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Wednesday, January 24, 2007
Analysts See a Speedy End to High-Definition DVD Format Wars

A new study from ABI Research forecasts that universal Hign Definition players will become the norm, not the exception, benefiting confused consumers unwilling to commit to one DVD camp or the other.

When LG Electronics launched its Super Multi Blue Player at the recent CES exhibition, it signaled an exit strategy from the "war of the high-definition DVD formats." By creating a player that will accommodate both HD-DVD and Blu-ray discs, the Korean manufacturer may have created a precedent that the rest of the industry will have to follow.

"We believe that universal players will come to dominate the high-definition DVD player market," says Steve Wilson, the firm's principal analyst of consumer electronics. Samsung is expected to release its own universal player soon, and others, including large CE vendors, may follow suit before long. ABI Research forecasts sales of 2.4 million players in 2007, rising to 55 million in 2011.

Many observers expect that the demands of supporting both formats would significantly increase the price of universal players. While there is some additional cost in the optical pickup and the LG player's initial price is quite steep at $1200, Wilson expects these prices to drop dramatically as new manufacturers come to market with universal players. "That $1200 price would seem to be more about matching Blu-ray player prices than about reflecting the cost of producing a universal player. There's no reason universal players should cost significantly more than HD or Blu-ray players."

However, he cautions, market growth will remain slow until prices fall. "The universal player market is still in its nascent stages, and developers are trying to maximize their revenues. The BOM price will start to fall once fully integrated chipsets reach the market. There will be downward pressure on prices for players of all types: ABI Research believes that prices will have to drop below $200 before true mass adoption takes off. That should happen by 2009."

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