So Over It: Blu-Ray Rips Off Consumers

It's hard to walk into an electronics store, look at the racks of Blu-ray discs and not grit your teeth a bit.

The film industry is making DVD buyers play format games again. It's hyping a product whose apparent successor, downloadable and streaming high-definition video, is 360 lines of resolution away from providing the same clarity without the trip to Best Buy ( BBY).

Sales of Blu-ray discs are growing faster than those of conventional DVDs, but the technology could become obsolete soon.

The industry knows the highest-quality video is already available and that you're wasting money by playing anything else on your fancy high-definition TV. That's why retailers charge $10 more for a Blu-ray disc over its DVD counterpart and Netflix ( NFLX) tacks on a $4-a-month surcharge for Blu-ray rentals. Blu-ray producers think they're doing you a favor by offering you BD-Live content directly from the Web instead of forcing you to buy more editions of the same disc you just repurchased.

"The majority of people really do understand and appreciate the simplicity of a disc: You buy a disc, you drop it in your player, you hit play and beautiful video comes out," says Andy Parsons, a senior vice president at Pioneer Electronics' home-entertainment group and U.S. chairman of the Blu-ray Disc Association Promotions Committee. "Broadband distribution outlets have their places, but I think a lot of people don't understand how they work, don't know how to implement them or don't have enough broadband connection speed to get high-def out of them."

In Blu-ray world, familiarity breeds contentment. In a survey by the Digital Entertainment Group, HDTV owners preferred discs over video streaming and downloads by nearly 10 to 1. Nearly 50 million Blu-ray discs have been sold worldwide, with Blu-ray's growth outpacing DVDs by almost 10 million discs at the same point in its lifespan.

But you know what else people are familiar with? DVDs. Despite Blu-ray's advances, it still accounts for only 8% to 15% of weekly video sales, peaking at 17% in January on the backs of The Dark Knight and Wall-E. Most consumers are still buying DVDs.

"The consumer's already happy with the quality of what they're getting," says John Farr, who reviews home video for the Huffington Post and his own Web site, Best Movies By Farr. "In the time it's going to take Blu-ray to become a mature business and get the penetration it wants, we're already going to be talking about when we're going to be able to stream all the movies we want whenever we want to see them."

Amazon.com ( AMZN), Netflix, Apple's ( AAPL) iTunes and cable operators are attempting to answer that question, but Parsons says these services offer HD content in 720-pixel resolution versus Blu-ray's sharper 1080 pixels. Those companies and their customers also lack the bandwidth and storage space to overcome the convenience of discs.

If the Blu -ray is so convenient, shouldn't it have the 50% global market share Sony ( SNE) President Ryoji Chubachi said it would have by the end of 2008? It doesn't, and studios like Walt Disney ( DIS), News Corp.'s ( NWS) Fox and ( TWX) have hedged their bets by bundling DVD and Blu-ray versions of their movies together. Blu-ray hasn't failed, but it's not the blockbuster Sony had hoped for.

"There's been a lot of upfront investment put into it, and it's hard to get people to just scrap it," Farr says.

It's not that Blu-ray and digital content can't coexist. Amazon Kindle readers still own books, after all, and hard-copy backups are always a good idea. But expecting consumers to ignore the rapidly advancing technology right on their doorstep is a stretch even by Hollywood standards.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

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