High-Def Digest Attends Blu-Con 2010

Posted Thu Nov 4, 2010 at 03:05 PM PDT by

by Michael S. Palmer

Blu-Con, in its third incarnation, is a day-long convention where creative content distribution and hardware companies evaluate, learn, and above all -- promote -- Blu-ray as a technology. Sponsored by the Blu-ray Disc Association (BDA) and the Digital Entertainment Group (DEG), the day involved a mix of panelists from the movie studio's home entertainment divisions, blockbuster filmmakers James Cameron and Jon Landau, and even a special appearance from High-Def Digest's own Josh Zyber. Look in the coming days for HDD's continued coverage of the many, many panels. 3D was the major headline, as evidenced by all the television demos and even the site of seeing Panasonics new consumer-level 3D camera, but it was also great to hear the studios promoting quality catalogue and classic releases.

For this first article, I think it's best to take a look at where Blu-ray is today as a format. Most of us reading and writing for High-Def Digest are enthusiasts. A range of "innovators" or "early adopters" on the Rogers model for adoption and diffusion of innovations. We are those who paid, in many cases through the roof, to beta test Blu-ray and/or HD-DVD because we love resolution, increased picture quality, and roaring surround sound. We bitch loudly, but sometimes secretly take pride in the technically know-how needed to update firmware or patch our WiFi networks. We're the guys and gals whose family and friends turn to when it's time for them to finally buy their newest toy.

The trouble, however, for any media innovation is that it needs to be monetized to survive. Laserdisc and BetaMax are only two formats which never went Mainstream, and every time we -- the excitable Must-Have-It's whose eyes glow when reading countless blogs and Black Friday guides -- jump headfirst into the Latest and Greatest, we risk diving into a draining pool.

But here's the great news from the other folks investing time and millions of dollars. Blu-ray is here to stay, and despite an imploded economy, it's one of the few growth areas in home entertainment distribution.

Let's talk math.

Home Entertainment Presidents from Universal, Fox, Sony, and Warners seemed genuinely confident with 2010. Like men who finally understand that media consumption and production aren't about linear transitions from one single format to the next single format. They're in the content business, and their jobs in this new century are to provide said content in any and all formats -- physical media, streaming, downloading, smart phones, social networking. And the good news? Consumer spending is at an all time high. Counting all media, there have been 3.6 billion "transactions" this year, up nearly 60 million from the recession-cramped 2009.

2010 is already the best year in Blu-ray's short history. 'Avatar' is the first true crossover disc, selling 8 million Blu-ray units in its first release -- many bought Blu-ray players just to see this movie. Though DVD is down 14 percent, Blu-ray is up 86 percent, which translates to a cool $1Billion in disc sales in the first 9 months (to be fair, this doesn't offset the loss in DVD sales yet). A promising figure by itself, lest we forget retailers do a majority of their business in the fourth quarter / holiday shopping season. Further, catalogue or library titles sales grew 60 percent -- this is particularly good for Blu-ray fans because it means the studios are seeing dollar signs and we reap the benefits by finally getting our favorites in the format. Sales of stand alone Blu-ray disc players are outpacing Sony's PlayStation 3 (stand alone player sales are important because those owners typically buy more movies than game console owners). What's staggering in this economy is that homes with one Blu-ray player have doubled since 2008 to 21 million.

This means Blu-ray officially has a 20 percent adoption rate in the US, and when that number hits 25 percent (perhaps this Christmas or early next year), Blu-ray will officially be Mainstream in the eyes of the number crunchers who decide such things.

[sorry I don't have the exact figures, International Readers, but know this: Europe Blu-ray disc sales are kicking ass, and Blu-ray Player sales in Japan are easily outpacing DVD players]

What all these statistics mean is that our family and friends are finally getting it. They see the value in the extra picture quality and they're still interested in "collecting" which puts a smile on the face of any home entertainment executive. The studios themselves seem better connected, and as a result, are doing a better job. Blu-ray releases brim with bonus materials and the flexibility of including a DVD and/or digital release. Yes, there are problems -- firmware, user experiences, networking and compatibility issues, the speed of evolution preventing 'future proofing' -- and these all need addressing. But the players themselves are faster now, easier to use for the average consumer, and are becoming gateway media machines. They're almost becoming DVD-easy and DVD-simple, which has long been a barrier.

