Blockbuster/Blu-ray Deal Hardly End of Format War, Analyst Says
The recent decision by the Blockbuster movie rental chain to carry only Blu-ray Disc for high-definition in-store movie rentals was downplayed by an industry analyst this week- even before news came that the once-dominant Blockbuster was closing 282 stores.
IMS Research analyst Paul Erickson, in a report issued by the firm, believes that the deal between Blockbuster and Blu-ray’s parent company, Sony, to exclusively rent Blu-ray Discs in most of its stores will have “limited impact,” mostly because the video rental business is in “steady decline,” rentals do not drive purchase decisions for players, and the exclusivity does not include Blockbuster’s growing online rental business. Erickson called Blu-ray’s deal a “PR coup,” but concluded that the format war is probably a year away from coming to a close.
“Actual sales indicate that mainstream consumers are generally happy with DVD, and still find both blue formats’ standalone players too expensive for mass adoption, regardless of content availability,” Erickson wrote. He concluded that the winner of the format battle will be whichever competitor “can achieve the greatest mass-market hardware penetration of its standalone players,” with the true test to come when prices begin to drop.