In January, Sony and its allies won a big victory. Blu-ray, Sony's version of a new generation of high-definition DVD players and discs, signed up enough studios to knock out Toshiba's format after a six-year tussle. This was considered a big deal because sales of regular DVDs have been slowing of late. The studios and hardware makers needed something new to get consumers jazzed,in this case, technology that delivers crisper video and can hold many more bonus features. So all concerned (except Team Toshiba, of course) breathed a sigh of relief when a potentially ruinous format war came to a sudden halt, BusinessWeek.com reports.
Shame about the timing. New technologies often take a while to get established, and Blu-ray is fighting for acceptance at the very moment that cash-strapped consumers are pulling back. Meanwhile, Apple (AAPL), Netflix (NFLX), and Amazon.com (AMZN) are launching downloading and other services that could make Blu-ray obsolete before it has a chance to get traction. "We see Blu-ray's window of opportunity closing very quickly," says Jagdish Rebello, a director and principal analyst of iSuppli, a research firm. "The question is: Does Blu-ray really matter?"
It's too early to declare Blu-ray a flop. While research firm NPD Group reported a 40% sales drop in January, Sony, studios, and retailers suggest that a scarcity of players in stores is to blame. They say that hardware makers are still gearing up to produce Blu-ray machines in the wake of the format war and point to a 2% uptick in February as more players became available. Andrew J. House, Sony's chief marketing officer, says the company's $399 players are selling well. And Lions Gate Entertainment (LGF) CEO Jon Feltheimer says the new format already accounts for 7% of DVD sales for some of the studio's films, including 3:10 to Yuma and War. "This is just the tip of the iceberg," he says. "People want the better picture."
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