In a new study, research firm SNL Kagan predicts Blu-ray will be the driving force in the market throughout the next decade, but it will ultimately be overtaken by video-on-demand-services.

"Blu-ray will be the driving force behind the video retail market throughout the next decade," said Wade Holden, analyst at SNL Kagan. "The current economic climate, however, will slow the growth of this new format and likely keep it from reaching the heights that it may have in better times. VOD services will continue to improve in both technology and content over the next decade and begin to draw consumers away from Blu-ray and DVD by 2017."

While the current impact of Blu-ray has been relatively minor (standard DVD still comprises 97.1% of the market), SNL Kagan projects that high-definition DVD will attain 59.7% market share in 2014, with $13.1 billion in revenue. By 2017, this figure is expected to reach 73.8%, or $15.6 billion.

The SNL Kagan study points to 2010 as the start of the resurgence in retail revenue. Sales of Blu-ray players are expected to grow from $255.4 million in 2008 to $1.3 billion in 2010, reaching mass-market penetration and spiking to nearly $6.9 billion in 2013.

However, Blu-ray's dominance may be short-lived, with video-on-demand (VOD) poised to become a major force in home entertainment after 2017, the study predicts. SNL Kagan estimates that there will be 98.8 million high-speed Internet homes capable of delivering VOD in 2017 compared to 115.2 million high-definition DVD homes.

Story filed 09.02.09