Disney: Blu-ray Needs Lower Player Prices

Washington, D.C. (May 7, 2008) -- Disney's top executives yesterday said that Blu-ray high-def disc player sales will begin to rise when prices start to fall.

In an investors call yesterday following the company's first quarter report, Disney CEO Robert Iger said the penetration of Blu-ray players is still "relatively modest." (Industry reports indicate that fewer than 10 million U.S. homes now have Blu-ray players, even when you include the Play Station 3, which has a Blu-ray player inside.)

But Iger added that the company sees Blu-ray "growing nicely, particularly as the cost of the players comes down."

The lowest-priced Blu-ray player is now $399, but Iger said "you'll be seeing a lot more $300 (players) and less inventory in terms of player costs of the shelves."

He added: "The real impact from Blu-ray will be felt down the road...We're believers because of the quality of the experience but it is going to take some time for the platform to penetrate the marketplace."

Blu-ray makers were offering some players in the $300 range during the 2007 holidays when the high-def format war against HD DVD was ongoing. However, after Toshiba pulled the plug on HD DVD, the companies raised Blu-ray entry-level prices back to $399.

Disney CFO Thomas Staggs predicted yesterday that Blu-ray will start to have a serious impact on studio revenues after the 2008 holidays. He said the company plans to release several blockbuster movies on Blu-ray this year, including Finding Nemo and Sleeping Beauty.

"Overall, total (Blu-ray disc sales) are going to be probably more in the low-single-digit range because less Blu-Ray (is) on catalog sales right now but...we think that’s going to continue to grow and especially as you get passed the next holiday season, it can be a more important component of the whole thing," Staggs said.

Iger hinted that Blu-ray disc prices, which now are $5-10 more than standard-def DVDs, could come down as more people buy players.

"The cost of the Blu-Ray DVD in the market or on the shelf to the consumer is running a few dollars higher (than standard-def DVDs) and that obviously bodes well for us, although as it penetrates the market, we’ll see whether the pricing comes down," he said.

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