succeeds in 2009. It would be a shame if went under because of downloads or anything else.