DVDGuy’s Blog @ Digital Digest

So Blu-ray has been released for some time now. We’ve all read the news stories about how well, or how badly, it is doing, depending on your source, but what is the real “state of play” when it comes to Blu-ray. This feature, through using Nielsen VideoScan data that I’ve compiled weekly now for more than a year, aims to shed some light, and at the very least give you the data so you can decide for yourself on the state of  Blu-ray.

You may remember that I wrote a similar feature around the same time last year. It might be interesting to read that again to find out just how right, or wrong, I’ve been before deciding whether to take this update more seriously, or not.

As mentioned above, I’ve been posting and analyzing the weekly Blu-ray sales stats since May 2008. These weekly stats are provided by Nielsen and published in the free digital edition of Home Media Magazine.

One of the stats provided is the percentage of Blu-ray sales as a total of Blu-ray and DVD sales based on the dollar volume for all titles. To put it simply, you add up the revenue from all Blu-ray and DVD sales and find out how much of it belonged to Blu-ray, and this is the figure which the graphs and analysis below are based on.

Basing an analysis on this figure is not without problems, the major one being that since Blu-ray is more expensive than DVD, its revenue will be higher per title than that of DVD and the revenue percentage figure is affected by this. And as Blu-ray prices drop, its revenue drops, even if the number of titles sold remains the same. The same may apply to DVDs, but it’s at a lesser extent as DVD is a more established format with less price fluctuations (Blu-ray being new is more likely to have price drops, and larger ones at the beginning).

Here’s an exaggerated example to illustrate this point. Let say the DVD version of a movie costs $1 each and it sold 900,000 copies, and if the Blu-ray version of the same movie was $10 each and it only sold 10,000 copies, then Blu-ray would have a revenue percentage of 10%, despite the number of Blu-ray sales being only 1.1% of DVD sales. And then a year later, with the DVD version still selling 900,000 copies at $1 each, but the Blu-ray version is now only $5 and selling 20,000 copies, then the revenue percentage is still only 10%, despite the Blu-ray version now selling twice as many copies. In real life, the difference in pricing is not that dramatic, and both Blu-ray and DVD prices will decrease, but perhaps with Blu-ray decreasing a bit more than DVD.

The best set of figures to base any analysis on would be the percentage of titles sold, rather than a percentage of revenue, but I do not have access to this information for all titles, only for the top 20. So please take all of this into account when looking at the figures.

First of all, let’s take a look at a graph showing the weekly Blu-ray sales percentage from when I first started collecting the data (4th May 2008), to the most recent set (27th September 2009) – click on the image below to see a larger version:

Blu-ray Sales Percentage - 4 May 2008 to 27 September 2009 - Click to see larger version

The immediate conclusion to make is that Blu-ray has made revenue increases over the last year and a bit, and since Blu-ray prices have dropped and hence meaning less revenue per disc, you can bet that the number of titles sold has increased even further than what the above graph indicates.

On the graph, I’ve noted several key milestones for the format, basically the weeks in which major titles were released. Some of the earlier milestones, like the release of I Am Legend, aren’t shown on the graph since it was released earlier than when I had access to the stats. Iron Man was a major release for the format, as you can see from the graph, it was unbeaten as a first week release until just recently, by Watchmen. To talk about important titles for the format, then The Dark Knight cannot be ignored, but as you can see from the above graph, it was relatively disappointing for Blu-ray for a first week release. This was because that it was such a hit title, that even the DVD version sold in huge quantities, thus diluting the Blu-ray percentage. This is why Iron Man was able to beat The Dark Knight, despite the latter being much more popular (or perhaps I should say, “because the latter was much more popular, even amongst DVD owners”).

And it’s not just new releases that can give Blu-ray a weekly boost – catalogue titles, including ones that had already been released and practically given away towards the end on HD DVD like Transformers or King Kong, can still command huge sales (King Kong actually beat The Dark Knight in terms of the Blu-ray sales percentage). And even when there are no releases, Blu-ray can perform, an example is point 5 on the graph, which was occurred during the New Years break. The reason is that when there are fewer shoppers, those that are out there buying are often the more “fanatical” kind, early adopters, home theater enthusiasts and such, and they prefer Blu-ray over DVD. And every new release on Blu-ray, whether it’s a new movie or a classic, is “new” to Blu-ray owners, and such almost everything can be considered a new release and the sales figures roughly reflect this.

In terms of growth, the revenue growth as shown on the graph doesn’t look quite that spectacular. There is good reason for this, and that’s largely down the missing data – we’re not yet at the peak sales period, which is right now until the end of the year. However, the 2008 data does include this period, and most of the peaks occurred during this period as well. Only when the 2009 peak period has passed, can we accurately compare “peak to peak” to see the real signs of growth. And as mentioned earlier, the lower Blu-ray prices resulted in a revenue drop on a per title basis, which is most likely larger than any similar revenue/title drops for DVD, and the graph above cannot accurately reflect this either.

So to better compare, let’s have a look at the 2008 to 2009 comparison based on the same time period. Or in other words, May to September 2008 sales as a comparison to May to September 2009 sales. Here’s the graph:

Blu-ray Sales Percentage: 2008 versus 2009 Comparison (May to September)

I would have preferred more data, but this is the best I can do with the data I have. I will do one at the end of the year which should be more informative. But even with the lack of data, we can still see the growth trend on a year to year basis. Every month of 2009 so far has outsold the same month in 2008, that’s to be expected. The average growth for each week’s dataset is 51.07%, in other words, on average, a week in 2009 meant a 51% increase compared to the same week in 2008. But “percentage increases” are not that indicative of real growth, because if only one Blu-ray movie was sold last week, and two was sold this week, then that’s a 100% increase in a week, which sounds like a lot, but is really isn’t. The actual increase in market share for Blu-ray is about 3.27% on average for the above time period, meaning that on average, Blu-ray market share for a week in 2009 is likely to be around 3% higher than the same week in 2008 (so if Blu-ray had 5% market share in week 30 of 2008, then week 30 of 2009 should have roughly 8% market share). This is not an insignificant increase, and as I will mention again, due to the drop in revenue per title that should be greater on Blu-ray than on DVD, this increase may actually be larger that what you see in the graph.

For the above period (May to September), the 2008’s average was 6.69%, while the 2009 average was 9.96%. This perhaps is biased towards the 2009 figures, as there were no major releases in this period in 2008, compared to a single major release in 2009 (Watchmen). But even if you take out the Watchmen effect for 2009, the average was still 9.42% for the same period. That’s a healthy growth, but nothing like the 100+ % you’ll hear from some outlets.

From observation, Blu-ray growth seems to be driven by individual titles. For example, the release of The Dark Knight might have helped to sell more Blu-ray players, or to make more people aware of Blu-ray, and as such, this lifts the sale of all other titles. With many “Blu-ray friendly” hits coming this holiday season (Star Trek, Terminator Salvation, Transformers 2, Harry Potter), the overall Blu-ray sales percentage should increase beyond the temporary rise offered by these titles. How much remains to be seen, and I’ll update this feature when it becomes clearer.

This entry was posted on Saturday, October 17th, 2009 at 7:20 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.