FocusDownloading to squelch Blu-Ray PC demand

25 February 2008 22:12  [Source: ICIS news]

By Ben Lefebvre

HOUSTON (ICIS news)--Downloading via the internet, cable and satellite may squelch any increase in polycarbonate (PC) demand that would have resulted from the rise of Blu-Ray high-definition DVDs in the home entertainment industry, sources said on Monday.

Even with the picture quality and data storage edges featured by Sony’s Blu-Ray discs - which on 19 February officially beat rival Toshiba’s HD DVD out of the home entertainment market - the DVD format is still ultimately expected to go the way of the CD, according to industry sources and analysts.

“On Blu-Ray, opinion is still mixed,” said Federico Montaner at Dow Chemical. 

“The quality of images and data storage could be a great boost,” Montaner said. “It could become more useable to store a lot of data. But does that change the fundamentals of what’s negatively impacting the industry - downloading?”

Digital media analyst Rob Enderle of the Enderle Group suggested it will not.

Endrele said consumers will become more accustomed to watching movies and television programmes on a variety of formats, including televisions, computers, MP3 players and even cell phones. As such, he said, portability will become more of an issue with DVDs.

As cable and internet companies spend more to develop higher bandwidth capacity for their customers, video on demand (VoD) via the internet and cable and satellite television services will eventually overtake Blu-Ray technology, Enderle said.

“I simply don’t see anything to suggest… that we are going to have enough Blu-Ray players in the market before downloads go mainstream and Blu-Ray will go the way of the laser disk as a result,” he said. 

Research conducted by media consulting group SNL Kagan also projects an eventually shrinking of the physical-format DVD market.

In an October report, the company forecast a relatively short-lived growth spurt for high-definition DVD revenues, saying it expected sales and rentals to grow 10% and nearly 7%, respectively.

But by 2015, the market is expected to slow and then shrink by 2.3% to $31.5bn (€21bn) in total revenue, Kagan analysts wrote.

On-demand video is expected to grow in revenue by 22.3% by 2016 and keep going from there.

Eventually, analysts said, VOD will force the DVD market into a position similar to the one occupied by CDs, another polycarbonate product. By 2010, one quarter of global music sales will consist of songs and albums downloaded from the internet, according to recording industry trade group IFPI.

“When I look at the marketplace, my feeling is that ultimately (Blue-Ray) will not necessarily drive PC demand,” said Jack O’Malley, director of Bayer Material Science’s performance resins division, NAFTA region. “It’s a difficult thing.”

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By: Ben Lefebvre
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