CES Countdown #12: Has streaming media already rendered discs obsolete?

CES 13 Coundown banner (300px)This just in, the format war is over. The 18-month honeymoon analysts had given Blu-ray has prematurely ended, and while sales have risen from nothing to something barely eclipsing okay, its successor may already be over the horizon.

In paleontology, there is a concept known as the Alvarez Hypothesis. This hypothesis originally suggested that a giant asteroid impacting the Earth's surface triggered the subsequent extinction of the dinosaurs.

Applying this hypothesis to consumer technology, it could be said that 2008 was the asteroid that will ultimately extinguish disc media.

Digital Entertainment Group data shows that DVD sales actually hit their peak in 2005, stagnated, and are now on the decline. As of November, independent tracking service Nielsen VideoScan reported a 9 percent overall drop in DVD sales, and an even greater drop (22%) in higher-priced, high definition titles.

Since Blu-ray became the unofficial successor to DVD, a number of analysts predicted that sales of the high definition media would eventually come to offset any declines in DVD sales. Parks Associates analysts went so far as to predict that Blu-ray player sales would actually surpass most other electronics items during the next four years as they gain traction in the developing world. Analyst Kurt Scherf predicted that unit sales would climb to around 40 million by 2012.

However, Neilsen's figures show that not only is Blu-ray not shouldering the weight, but it's buckling under the pressure. Despite the fact that Warner Bros' first BD-Live title The Dark Knight broke all previous Blu-ray sales records by moving 1.7 million units in December, it is still dwarfed next to the 11.8 million DVDs that same title sold.

In July, Netflix CFO Barry McCarthy said that less than 10% of Netflix subscribers have Blu-ray titles in their rental queues, suggesting that adoption was so low that it had little chance to have an appreciable effect on retail sales.

With Netflix and Blockbuster both vending their own on-demand video services that strip out the tremendous overhead associated with mailing, sorting, and maintaining an inventory of discs, it's no surprise Netflix should rebuke Blu-ray in such a way.

During the first Netflix earnings call of calendar year 2008, CEO Reed Hastings waxed prescient and gave DVDs five years to live, saying that he expected them to remain viable due to their affordability and ubiquity, but that streaming media is the way the world is heading.

Downloadable and streaming content has made tremendous leaps this year in availability and relative quality. Users can stream content to even the most humble netbook from one of the surplus of video syndication sites, or access their Slingbox content via Sling.com. High definition fans can hook up to Vudu, and receivestreams in 1080i that cost between 99¢ and $2.99; or can get Netflix on Demand high definition streams through their Xbox 360.

Even Sony, one of Blu-ray's highest profile supporters, has begun to offer streaming 720p content via its Bravia Internet Video Link. Meanwhile, the best-selling Blu-ray player today, Sony's PlayStation 3, is currently trending downward in sales.

The meteor has definitely hit. But the most interesting thing of all is that we've seen it coming the whole time. In an article from the Des Moines Business Record nine years ago entitled "Will DVD Players Replace VCRs?" author Jeanne Lightly said: "The surge in [DVD Player] sales suggests that the new technology is not only catching on where other consumer electronics innovations did not, but that it's also on track to overtake videotape in a few years as the home entertainment format of choice. Until, that is, it's supplanted by 'video on demand'-- the opportunity to retrieve any movie via cable, satellite or, ultimately, the Internet -- which is still some years off."

But the question remains, what is the value of Blu-ray as DVDs senesce, and streaming media comes into maturity?


FOLLOW THE COUNTDOWN:

  • #13: Can automotive electronics maintain forward momentum? by Angela Gunn

80 Responses to CES Countdown #12: Has streaming media already rendered discs obsolete?

© 1998-2024 BetaNews, Inc. All Rights Reserved. Privacy Policy - Cookie Policy.