Lower-res TV sales outpace 1080p -- hurting Blu-ray?

As Blu-ray Disc sales sputter in the face of low demand, and consumer electronics market experts attempt to explain why the uptake isn't what it was expected to be, the sales of flat-panel televisions that can actually take advantage of the 1080p high-definition video format were actually outpaced by televisions with lower resolution this year.

According to the Consumer Electronics Association (CEA) in Arlington, Va., shipments of true 1080p hi-def TVs through July 2008 were 5.1 million units, accounting for $6.6 billion in sales. In comparison, the shipments of flat panel televisions of lower resolutions, such as 480p, 720p and 1080i, amounted to 8.4 million units or $4.6 billion dollars.

"If it's not 1080p, it's less expensive. That is a sticking point that consumers are dealing with when it comes to the purchase a television," said Steve Koenig, director of industry analysis at the CEA. "There's also not a huge amount of 1080p content out there."

Koenig said that unless a consumer has a Blu-ray Disc player, or an Xbox or PS3, and is planning to play Blu-ray movies, there just isn't much reason -- other than some additional content --to purchase a flat-panel television with 1080p resolution at this point.

"Before we see 1080p gain traction, we're going to need to see more high-definition content," Koenig said. "It's going to take more content than just Blu-ray movies and some select console games to encourage consumers to upgrade to 1080p and pay for it."

The CEA is predicting that only 34% of all digital displays sold this year will be full HD or 1080p. That number is expected to climb however to 43% in 2009 and 64% by 2012.

Recent sales figures suggest a flattening out of Blu-ray and DVD sales, with DVD still outpacing the new high-definition video format. But high-definition downloads aren't the reason, according to a PC World article. About 52% of HDTV owners are purchasing movies or television series on DVD, compared with 6% who are downloading them, according to The NPD Group Inc. The NPD Group's numbers show that on average, 41% of consumer movie budgets are spent on DVDs, 29% on rentals, and only 0.5% renting or purchasing online.

Even though Sony's Blu-ray won the high definition DVD format war against Toshiba's HD-DVD, there are signs that Blu-ray is struggling to gain consumer acceptance. Nielsen's recent figures show Blu-ray discs sales in the U.S. are declining, which has lead Sony and other Blu-ray vendors to begin offering free trial discs in magazines and to chop the price of players in some cases to below $200.

Koenig believes high-definition downloads will increase "rapidly over next 5 to 10 years, but that's in conjunction with the sale of" Blu-ray discs."

One stumbling block to high-definition downloads is digital rights management, Keonig said. Studios don't want "high-def digital copies bandying about on line," Koenig said.

"But now we're starting to see streaming video and downloads with some encryption attached where you watch it and then it's deleted," he added. "That's a good model. With the right encryption, now movie studios are releasing more and more content."

Copyright © 2008 IDG Communications, Inc.

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