Even as the streaming home video revolution continues to widen, Blu-ray software and hardware sales continue to hold their own.
According to DTC estimates, worldwide Blu-ray hardware sales rose 14% last year, will rise 13% this year and 12% next year. On the software side, DTC projects worldwide packaged media sales grew 43% in 2012, and will grow 32% this year and 29% next year.
But in North America – or at least in the U.S. – 2013 will be the last year in which Blu-ray hardware sales show positive growth. Or, it could be the first year Blu-ray will register the oxymoronic negative growth in the U.S.
In the last couple of weeks, I’ve had conversations with executives from Samsung, the worldwide Blu-ray hardware sales leader, Panasonic and LG, the numbers 3 and/or 4 Blu-ray deck sellers, depending on what month it is. When asked about Blu-ray sales, all hemmed and hawed Ralph Kramden style – not exactly the reaction one would expect if all things Blu-ray were as rosy as they appear to be worldwide.
Dave Das, Samsung’s VP for home entertainment products, allowed that the Blu-ray hardware market in the U.S. was “starting to stabilize,” and that unit sales “seemed to have peaked and are already declining.” Das is hoping for, at best, flat Blu-ray hardware sales in the U.S. this year, but his current forecasts say there’ll be a 3% dip in Blu-ray units by the time the ball drops in Times Square next Dec. 31.
Tim Alessi, LG’s new product honcho, was a bit more politically circumspect about negatively projecting this year’s Blu-ray hardware sales, estimating small growth but allowing that sales could easily swing in the wrong direction. But his body language didn’t exactly exude confidence.
Panasonic’s estimates for U.S. hardware sales presented at a recent press event also are officially flat for the first time.
Without saying so, it would seem first quarter Blu-ray hardware sales weren’t as robust as these companies would have liked, a downward trend that may be accelerating as streaming becomes more ubiquitous in the U.S.
Soft disc sales
While Blu-ray unit growth/decline seems to be teetering on the sales fence in the U.S., U.S. Blu-ray disc sales growth have already begun to decline, indicating soft demand for software.
For instance, DTC projects packaged media sales in North America declining compared to the rest of the world, steadily dropping from a commanding 48% in 2011 to just 39% this year and 36% next year. By 2017, North American share of pre-packaged media sales is forecast by DTC to drop to 24%, behind both Europe and Asia/Pacific.
In the U.S. market specifically, DEG (Digital Entertainment Group) recently reported revenue from disc sales declined 5.5% from 2011 to 2012, revenue from brick-and-mortar disc rental slid nearly 24% and revenue from subscription disc rentals (i.e. Netflix) dropped a whopping 28%.
Meanwhile, revenue from what DEG calls “electronic sell-through” (EST) leapt 34.6% while subscription streaming jumped a massive 46% last year.
Obviously, streaming media and streaming media devices – dedicated media streamers, videogame consoles and smart TVs – are eating into physical media sales and, by extension, sales of Blu-ray decks.
What’s odd about this pessimism surrounding Blu-ray hardware sales is that more than three-quarters of the Blu-ray players sold by the major brands are “smart” decks, packed with media streaming services such as Netflix, Vudu, Hulu, et al.
While Blu-ray hardware marketers know their wares present a high value proposition compared to dedicated streamers, it doesn’t appear they’ve gotten that message out to consumers. Both smart TVs and media streamers seem to be perceived as sexier products, easier to sell than old lady disc players.
Blu-ray hardware and media sales are likely to continue to grow worldwide, albeit less robustly as in years past. But it’s clear that Blu-ray sales have reached the top of the bell curve in the U.S. market.