Blu-ray backers look to tap online video cash stream; Hollywood says change is a-comin'

With U.S. DVD purchases continuing to fall off the cliff--movie disc buys were off 13.8 percent in 3Q2009--an increasing number of Blu-ray backers are looking at online video delivery as a needed shot in the arm for their business.

Best Buy, Samsung and LG are all embedding software in their Blu-ray players that allows users to access online movie platforms like NetFlix, which last week announced a partnership with big box retailer Best Buy, reports The Wall Street Journal. The OTT access will give consumers yet another option for home entertainment that could take a big bite out of VOD services offered by cable and telco providers.

"The horse is out the gate and there's no going back. Consumers want Internet-enabled devices," Reid Sullivan, a vice president at Samsung Electronics America, which also makes Blu-ray players that stream movies, told the Journal. "We can upgrade the software on the players to offer more content or new kinds of services."

While sales of discs were off nearly 14 percent, Internet streaming and VOD services saw an 18 percent increase in the quarter, moving forward faster than the industry had forecast and adding pressure on disc-player makers to adapt. Blu-ray disc sales surged 66 percent in Q3, still not enough to offset DVD sales declines.

Hollywood execs say 2012 will start disc sales spinning again--
if they're tied to online video sales

Meanwhile, DVD sales--as long as those sales are tied to online video sales--will rebound in 2012 after another losing year in 2010 and a flat 2011, Holywood studio execs told a panel at Blue-con in Beverly Hills yesterday.

"By 2012 is when the physical/digital combination will get to the point where we tend to see a growth trend again," said 20th Century Fox Home Entertainment President Mike Dunn, referring to Blu-ray and online movie distribution, the industry's two growing segments as sales of standard DVDs are falling. Studios have seen home entertainment revenue--which makes up some 50 percent of a studio’s revenue--decline 3 percent for the year, primarily due to the collapse of DVD sales, the L.A. Times reported.

Mike Vitelli, Best Buy’s executive VP, in a keynote address at Blue-con, said studios need to focus on streamlining consumer options to help launch a turnaround.

"What's looming in front of us is an increasing amount of confusion as Blu-ray players and televisions and other set top boxes are becoming more connected to the Internet," he said. "Until all of this gets settled, there will be massive confusion. And in massive confusion, you get a pause."

For more:
- see this Journal article
- see the L.A. Times story

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