THE BIG PICTURE

Now in its fourth year since the format was launched, Blu-ray remains a bit enigmatic. Of course, most early adopters and movie enthusiasts eagerly embrace it, and rightly so—Blu-ray provides the best picture and sound quality you can get from a home-theater source. But its success in the mass market is less clear, at least so far. To assess this and other issues related to the state of Blu-ray, the Digital Entertainment Group (DEG), an industry-funded, non-profit organization that promotes various types of home entertainment, hosted a day-long conference last week at the Beverly Hilton hotel in Los Angeles, calling it Blu-Con 2.0.

Stats
Before reporting on the conference itself, a few statistics are in order. According to the DVD Release Report, there are currently over 1900 Blu-ray titles available, compared with over 106,000 DVD titles. Blu-ray releases are up by 110 percent in the first seven months of 2009 compared with the same period last year (549 vs. 261), though this pace slowed down in July from the 150-percent increase in releases observed in the first half of the year. By comparison, DVD releases are down 11 percent (6412 vs. 7213). Interestingly, new theatrical releases account for 43 percent of Blu-ray releases, compared with only 5 percent for DVD.

How far has Blu-ray penetrated into the market? Estimates of the number of US homes with Blu-ray capability vary from 12 to 15 million—over 10 percent—with 27 million worldwide. These numbers indicate that Blu-ray is doing better than DVD in its first three years, which reached a 5-percent US-market penetration in the same time frame. Interestingly, the majority of Blu-ray households in the US—9 million—use the Sony PS3.

Best Buy
The first speaker at the conference was Mike Vitelli, Executive Vice President of Customer Operating Groups for Best Buy. He reported that sales of Blu-ray players are growing faster than other product categories, and that dedicated-player sales have finally overtaken the PS3, due in no small part to falling prices. (Best Buy and other retailers now advertise Blu-ray players in the $100 range, though some of those are Profile 1.1 with no BD-Live functionality.)

Vitelli made a clear distinction between consumer awareness and familiarity, saying that only 32 percent of consumers are familiar with Blu-ray. He also discussed several factors that are slowing adoption, such as portability and confusion about Blu-ray versus downloaded content. Clearly, he said, the industry must embark on an education campaign, increase portability and affordability, and provide great movies on Blu-ray.

Presidents' Panel
Next up was a panel of studio presidents from Lionsgate, Sony, Fox, Universal, and Warner. They all agreed that the economy is a big problem for everyone, including their studios, but they are cautiously optimistic about the 2009 holiday season and next year. They see three growth trends in content delivery—Blu-ray, video on demand (VOD), and downloading, of which only Blu-ray lets people collect something physical, which is very compelling for many.

Martin Scorsese
The keynote address was delivered by famed movie director Martin Scorsese, who addressed the conference via live satellite feed. He emphasized that the potential of Blu-ray to replicate the director's intent and the theatrical experience is far greater than any other technology. The format's superior resolution can reproduce film grain and more effectively convey emotion in actors' eyes and facial expressions—in fact, he said, it almost looks 3D, even without 3D technology. However, the format is very unforgiving, so producers need to be very careful to remove things like wires suspending model planes, which become quite visible at such high resolution.

PS3
Following Scorsese was John Koller, Director of Hardware Marketing for Sony Computer Entertainment America, the division responsible for the PS3. He reported that the new, lower-priced models have spurred sales dramatically—in the first three weeks, the $299, 120GB model sold one million units globally, well above Sony's forecast. And with 90 percent of the installed base of PS3s being used to play Blu-ray movies, that bodes well for the format.

Koller also reminded the audience that Sony just announced a partnership with Netflix whereby the PS3 can be used to download titles, a feature that launches this month. He argued that Blu-ray and downloaded content can coexist and actually compliment each other rather than being adversaries.

Digital Downloads
Speaking of downloaded content, one of the afternoon panels was devoted to its relationship with Blu-ray, with representatives from Netflix, CinemaNow, Blockbuster OnDemand, and Sony Electronics. Of course, players from the likes of Samsung, LG, and Sony now offer access to content from Netflix, CinemaNow, YouTube, and many other online providers.

Some panelists went so far as to claim that online streaming is the killer app for Blu-ray players, though all were quick to acknowledge that physical media will be around for a long time because the psychological appeal of physical ownership is very strong. They concluded that physical media and downloaded content are complimentary and serve different purposes—discs satisfy the need for absolute quality while downloads provide more convenience.

BD-Live
One of the afternoon panels concentrated on BD-Live, with representatives from Sony Pictures, Disney, Universal, Fox, and Gracenote, the company that maintains a database of cover art and metadata on CDs, DVDs, and Blu-ray discs and makes that info available to consumers to help manage their collections.

Up to now, I've been underwhelmed with BD-Live content, and I'm not alone—only 5 percent of Blu-ray players are even connected to the Internet. But according to the panel, new applications are coming, such as access to movie databases like IMDb via Fox's Live Lookup and Sony's MovieIQ. I was also interested to learn about the concept of "community screenings" in which large numbers of people watch a movie at a given time and chat about it online. And Universal is launching the Lost University on Lost – Season 5 when it's released later this year—over 40,000 people have pre-registered to attend "classes" on subjects such as ancient languages and time travel. Sign me up!

3D
The day ended with a discussion of the upcoming 3D specification for Blu-ray, with representatives from Paramount, Disney, Sony Pictures, Pioneer, and Panasonic. The spec is reported to be on target for completion by the end of 2009, and it will standardize the encoding and transmission of 3D content so that display and player manufacturers can build products to that standard. Fortunately, there's no format war impeding progress in this case, though there are several competing display technologies that will undoubtedly duke it out in the marketplace.

I was happy to hear that the spec is intended to be applicable to any type of 3D display technology, such as frame-sequential with active shutter glasses and line-sequential or side-by-side with passive polarized glasses. (A frame-sequential system can deliver full 1080p resolution to each eye, while systems that use passive polarized glasses cut the horizontal or vertical resolution in half.)

When asked if 3D will render current players and displays obsolete—and cause much gnashing of teeth among consumers who just bought an HDTV or Blu-ray player—the panelists stressed that 3D is not intended to replace 2D but to add a new layer of functionality to Blu-ray. Also, 3D discs will play normally in current players, and 3D-capable players and displays will be fully backward-compatible, allowing normal playback of 2D Blu-ray content. To see the 3D effect, you'll need a 3D-encoded disc and 3D-capable player and display (which will be sold with the appropriate glasses).

As you might imagine, 3D content will take up more storage space than the equivalent 2D material, but no one would say exactly how much more. Also, 3D discs, players, and displays are likely to cost more than their 2D counterparts, but again, no one would venture a guess as to how much more that might be.

Of course, the big question is, do consumers really want 3D? According to a survey by media-research firm In-Stat, 10 percent are extremely interested, 15 percent are very interested, and 39 percent are somewhat interested—a total of 64 percent that have some level of interest. That's a pretty big number, but will it translate into sales? Only time will tell. One thing's for sure—the studios and manufacturers are solidly behind it, so like it or not, here comes 3D.

Blu-Con 2.0 was a long but interesting day of information and insight into the state of Blu-ray. I came away with greater confidence that the format isn't merely a transition to online content delivery, destined to fill only a small niche in the home-entertainment market. And I remain convinced that Blu-ray offers the best-quality content available today and tomorrow—which is what Ultimate AV is all about.