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Tuesday, October 21, 2008
 Blu-ray Sales to Suffer Under Economic Slowdown
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Message Text: Blu-ray sales may suffer in the fourth quarter, thanks to the shaky economy and plenty of entertainment alternatives, analysts say.

Generally, economy dictates the level of investment companies will put into development and marketing, and perceptions of economic health are a critical factor in consumer purchase decisions. And the current economic slowdown could mean that consumers would be cautious in their spendings in the upcoming holiday season and especially for pricey Blu-ray players and discs.

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.

"If you can get movies over the wire on demand and have an entire library at your disposal on the screen a la Netflix, that's the way you're going to go," said Kay, president of Endpoint Technologies Associates, in an interview with San Francisco Chronicle.

Netflix said on Monday it expects about 500,000 of its 8.7 million subscribers will be Blu-ray subscribers in the current quarter.

In addition, Parks Associates has revised its Q2 predictions for the Blu-ray sales. Total sales of Blu-ray players will drop at least 25% from the firm's original projections to about 2.2 million players in the US and 4.3 million worldwide, told Beta News website Kurt Scherf, principal analyst at Parks. Back in Q2, Parks had predicted that Blu-ray player unit sales, not including Sony PlayStation 3 game consoles, would total about 5 million globally this year, up from about 800,000 Blu-ray players sold in 2007.

According to a recent survey by NDP Group, 26% of consumers they plan to spend less this holiday season. In the 2007 survey results only 18% said they planned to spend less. "This 8% decline illustrates that consumers are already focused on the idea of spending less," said Marshal Cohen, chief industry analyst, The NPD Group. Of course, those figures are not referring to the consumer's intention to purchase Blu-ray products only. The same survey indicates that Televisions and Sunglasses will be the two items that could emerge as this season?s bright spots. This was the last full year for analog TV reception, and NPD research shows consumers may be looking to purchase new digital sets.

It seems that while consumer awareness of Blu-ray's capabilities is growing, consumers are still selective in their spending. Technology companies could slash prices to attract customers. But again, price cuts can backfire, damaging a high-end company's brand or signaling to consumers that even bigger discounts might be coming.

Currently, a Blu-ray player can be purchased for $300~250 and tend to near the $200 price tag by the end of the year. Best Buy has also made a step forward and currently offering the NS-BRDVD Blu-ray player for $199.99, although it comes with a $100 coupon book for Blu-ray movies.

While some analysts as well as the Blu-ray disc Association believe Blu-ray will have time to eventually become big, other think that the current economic woes will continue into 2009 and deal an even more serious blow to the Blu-ray format.
 
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