Blu-ray Fights the Last War

I wrote a couple of posts about Blu-ray that emphasized the last war aspect of the technology and ignored where consumers would ultimately be getting their entertainment from, the internet. It will do okay but for Sony and the content owners banking on it, Blu-ray will be a disappointment.

Analyst Roger Kay predicts a “dramatic” drop in Blu-ray sales for the fourth quarter and beyond, pushing back adoption of the technology long enough to allow other forms of video over cable, satellite and the Internet to shut the window of opportunity for Blu-ray.

[From Blu-ray has case of the economic blues]

Video on demand will overtake physical distribution at some point over the next couple of years, just like downloadable music eclipsed physical distribution (quick, do you know where the closest music store is to you?). HD content on iTunes, Amazon’s download service, Netflix’s Roku box, and more will all conspire to make Blu-ray hardware obsolete, and with Blu-ray we are indeed witness to the last DVD standard as it’s unlikely anyone would ever invest in a new format given technology trends and consumption dynamics.

85% of American households have broadband, a generation shift in content consumption is evident, and the proliferation of download services all add up to a death sentence for Blu-ray hardware makers. Sony is not in a race with competitors but rather with itself in order to reduce the costs of manufacturing Blu-ray players to enable the proliferation of Blu-ray playback wherever a disc could be inserted. Apple’s rejection of Blu-ray is certainly motivated as much by the fact that it’s Sony behind the licensing as anything else, but clearly Apple sees the exclusion of Blu-ray as a tactical exercise that will not dampen demand.