Why Has Blu-ray Failed to Catch Hold?

My VCR is stashed in a closet, right next to a couple of CD-ROM players, a laser disc player, and other forgotten electronics. Is my Blu-ray player about to join them?

Strategy Analytics researcher Peter King recently said his analysts were surprised that DVD player sales continued to be so strong against Blu-ray players. That reminded me of what some critics have suspected: Blu-ray really hasn't caught on -- and probably never will.

"I'm surprised DVDs have continued to hang on," said King, referring to the fact that player sales of over 20 million units in the U.S. last year were pretty much evenly split between DVD and Blu-ray models. His figures show that Blu-ray player sales will surpass DVD sales by the end of this year ... but only slightly.

Blu-ray discs and players are clearly superior to DVDs, offering more features and a better picture overall. Blu-ray players connected to the Web can offer games, extra movie features, and additional bonus materials online that DVD players generally can't. And the latest Blu-ray players can handle 3D discs, something no DVD player can do.

So why haven't shoppers been impressed? It can't be the price. Walmart sells Blu-ray players for as little as $70.

Researchers suggest the reason Blu-ray has struggled is the old war with competing format HD DVD (a war Blu-ray eventually won). But more important, they say, is that consumers have just failed to understand the benefits of Blu-ray. King told me consumers don't realize that DVDs can be played on Blu-ray machines and erroneously believe they'll have to replace their entire DVD collection if they get a Blu-ray player.

Blu-ray won the format war over 3 years ago, giving it plenty of time to build momentum. And most consumers aren't worried about replacing discs; they worry that if they get a Blu-ray player and start buying expensive Blu-ray versions of new movies, the discs won't play in their friends' DVD players or in the backseat of the car. They're right. (As if to prove it, many titles are now offered in Blu-ray and DVD combo packs.)

The real reason Blu-ray players never went mainstream? Quite frankly they were never that good. 

There wasn't enough of a qualitative difference between the picture offered by an upconverted DVD and that of a Blu-ray disc. Sure, analysts and reviewers can tell the difference (most of the time), but it isn't a significant enough difference to make viewers sit up and take notice. It wasn't like the jump from VCRs to DVD players or from giant tube TVs to flat screens.

And now it may be too late for Blu-ray.

Recent research by analysts at NPD has shown that 77 percent of viewers still watch movies on disc, meaning there's hope for Blu-ray. On the other hand, after years of Hollywood studios fighting the trend, the future is clear: Movies and video are moving to online streaming services. No more video stores. No more discs and late fees. 

Simply rent or buy the movie online and get it via Netflix, Amazon or Vudu. It won't be as sharp a picture as that offered by a Blu-ray disc, but you don't have to get off the couch. Indeed, it's such a significant trend that the makers of Blu-ray players were forced to add the very streaming services they compete against to their own players.

Of course, few technologies disappear overnight, and Blu-ray is no exception. And it's likely that as DVD devices gradually wear out, Blu-ray players will become the majority as consumers replace older models. 

Or maybe we'll all just skip the Blu-ray upgrade and move straight to streaming rentals. If that's the case, my Blu-ray player could land in the closet before the end of the year.