In the embattled physical media landscape, Blu-ray remains one last bastion of growth. The format, which was worth $16.97 billion in 2015, is still clinging to life, and eking out a compound annual growth rate of 3.15% from 2015-2020. According to a new Technavio report, the market will top a value of $19.8 billion by 2020.
But if you look a bit closer, it quickly becomes apparent that there is a big imbalance in the Blu-ray market. At the moment, any and all growth for Blu-ray comes down to media, as people continue to buy Blu-ray discs. The players, on the other hand, are struggling to post any growth at all. The average selling price (ASP) of a Blu-ray player has dropped significantly in recent years. And while a declining ASP can often be a good thing for technology, Blu-ray vendors are struggling to make any money amidst the falling values.
Global Blu-ray device market 2015-2020 ($ billions)
Source: Technavio
And it really doesn’t take a genius to see why the format is struggling. A one-month subscription to Netflix costs less than a single Blu-ray disc, and gives you a heck of a lot more choice. And on top of paid services like Netflix, there are free TV and movies available everywhere on the internet, through both legal and illegal streaming services. And with the quality of streaming content getting better, it’s getting harder to sell consumer on physical media.
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Customer retention is also a near impossibility for Blu-ray vendors. Just because someone buys one disc does not mean that they’ll be back for another in a month’s time. The volatility of customer behaviour in this segment means big competition between suppliers. This leads to price wars, which doesn’t translate to good market growth prospects.
But as we said earlier, it’s not all bad news for Blu-ray—the market is still growing. It turns out that emerging economies will actually be a saving grace for the format. Unit shipments are expected to grow during the forecast period as vendors look to tap into market in the rural APAC regions to boost sales. But the tepid growth rate indicates that even a bump from APAC adoption might not be enough to save the faltering Blu-ray media and devices market.
