UHD Blu-ray Passes Key Sales Milestones, But Challenges Remain

With the Ultra High-Def (UHD) Blu-ray Disc format’s first year on the market coming to an end, the Blu-ray Disc Association (BDA) reported that hardware and software sales passed a couple of key milestones. But the format continues to face challenges despite performing better than even BDA’s expectations.

U.S. sales of standalone UHD Blu-ray players are now “well over 100,000” units, Victor Matsuda, chair of the Blu-ray Disc Association’s (BDA) promotions committee, told the Media & Entertainment Services Alliance Dec. 20. That’s up from the 80,000 units previously reported by DEG: The Digital Entertainment Group in the fall.

That might not be a huge number of hardware units to have been sold since Samsung shipped the first model for the U.S. market in February. But there are two key points worth stressing. First, Samsung was the only manufacturer to have fielded a standalone UHD Blu-ray player for a significant chunk of 2016. Panasonic, Philips and Oppo all started shipping models late this year in the U.S., Sony is expected to ship its first model in early 2017, and it’s expected that other companies will throw their hats into the ring at the Consumer Electronics Show (CES) early next month. Second, Microsoft’s Xbox One S video game console that shipped in the summer supports UHD Blu-ray and it’s not included in the hardware sales data cited by Matsuda.

It’s not clear how many Xbox One S consoles have been sold in the U.S. so far and Microsoft didn’t respond to a request for comment. But NPD reported that the Xbox One performed well after the new console model was released. The console is also expected to be a strong seller throughout this holiday season – more so than standalone UHD Blu-ray players at retail.

Meanwhile, “we’re well over a million” units of UHD Blu-ray software titles that have been sold now, Matsuda said Dec. 20.

The number of UHD Blu-ray title releases has also now passed 100, he told us. Fox Home Entertainment Worldwide President Mike Dunn predicted during a UHD Alliance (UHDA) news briefing at CES in January that at least 100 titles would be available in UHD Blu-ray from all Hollywood studios combined by the end of 2016.

“The fact that we were able to actually achieve that, I think that is very significant as well,” Matsuda said.

Anecdotally, he heard from hardware makers and the Hollywood studios that UHD Blu-ray is performing “beyond expectations” this holiday season, as the format has been for much of 2016 in the U.S., he said, adding: “The momentum that we had at the beginning of the launch and mid-way through the year continues to pick up as we are well into the holiday season here obviously, and we’re just excited to see what the numbers are going to be after the holiday season.”

The pricing of UHD Blu-ray products was likely not, however, conducive to the sort of heavy discounting that typically drives the strongest-selling technology products the weekend of Black Friday and Thanksgiving, he conceded. Therefore, it’s not that surprising that UHD Blu-ray hardware and software, possibly outside of the Xbox One S, were not among the biggest sellers that weekend.

There also was not a significantly stepped-up marketing push behind UHD Blu-ray for this holiday season, Matsuda said, predicting that will come instead in 2017. The BDA is also redesigning its web site to more heavily promote the new format and that will be ready in early 2017, he said. It’s also working on a consumer education campaign for the format that’s ready to go and will kick off at CES, he told us. A series of industry events will also kick off in 2017 to help promote the format after CES, he said.

“We’re definitely in that early adopter/early mass market stage” for the format still, he went on to say, stressing the early adopter part of the equation. Therefore, it didn’t surprise him that Walmart isn’t heavily pushing UHD Blu-ray at its stores just yet, he said, predicting that will come in 2017.

Matsuda also conceded that the lack of a Disney UHD Blu-ray announcement, as well as Sony’s decision to not support UHD Blu-ray with its new PlayStation 4 console, could be having an impact on the format’s momentum. “All of it matters,” he said, adding: “The more we have, certainly the better it is overall for the format. But it is what it is …. Hopefully the success of the format — for any company that might be on the fence here” — will convince them to jump on the bandwagon in 2017. Disney remains the one Hollywood studio that hasn’t released any titles in the format.

What stands to significantly increase the format’s momentum in 2017 is that “we’re going to see a lot more product in the market,” Matsuda predicted. He pointed to Sony’s announcement about its first UHD Blu-ray player as just one example. What stands to also help is the declining pricing of hardware as manufacturers become more competitive, he said.

However, even the $199.99 pricing for Samsung’s UBD-K8500 UHD Blu-ray player at Best Buy this week is still not quite mass-market pricing, he said.

On the software side, in addition to the growing amount of titles in the format from the major studios that are expected to come in 2017, the BDA is out to make sure that other studios, including the “second-tier” ones, “see the business opportunities that this new format” offers, he said. That should help build the format’s momentum, he projected.

Another challenge is duplicating the success that the format has seen in the U.S. so far in other countries, he said, explaining: “The success so far has been very much centered in the United States, and when we do our activities abroad we don’t see that same level of success overseas just yet, and that is, for the most part, the nature of the business.” He pointed out that was the same case in the past with the Blu-ray rollout, and the BDA is expecting UHD Blu-ray momentum to build in countries outside the U.S. during 2017. It tends to be about a 3-9-month lag time between the new format catching on in other countries, he said.

As an example, although Panasonic shipped the first UHD Blu-ray hardware device in Japan about three months before Samsung shipped the first device in the U.S., he pointed out that Panasonic’s initial model for Japan — unlike the case in the U.S. — was also a recorder. The recording capability of Panasonic’s product in Japan was a key factor because TV service providers don’t typically provide TV-recording devices to subscribers there like such companies do in the U.S., he said, noting the Panasonic product was able to function as a TV recording device before it started being used as a UHD Blu-ray player. That’s also why that product cost a lot more than the initial UHD Blu-ray hardware devices we saw in the U.S., he said. Matsuda added: “We’re hoping to see more manufacturers step up in Japan” with UHD Blu-ray players in 2017.

Matsuda is also hoping to see more support for the format in Japan among the studios and other content providers there, he said, pointing out that Japan is a market where Hollywood movies don’t typically drive software sales.