Amazon Talks Blu-ray's Ups and Downs

Posted Mon Nov 8, 2010 at 02:00 PM PST by

by Michael S. Palmer

As our Blu-Con 2010 coverage continues, it's important to not only examine how well the format is doing, but also the missteps, mistakes, and over-complexities that continue to hold Blu-ray back despite a 20 percent adoption rate in the U.S.

There's an old saying that the retail industry is the "last three feet" for any product being sold. Inventors, engineers, designers, and marketing teams can do one hell of a job inventing the Next Great Thing, but the face of these products becomes the floor employees or the telephone reps for local and online stores. And this is potentially terrifying for the consumer. We've all had bad customer service experiences when all we wanted was for That Thing to simply…work. Not really the highest expectations, yet sometimes this is an impossible request for one reason or another.

Gadgets, gizmos, and technologies often live or die based on the store (real or virtual) experience. Earlier adopters? Well, I can generally trouble shoot things myself or with a short Google search. But my mom still can't use a VCR (though partly because it's now disconnected in favor of my brother's PlayStation 3…which she also can't use, but I'm off topic), and if she and/or anyone who doesn't inherently love these Next Best Things have a bad sales or customer service experience, well there's more lost customers, perhaps forever.

Speaking as this year's retailer representative for Blu-Con 2010, Bill Carr, Vice President of Music and Video for Amazon, outlined what he and his fellow employees have been learning about Blu-ray on the front lines and in the last three feet. After taking us through what his customers love, he then outlined Amazon's strategy for ensuring maximized sales for Blu-ray discs and all related high-definition technologies.

The Good

Well, it's Blu-Con. Mr. Carr has to say how much people love Blu-ray. It's the whole point. He started with quotes from Amazon customers "Brother Bish" and "Video Guy." Video Guy was thrilled to update his 'Bourne Trilogy'. He said he's actually enjoying the movies more and can't quite understand why. Martin Scorsese discussed this phenomenon last year, but it comes down to detail and resolution providing the most cinema-like experience possible. Brother Bish purchased the original 'The Prisoner: Complete Series' and said this Blu-ray looked like it could have been filmed yesterday and is much better than the previous DVDs.

To retail executives like Mr. Carr, this means consumers are starting to see a qualitative difference between high definition and standard definition (remember when idiots used to say, "M'eh, DVD's good enough?"). The bottom line, when tracking purchasing activity, is that spending on home video surges by nearly 400 percent (though half of these purchases are still DVD) after an customer buys his or her first Blu-ray.

The Bad

But other Amazon customers have worried about investing in the format. Is Blu-ray too niche? Is it the next LaserDisc? Part of this can be tracked to companies like Best Buy who are reducing physical media floor space before Christmas this year. Of course, this is mainly about DVDs and CDs, but walking my local rearranged Best Buy now feels less like a place to buy movies than before the reduction. Coincidentally or perhaps not, Best Buy spoke at last year's Blu-con 2.0, but did not this year.

Another reason for consumer concern is, despite tracking almost as well as DVD's first five years in regards to hardware sales, there are only 3,000 Blu-ray titles available. After its first five years on the market, DVD had 20,000; today, there are 150,000. Many of the still-unreleased titles are fan favorites.

Pricing is another big factor. For every 10 percent that a Blu-ray disc is priced higher than its day-and-date DVD sibling, the Blu-ray's sales will drop by 4 percent. This means with a $10 premium price over the DVD, the Blu-ray will get 50 percent of the volume mix. With a $5 premium, the Blu-ray will take 75 percent of the mix. And with a 0 percent premium, the Blu-ray will take 95 percent.

Don't forget the hardware itself. Most Blu-ray-related technical service complaints, calls, and returns are due to firmware updates. Every month, Blu-rays debut with sparkling new features which immediately proceed to cripple (mostly older, and mostly temporarily) Blu-ray players across the country. And then there are interrupted firmware updates, whether caused by be a clueless owner or an outside issue, which can kill these expensive machines dead. DVD never had this problem. Sure some early-early discs wouldn't play on some machines, but most people used DVD players for a decade. Blu-ray started with maddeningly slow players that didn't have simple features like remembering where in the movie you were last watching. I personally purchased a PS3 as my second Blu-ray player and haven't looked back, but until recently, stand-alone players have been a headache.

