Big News for Blu-ray

Associated Press reports this morning that Blockbuster will announce that it only will stock Blu-ray high definition DVDs in 1,400 stores later this month. Having tested Blu-ray and rival HD DVD formats in 250 stores for the past year, the company reports that customers requested the Blu-ray titles 70 percent of the time. As a result, the company has chosen Blu-ray as the one that they will carry.

On the one hand, this seems to be a no-brainer for Blockbuster. If nearly three out of four customers want Blu-ray, they’d be foolish to stock HD DVD instead. And then there’s the fact that all but one of the major studios are releasing their films in Blu-ray format (as characterized by AP).

Okay, I’m frequently accused of spitting into the wind, but I’m going to do it again. I think Blockbuster is wrong. Sony has an excellent reputation for consumer electronics, and many of the early adopters have the disposable income to buy what they perceive to be the best — or highest status — equipment. Add in a bunch of PS3 owners looking to try out the Blu-ray players that are built in, and you have an initial market that is probably weighted in favor of Blu-ray. But the financial advantage still lies with HD DVD. The recent round of price cuts still leaves the entry level models of HD DVD players at about half the cost of Blu-ray, and as the prices get lower, more and more consumers will choose the less expensive technology, because they will be more price sensitive than the early adopters. And all but three of the major studios are releasing movies on HD DVD format.

AP also reports that the North American HD DVD Promotional Group believes that the success of some of the big hit films released on Blu-ray this year has helped skew the results.

There’s no doubt that Blockbuster’s decision will provide a big boost to Blu-ray, but I’m not ready to coronate it as the winning format.