After a hard-fought hi-def standards war, the major question for Sony and the Blu-ray camp is whether a physical format for HD still has any relevance to consumers in this era of Internet-delivered movies and video on demand, asks research firm iSuppli.

"The demise of HD DVD will reduce consumer confusion, since everyone will talk about a single next-generation DVD player and the benefits of owning such a player," said David Carnevale, vice president of multimedia content and services at iSuppli. "But the biggest question of them all now is: Do consumers even care?"

Do consumers even want or need a physical copy of their movies or TV programs anymore?" Carnevale asked. "As standards change and as digital content improves, consumers don't have to buy a new DVD player; instead, they can just download an update or even a new version of the online service's software. The need to spend hundreds of dollars every few years for new hardware goes away completely." As faster broadband services and newer technologies come online, physical media distribution could become a thing of the past, according to Carnevale.

Another obstacle for Blu-ray is that the prices for players are likely to remain at high levels, especially now that the competitor is out of the equation. Blu-ray DVD players currently sell for about $400. In contrast, a decent standard-definition player is priced at about $60. Furthermore, upscaling DVD players, which translate standard-definition DVD content to 720p resolution, are becoming commonplace. With these players priced at about US$100, cost is likely to be an area where Blu-ray will continue to struggle, noted iSuppli.

Despite the factors that may inhibit many consumers from adopting Blu-ray players, there are some compelling reasons why some will make the switch: less confusion in the market; larger capacity for more special features on DVDs beyond the feature presentation; Internet-enabled functionality, picture-in-picture and other options that appeal to a number of consumers for a variety of different reasons; and the desire to get in on a hot technology. Early adopters who were on-the-fence awaiting a winner to emerge, will be less concerned about price and will begin to make purchases, spreading the word about the advantages to others, according to iSuppli.

iSuppli's present forecast, developed before the news from Toshiba, calls for worldwide blue-laser DVD player shipments, i.e. Blu-ray and HD DVD, to rise to 45.4 million units in 2011, up from 6.6 million in 2008. This figure excludes PCs and games consoles.

Shipments of blue-laser recorders will rise to 6.6 million units in 2011, up from 500,000 in 2008. However, the total of both players and recorders in 2011 will fall far short of the peak shipments of the older-generation red-laser players and recorders, which amounted to 156 million units in 2006.

Microsoft now faces an interesting dilemma: Does it launch a Blu-ray option for its consoles – should it establish its own facility to produce HD DVD players for those users who want to continue to buy titles only available on HD DVD systems – or should it offer new systems with Blu-ray integrated into the console? (Source: iSuppli).

Story filed 27.02.08