Lastly, though most Blu-ray players are internet-ready, connection rates are quite low. The reasoning here, of course, is that most of these players have Ethernet jacks, but no built-in WiFi. Yes, professional installers will advise hard-wiring your Blu-ray player for internet streaming because the signal is stronger and less likely to drop (which is important for services like Netflix, which measures your bandwidth before delivering you a resolution), but that isn't an option for most people whose internet router is most likely in another room. Hell, I still haven't connected my DirecTV DVR (which gives access to OnDemand) for just that reason; my router's in another room, and I didn't want to pay $75 for the wireless adapter kit. All of this means Blu-ray players aren't being used to their maximum capability and user-experience. It's SO much easier to update via an Ethernet / WiFi connection than it is to either painfully wait for a manufacturer firmware disc or download and burn a CD/DVD off the web (which of course is easy for jerks like me, but I'll reference my mom again).

The Ugly Education

In order to combat consumer frustrations and confusion, Amazon has developed a three-part strategy to make Blu-ray more appealing to current customers and the nearly 80 percent who have yet to adopt the format: selection, value, and customer experience.

Selection: movies studios need to get off their asses and release more good movies. That's the only thing that will drive hardware sales (see 'Avatar'). If people can have their favorite, must-own movies, they will upgrade. Amazon is particularly lucky because they only have what's known a "virtual shelf space." Retailers like Walmart and Best Buy can only have so many movies in-store at any one time, but Amazon can feature any and all Blu-rays.

Value: Blu-ray disc players need to come with built-in WiFi to make internet streaming more available and firmware updates easier. Further, Blu-ray disc price gouging needs to go away. There's little reason to have a Blu-ray cost more in the consumer's eyes than a DVD, unless there is added / perceived value. Catalogue titles and new releases should be packed with special features. Blu-ray+DVD+Digital Copy releases must become the norm -- it's content any where any time, not format. For example, the 'Snow White' combo pack (the most successful combo pack so far) sold 55 percent more than the average stand-alone Blu-ray disc. Speaking of which, do you all know about Amazon's "Buy Now, Watch Now" Disc + OnDemand service? Basically, when you buy one of 10,000 titles on Blu-ray or DVD for no extra charge, you'll also get a downloadable copy so you don't have to wait for shipping. Amazon On Demand titles can be played on Macs, PCs, and on any of the 200 HDTVs, set top boxes, and Blu-ray players fearing the Amazon On Demand app.

Customer Service: not just about having polite people in store or on the phone to help when things go wrong. It's about education. Helping consumers know what they need before they buy so they're not surprised or not enjoying their equipment to its fullest. For example, customers are really excited about the advent of 3D HDTVS and 3D Blu-ray technology. They love the theatrical experience and have been wowed by in-store demos. But, they don't understand what it entails. New televisions? A new receiver? A new Blu-ray player? The answer is yes to all, of course, but it can be confusing even for technophiles on certain subjects (it took me forever to find out that my PS3 won't do 3D and lossless audio at the same time).

In order to help you, the consumer, with your next purchase, online retailers like Amazon and Crutchfield have initiated helpful education portals on their websites with helpful FAQs and how-to guides. On Amazon, there's High-Def Headquarters and 3D 101. For another opinion, check out Crutchfield 3D.

Bottom line

We love Blu-ray, but we need more titles, more value in these titles as well as the hardware itself, and the whole experience needs to be simple and easy. Is that really too much to ask? Perhaps. Blu-ray is sophisticated soft/hardware that exists in a world where technology grows so fast that it will continuously be updated. But look at Apple; the easiest, most intuitive products around, but still evolving. Firmware is never going away, but it's up to the engineers and retailers and movie studios to make it seem invisible.

Next up in our Blu-Con 2010 coverage, we'll hear to what James Cameron has to say about Blu-ray and 3D. Until then, dear readers, hit up the forum link below to tell us what you think would make Blu-ray discs, players, and the whole high-definition experience more enjoyable, user friendly, and would help you collect more films and television series.

See what people are saying about this story in our forums area, or check out other recent discussions.

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