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Last year DVD revenue in the U.S. declined by eight per cent but a new research report entitled "The State of Home Video" released by SNL Kagan projects that it?s only a matter of time before Blu-ray begins to compensate for these declining returns from traditional technologies, creating incremental strengthening of home entertainment revenues over the next several years.

SNL Kagan said that the growth in the installed base of Blu-ray Disc players will compensate for DVD declines. "We expect a resurgence over the next couple of years, thanks to High Definition," SNL Kagan forecasts in its report.

Confidence in Blu-ray Disc's ability to fight off the recession is found throughout the industry. CES? sponsors, The Consumer Electronics Association predicts that North American consumers will spend will spend more on Blu-ray then on DVD in 2009, with $1.3 billion on Blu-ray players outpacing the projected $1.2 billion that will be spent on regular DVD players.

At CES, the smart money is betting that several product segments - including Blu-ray Disc - will enjoy healthy sales in 2009 and, in so doing, provide a much-needed underpinning for the international entertainment business.

"In the midst of a dismal housing market and an overall economic slump, consumers are still expected to shell out cash for consumer electronic products," In-Stat analyst Stephanie Ethier says.

Kurt Scherf, VP/principal analyst at Parks Associates , says his company's research shows a boost for products in the home. "Consumers are making the conscious decision to spend more money on home entertainment," he explains. "That's a result of the economy, but this was also beginning to happen well in advance of the economy."

Scherf reports that penetration of HDTV sets is at 50% of U.S. households, with deluxe home theaters (large-screen TVs with 5.1 surround sound) at 20% penetration. Completing the picture, Scherf adds, are products that enhance existing household entertainment setups. "That includes Blu-ray players and game consoles at the center of so many home theaters," he says.

European analysts optimistic about Blu-ray Disc

The strength of support for Blu-ray Disc spreads well beyond the U.S and Japan. As previously reported, the latest GfK Retail and Technology Japan figures have revealed that in the first week of November 2008 Blu-ray Disc Recorders surpassed a 50% market share for DVD Recorders in unit terms.

Now, also in Europe, the format has exceeded all expectations and posted strong sales performance over the Christmas sales period. "Once people see the benefits of Blu-ray for themselves, they soon realise the difference it can make," says Jim Bottoms, Managing Director, Corporate Development, Futuresource Consulting.

"Seeing is believing after all. We fully expect Blu-ray to keep on bucking the current economic trend and continue its rapid growth over the next few months and beyond, stimulated by falling prices and even more bundling deals with large screen TVs."

Blu-ray players are experiencing a strong upsurge in European sales that is expected to continue in the New Year. Futuresource predicts overall sales to more than triple in 2009, reaching 2.5 million units Europe wide - a figure that excludes PLAYSTATION 3 consoles.

Blu-ray Disc movies then hit a new high in the run-up to Christmas with 1.5 million discs being sold in the month of December - an increase of almost 400 % compared with the previous year. In total, the format has sold over 3.7 million units in the UK during 2008 (source: British Video Association / Official Charts Company).

In France, Blu-ray's share of the optical disc market is expected to double next year to 6%. Across Europe as a whole, over 6.5 million units of software have been sold to date, with year on year growth up 320 per cent, according to Futuresource.

"Globally, we live in challenging times and it is right that consumers think hard before making important purchasing decisions," commented Victor Matsuda, Chairman of the Blu-ray Disc Association Global Promotions Committee.

"However, in every territory we are seeing strong evidence that consumers are recognising the potential Blu-ray Disc has to revolutionise their home entertainment system. "We could not find more challenging launch conditions, but still we predict solid and substantial growth in 2009. Many exhibitors at CES are showcasing exciting new products and these will provide consumers with yet more choice. We see a significant increase in the number of BD products, as well as many examples of companies using the potential of the format to offer new enhancements to the consumer experience," concluded Matsuda.