Op-Ed: Optical Media Not Dead Yet

I have to admit, I read with fascination this morning the latest Techmeme headline from Techcrunch: “Yep, Apple Killed the CD Today.” Of course, a headline like that is meant to cause a reaction – and it did, by the number of tweets, Diggs and comments. In my gut, I agree with the general trend (as it applies to computers) – the optical drive is becoming passé in favor of smaller portable storage options like USB flash drives and even file-sharing via Web-based tools.

However, optical media itself is not dead yet – far from it, mostly thanks to Blu-ray. So perhaps the headline should have read “optical drives in computers are not really all that important anymore, but Blu-ray is doing well.” But that wouldn’t have been as catchy.

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Optical Media Drives vs Optical Media

For those who read beyond headlines, the Techcrunch article makes a valid point – it’s no longer as necessary to include an optical drive in a computer, especially one designed for maximum portability, because the USB drive will often suffice for transferring files to and from computers.

But to proclaim that this makes the “CD, DVD and every other optical disc obsolete” is a stretch. (Well, at least for the DVD, that is.)

For some time, music CD sales have been tanking, down by mid-2010 by about 50% of their peak. But for the DVD, there’s a different story. Because of Blu-ray, the HD video viewing format, DVD is still a somewhat popular choice for consumers in certain markets.

DVD sales vs. Blu-Ray

The movie studios are fretting that less people are choosing to buy movies on DVD, but some media execs are giving mixed signals on current trends in this area. As recently as this August, Time Warner Inc. Chief Executive Jeff Bewkes said that trends are improving when it comes to DVD sales, but Disney Chief Executive Robert Iger, however, said the market will remain "challenged.” (As reported by the WSJ.)

Obviously, digital distribution will impact the industry and optical media. Streaming options like those from Netflix and a realm of new media center devices and connected TVs will do the same. But “kill” it? Not entirely. Not yet.

Blu-Ray Sales: A Collection of Stats

• Some sources reported Blu-ray and DVD sales declined globally in 2009, only experiencing either positive or flat annual revenue performance in 33% of international markets. But sales were expected to increase in 2010, by nearly 70% across key markets.
• And when you look at just stats surrounding Blu-ray, the numbers aren’t so bad. In 2009, recordable Blu-ray discs reached 44 million, a 244% increase over 2008. Global demand was pegged to expand 7-fold from 2009, going up to 310 million discs by 2012, according data released by Japan Recording-Media Industries Association (JRIA).
• By Q1 2010, European sales had doubled, topping 150 million Euros, according to one source. However, the consensus now is that the European market overall isn’t doing so well (except for Germany). In fact, Screen Digest believes DVD and Blu-ray sales will drop 3.5% each year through 2015 in Europe.
• But in the U.S., Blu-ray adoption is at 17% – and about 20 million U.S. households own both a Blu-ray player and DVD player. Avatar helped with this. Blu-ray households rent and buy discs in greater numbers than DVD households, and the format appears to be the format of choice for younger, wealthier households with children.
• According to hardware maker Singulus Technologies, the 1st half of 2010 saw sales of Blu-ray discs at 5 million, an increase of 153 % compared with the 1st half 2009. In addition to the 2 % rise of DVD sales to 45.7 million units (following 44.9 million units in the 1st half 2009), the new record level is primarily due to the constantly increasing Blu-ray market, it said.
• In the U.S., market researchers Swicker & Associates found that sales of Blu-ray discs increased by 112 % in the 2nd quarter compared with the same quarter one year ago.
• By 2014, research company Futuresource estimates 40% of homes in the US, Western Europe, and Japan will have a 3D Blu-ray player, recorder or home theater. And they predict the format will even see 5 years of growth thanks to 3D.

In other words, Blu-ray, a DVD format – yes, an optical format – is not dead yet, at least in key markets like the U.S. And if Blu-ray proves popular for some time going forward, a slice of the computer-buying audience will want a Blu-ray optical drive in their computers. I know I do.

And that’s my opinion. I’d like to hear yours.

*Note: this article is not meant to give a comprehensive overview of DVD/Blu-ray sales or the industry, only provide some examples of optical media trends. If you want to share stats you know about, please do so in the comments.

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