The smartest thing the folks behind are doing are not trying to make Blu-ray only a "disc machine." Yes, physical media is the best quality available because even Blu-ray's data rate is ten times faster than a 4.6Mbps broadband internet connection (the average rate in most households). But, in five…ten…fifteen years, discs will likely go the way of the dodo, and for Blu-ray to become the last great physical media format, it has to be relevant in the era of streaming, and offer digital flexibility.

Rental Windows, Streaming, and Piracy

After lauding Blu-ray's achievements, the studio presidents opened up the conversation to discuss the 28-day rental windows, streaming and piracy. Apparently, the 28 days number came out of the legal agreement they made back in the days when RedBox was sueing everyone. These windows (and rental only versions of Blu-rays) will remain in place because they promote sales. The studios said they're seeing anywhere from a 7 percent to 15 percent sales increase (based on comparative titles who did not sell with a window). It seems we consumers have a choice: ownership / premium rental (such as VOD, see blow) with convenience and privilege, or subscription / $1-a-night Red Boxing for savings on a longer timeline. (Please take our poll regarding your own Blu-ray purchasing habits.)

The studios are also heavily invested in Video On Demand (VOD). They make good money, and will have more day-and-date releases. As for streaming, Netflix will remain a place for generally older titles (Starz being an exception because it's actually related to a Pay TV distribution window), but the studios are open to changing this relationship if favorable deal structures can be found.

In the future, we can expect more catalogue titles in the Blu-ray format thanks to companies like Sony seeing triple digit gains in their library release. And the DEG is hoping to perfect Digital Cloud, or Digital Locker, which means one purchase for content with the ability to stream or play the media on any device without the fear of losing it forever because it was only locally stored on a hard drive that decided to commit harikari.

Piracy is still a big deal for the studios and in countries where they aren't blocked by government interference (cough, China, cough), they have special teams that aim to combat pirates by releasing movies quick and for a competitive price. The studios also wish they could rebrand the act of stealing copyrighted content away from "piracy" which doesn't seem criminal. But here's the struggle: how do you change something culturally rooted when people in countries like Korea, Russia, and Spain doesn't see it as wrong (of course no one is implying that everyone in every piracy-heavy territory is a jerk…except you, Gary!) The studios would love to see laws here in the United States like those recently passed in France.

[author tangent:As someone who works and lives in Los Angeles, I can personally attest to piracy, or stealing, having real world effects on regular folks. Yeah, the nameless, conglomerate-owned studios are making record profits, but when the bottom line needs to be met for shareholders, who do you think suffers? It's the creative community: the stuntmen, the secretaries, the editors, the sound designers, the grips and electrics, the set dressers. No millionaires here. This also directly translates to more sequels, remakes, and less original, well-made content. So if any of our readers are avid bit-torrent users, though you probably don't care, you've literally put middle-class human beings out of work. Well done. By the way, pirate rogues, what do you do for a living? Perhaps you could let us know so we could undercut your business practices. Lovingly yours, Soap Box Palmer]

Okay, I'm back. Sorry. Where were we? Oh yes, Blu-ray in 2010. Okay, it's doing really well, expanding in hard times, and is about to be Mainstream. Of course, there are problems, namely user experience and number of available titles. I'll look to address some of those in a future panel which was lead by Amazon.com's Vice President of Music and Video, Bill Car. Please keep your eyes peeled and ready.

PS. I thought this was funny to see Toshiba go from format war enemy to sponsor. How far we've come in so little time.

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Tags: Blu-Con 2010, Michael S. Palmer, High-Def Retailing, High-Def Streaming, Industry Trends, Blu-ray (all tags)