Blu-ray And HD DVD To Battle For Market Dominance

Screen Digest expects that sales of stand-alone Blu-ray and HD DVD players and recorders will initially be rather slow. It anticipates sales of 430,000 stand-alone Blu-ray/HD DVD players and recorders across the US, Europe and Japan in the launch year of 2006. The bulk of these sales will be made in the US. Sales in year two (2007) in these regions should more than triple in unit terms.

Screen Digest also anticipates that early sales of hi-def disc-enabled games console hardware will be significantly higher than stand-alone devices from consumer electronics manufacturers. Across the US, Europe and Japan, it believes that sales of 2.8 million enabled consoles are achievable before the end of 2006. Most of these will be Sony PS3s, but there will also be some add-on HD DVD players for Microsoft’s Xbox 360 console.

Sales of Blu-ray/HD DVD-enabled games devices should grow rapidly to peak at around 18m units in 2009. Screen Digest foresees that sales of standalone Blu-ray/HD DVD machines will exceed those of games console devices for the first time in 2010, at least in the US and Europe.

However, it is not yet certain which of the two formats, Blu-ray or HD DVD, will be the most popular in the future. Screen Digest says that there are four possible outcomes to a war between the platforms: The first is that the HD DVD format achieves a dominant market position and supporters of the Blu-ray Disc format switch their allegiance to that format; the second, that the Blu-ray format achieves a dominant market position and supporters of the HD DVD format switch their allegiance to that format; the third is that neither format achieves a ‘knock-out’ position of market dominance and both coexist until combi-format solutions become cost-effective and eventually dominate, mirroring the current market for recordable DVDs, while the final possible outcome foreseen by Screen Digest is that both formats ‘lose’ in the sense that neither is successful enough to achieve mass consumer adoption, resulting in a situation comparable to that of the battle between ‘next generation’ audio formats SACD and DVD Audio.

Ben Keen, Screen Digest chief analyst, said: “Given the vested interests on either side, we believe that the most likely outcome at present is scenario 3, ie. that the two formats will coexist until they give way to affordable dual-format solutions but none of the other three scenarios can be completely ruled out. Overall though, the net result of the format war and the publicity it has generated will be to dampen consumer appetite for the whole high definition disc category.”

Graham Sharpless, author of the report comments: “The success of DVD was due to a single format that offered better quality and greater convenience than the VHS format that it replaced. This time both formats support similar features. Blu-ray discs offer capacities of up to 50 GB compared with HD DVD’s 30 GB. But Blu-ray is a revolutionary format that is more difficult and expensive to produce than HD DVD discs, which can be produced using modified DVD equipment.”