PORT WASHINGTON, NY, September 19, 2007 – Leading consumer and retail information provider, The NPD Group, reported today some reasons for the slower than expected start of high-definition video players and high-definition content sales (i.e., HD DVD and Blu-ray Disc). NPD's new High Definition Video Report Series examines consumer awareness, ownership, usage patterns, and intent to purchase high-definition players and content, since these new technologies were introduced last year. The report series provides important new insights into consumer perceptions about high-definition discs and players, and how owners are taking to the new formats.
The target audience for these next generation formats is current HDTV owners. Among those who do currently own HDTVs, half (52 percent) are familiar with the availability of high-definition DVD players, but only 11 percent expressed strong intentions to buy one in the next six months. Seventy-three percent of HDTV owners reported that their current traditional-format DVD player still works well for them, so they do not need to replace it; while 62 percent said they are waiting for the prices of high-definition players to fall.
Large numbers of consumers already understand what a high-definition player is, when it is associated with one of the two formats; however, consumers' knowledge of the HD DVD format is more prevalent than for the Blu-ray Disc format. While 29 percent of respondents were aware of HD DVD, just 20 percent had heard of Blu-ray Disc. Consumers who purchased a Blu-ray Disc player reported that they did so because they believed it was superior to HD DVD; while those who purchased an HD DVD player did so because the price was lower than a Blu-ray Disc player.
"The format war continues to be a primary operative issue when it comes to determining the long-term viability for high-definition DVD technology," said Ross Rubin, director, industry analysis, consumer electronics. "However, there are other more basic short-term obstacles blocking acceptance. As HDTV penetration continues to grow, manufacturers and studios will need to do a better job imparting the benefits of these formats to a consumer base that still reports a high satisfaction with the current DVD standard."
According to NPD, familiarity with these formats is primarily coming from exposure to marketing – especially television commercials. Forty-one percent of consumers who say they are familiar with Blu-ray Disc players and content gained awareness through ads and commercials. The same is true for HD DVD (42 percent). Nearly one-in-five consumers reported learning about the devices from friends and family.
"Falling prices and the arrival of new dual-format devices can alleviate consumer concerns about investing in a losing standard," said Rubin. "But, as was the case with proposed successors to the compact disc, both camps will lose if consumers don't embrace a higher-quality disc format. The clock is ticking as every major digital lifestyle stakeholder is blazing a direct path to the living room."
Difficulty in communicating the high-definition message is compounded by the relatively small amount of available content in either of the two formats. NPD's research shows that the overwhelming majority of DVDs purchased by high-definition owners are standard definition (64 percent); however, the primary reason consumers reported buying a traditional DVD was that the high-definition disc was not available.
"We're seeing some frustration with high-definition formats among people who've made the plunge, because they currently cannot get enough content to meet their needs," said Russ Crupnick, vice president and senior entertainment industry analyst. "These early adopters aren't choosing to evangelize high-definition players to others, in large part because they are unhappy with the available selection. The good news is that the industry can address this concern by releasing HD DVD and Blu-ray Disc titles more aggressively."
One encouraging signal for the industry is that existing HD DVD and Blu-ray Disc consumers are trading up from standard definition. According to NPD, early adopters plan to replace nearly a quarter (23 percent) of their current collections with high-definition format DVDs (either HD DVD or Blu-ray Disc), and there is an appetite for more. High-definition player owners would like to buy nearly two-thirds (63 percent) of upcoming new releases in high definition and only 37 percent in the existing standard DVD format.
"Once consumers become convinced of the superiority of high-definition, and find ways to navigate the format issues, there will be a great deal of pent-up demand for HD DVD or Blu-ray Disc content. The film and video industry must now focus on getting that message out to the 32 million HDTV owners who are currently just sitting on the sidelines," Crupnick said.
Methodology
For NPD's High Definition Video Player Report Series, more than 5,500 adults were surveyed between June 18 and June 28, 2007. Among the sample were 542 pre-identified owners of high-definition players and high-definition capable video game consoles.
About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit www.npd.com.