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Old 10-30-08, 03:50 PM   #1
nekrosoft13
I'm Geralt
 
Join Date: Oct 2005
Location: Chicagoland, once a year in Poland
Posts: 24,366
Default Blu-ray is dead - heckuva job, Sony!

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 wonít 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 donít care about Blu-rayís 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.

Itís all about volume. 8 months after Toshiba threw in the towel, Blu-ray still doesnít have it.

The Blu-ray Disc Association doesnít get it
$150 Blu-ray disc players are a good start, but it wonít 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 doesnít just suck for consumers: small producers canít afford it either.

According to Digital Content Producer Blu-ray doesnít cut it for business:

Recordable discs donít play reliably across the range of Blu-ray players - so you canít 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 ďproject?Ē
Then the Blu-ray disc Association charges another $3000 annually to use their very exclusive - on 4% of all video disks! - logo.
Thatís why you donít see quirky indie flicks on Blu-ray. Small producers canít afford it - even though they shoot in HDV and HD.

The Storage Bits take
Donít expect Steve Jobs to budge from his ďbag of hurtĒ 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 wonít budge. They, like so much of Hollywood, are stuck in the past.

A forward looking strategy would include:

Recognition that consumers donít 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 canít be higher than DVDs and probably should be less. The question the studios need to ask is: ďdo we want to be selling disks in 5 years?Ē No? Then keep it up. Turn distribution over to your very good friends at Comcast, Apple and Time Warner. Youíll 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: ďNo, Lieutenant, your men are already dead.Ē

http://blogs.zdnet.com/storage/?p=365
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