Europe’s Pain May Be Blu-Ray’s Gain

Mar 20, 2008  •  Post A Comment

Makers of next-generation DVD players may be thanking the Old World.
While analysts debate whether Sony’s Blu-ray victory over Toshiba’s HD DVD format in the high-definition disc player war will unleash a torrent of U.S. customers who’d been waiting on the sidelines, one U.K.-based consultant says the real gains may be made in Europe.
With cable and satellite television providers taking a smaller market share in Europe than in the U.S., many HDTV owners receiving analog TV signals over the air will require an HD disc player to get any type of true HD, consultant Understanding & Solutions said.
This year, about a third of Western European households will have at least one HDTV while just 2% will receive HD signals. By 2012, that gap will widen, as about 70% of households will have an HDTV but only about 30% will get HD broadcasts, according to Understanding & Solutions.
In comparison, more than 85% of U.S. households will have both HDTVs and access to HD signals by 2012, the firm said.
“It’s that gap that’s driving Blu-ray,” said David Watkins, market analyst at Understanding & Solutions. “For quite a few years, the U.S. has been broadcasting in HD. In Europe, it’s only the last year that HD broadcasting has really started.”
Such a gap may merely continue Blu-ray’s momentum overseas. In November, the Blu-ray Disc Association said Blu-ray discs were outselling HD DVDs by a 3-to-1 margin, compared to a U.S. market share of about 60% before Warner Home Entertainment effectively ended the format war in January by committing to Blu-ray.
In all, Sony Corp.’s European revenue for the nine months ended Dec. 31 surged 21% to $15.9 billion, compared with a 2.7% sales growth rate for the U.S. The company doesn’t break out its electronics sales by region.
Blu-ray’s overseas window may be closing the fastest in the U.K., where News Corp. satellite TV unit BSkyB serves about two-thirds of households with pay TV services. The U.K. has already started its transition to total digital broadcasting, which will be complete in 2012.
For other European nations, though, digital broadcasting as the norm may be a few years away despite more households with HDTVs.
“Digital broadcasting is only really on satellite—there’s none on terrestrial,” Mr. Watkins said. “In many countries, the infrastructure is just not there.”

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