Friday, May 9, 2008

Blu-Ray Disc Players Need Lower Prices – Walt Disney

The cost of Blu-ray disc players has to go down so that producers of content would feel impact of increasing sales of high definition media, said chief executive of Walt Disney Company, a strong backer of the Blu-ray format, during a conference call with financial analysts. The claim further underlines the necessity of reducing pricing of Blu-ray to get higher market penetration.

“The penetration of Blu-Ray players is still relatively modest and while we have got some titles out there, the real impact from Blu-Ray will be felt down the road. In fact, we have got some exciting titles coming up. […] And we see penetration growing nicely, particularly as the cost of the players comes down. You willl be seeing a lot more $300 and [lower priced playes] on the shelves,” said Robert Iger, chief executive of Walt Disney Company during a conference call with financial analysts.

Even though there are over 35 million high definition TV-sets in the USA, according to some estimates, there are still very few high-definition digital video disc players sold, about 2 million, but maybe less. The reason for such low penetration of the players themselves as well as content, according to analysts, is cost of Blu-ray disc players that begins at $300 and may easily end rising at $1000.

“We are believers because of the quality of the experience but it is going to take some time for the platform to penetrate the marketplace,” Mr. Iger admitted.

According to ABI Research market tracker, it would be 12 to 18 months before the market of Blu-ray hardware (and, consequently, movies) kicks into gear. The firm said that consumer electronics manufacturers have to introduce full-featured players – which support both picture-in-picture (Bonus view) functionality as well as Internet connectivity (BD Live!) and then get prices down to the $200 level. The current situation in the U.S. economy may also slowdown adoption of Blu-ray disc format.

“I think for perspective, for a new release important title right now, you can easily see mid- to high-single digit percentages of the units be Blu-Ray. Overall, total units are going to be probably more in the low single digit range because less Blu-Ray on catalog sales right now,” further explained Thomas Staggs, chief financial officer at Walt Disney Company.

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