Electronics Manufacturing – M528

Assignment 2.

The market value and forecast of ‘Blu-ray’.


Since its release ‘Blu-ray’ has been an interesting contender in the High Definition (HD) market. ‘Blu-ray’ has already taken a large proportion of the market, and it looks likely that it will continue to expand. It is likely that ‘Blu-ray’ and similar blue laser technologies will continue expand until the DVD is almost completely replaced. There is another factor in that there is a competitor in this race to replace the standard DVD, which will significantly affect the selling points and potentially the market value of 'Blu-ray'. I predict that ‘Blu-ray’ will take control of the largest sector of the market (The high end of the market, where consumers are willing to spend extra money on added functionality and better quality), and share a few of the smaller areas of the customer market with its leading competitor. 'Blu-ray' should end up taking control of the majority of the market (Around 80% to 90% control over the entire market currently completely controlled by the DVD), especially if the prices continue to fall on the 'Blu-ray' players and storage medium.

The initial competitor for the High Definition (HD) TV market was HD DVD’s, but these types of players were closely followed into the market by the ‘Blu-ray’. With these two opposing, incompatible and totally different types of storage medium entering the market everyone is wondering who to support. With companies such as Sony supporting Blu-ray, and Microsoft supporting HD DVD, one can almost feel the tension in the air with this new technology. It is unlikely that either of the two competitors will take entire (100%) control of the market due to the fact that there are many HD competitors entering an existing market currently controlled by DVD’s. This means that some people will prefer cheaper alternatives, whilst the standard DVD will try to retain at least a small share of the market (Around 5% to 10%) due to people unwilling to upgrade to the new technology.

The battle between HD DVD and ‘Blu-ray’ has been compared to the Beta max, VHS battle of the late 1970’s. This paper will investigate some of the main factors of VHS’s success, and attempt to see if it is possible to improve the accuracy of the forecast by using this previous example. To do this the similarities and differences between the two battles must be discussed, along with how accurate an estimation this previous battle will provide.

First the battle between HD DVD and ‘Blu-ray’ must be analysed for a comparison to be made, and to try to deduce which defining factors of each technology will determine their resultant place in the market. ‘Blu-ray’ has a more expensive startup cost, but despite this its market value is increasing with ‘Blu-ray’ players outselling HD DVD players, but is this enough to say that HD DVD’s will disappear completely, leaving the market to be completely controlled by 'Blu-ray'?

Why a new technology is necessary

The first thing to consider is why this new technology is necessary, and why is the standard DVD no longer sufficient, as if it were then no form of HD technology would make it into the marketplace. With the advent of LCD screens the screen sizes have greatly increased over the past few years, with 32, 42 and even 50 inch screens becoming commonplace. This has meant that the standard pixel size is insufficient (Wikipedia, 2007, HD-Television), as the TV’s have become larger. In order to improve the quality of the picture, the amount of pixels have had to increase vastly from a couple of hundred to a couple of thousand pixels. This is the origin of HD, which is where the amount of pixels in a screen are usually in the thousands range. In order to provide all the information for each pixel to be correctly coloured large amounts of information need to be stored and transferred.

The basic storage capacity of the standard DVD disk is 4.7 GB (Howstuffworks, 2007, How Blu-ray works), with the dual layer version storing 8.5 GB. This is totally insufficient for HD television, where 15 GB would provide under 3 hours of viewing (Depending on encoding format), which is the minimum length of most movies, including trailers and outtakes. This means that the DVD needs a replacement, in the form of a storage medium that stores at least 15 GB. The two most likely candidates to fulfill the replacement requirement are HD DVD and ‘Blu-ray’.

At the moment DVD’s are still the largest player in the home entertainment market, but the wind of change is in the air with the new Blue laser technology. It is important to understand the principles behind the new technology, along with the basics behind how it works, as this promotes understanding of the benefits of the Blue laser technology over the standard DVD technology. It will also show any other benefits of the new technology, over and above the additional storage capacity.

Blue laser light technology, advantages and disadvantages over the standard DVD

Blue laser technology is a new and exciting way of storing information. Unlike its counterpart, the standard red laser disk, it is able to store over five times the amount of information. This is not the only advantage of the blue laser technology, as the new technology offers new and improved levels of interactivity (Wikipedia, 2007, Blu-ray). With the new blue laser technology users should be able to connect to the internet in order to

The basis of modern disk technology is that all the video and audio information is stored in pits (Areas on the disk where the light will pass through and not be reflected back, forming the 1 and 0 digital data transfer structure), which are arranged in spiral grooves from the center of the disk, leading out to the edge of the disk. The amount of data on the disk is determined by how closely packed the pits are. The more closely packed the pits are, the more accurate the laser reading the information needs to be.

The blue laser technology is simple in theory, as blue light has a shorter wavelength (405 nanometres) than red light (650 nanometres), it is able to give a more accurate reading of a specified area. The blue laser technology also has a smaller track pitch (The amount of room necessary between each pit is only 0.32 microns, which is sufficient to read the difference produced by the pits. Previous red laser technology needed 0.74 microns.) This information is shown in the picture below which is sourced from Howstuffworks (2007, Building a Blu-ray disk), which illustrated that more information can be stored on the same area using the Blue laser technology.

DVD Vs Blu-ray Construction

Due to the fact that the blue light has a shorter wavelength, the area on the disk that can be read is much smaller, thus allowing for much more information to be stored in the same space. There are two main competitors using this technology, the HD DVD which was the first on the market, and ‘Blu-ray’ which gives superior storage amounts, but has other pitfalls. The storage comparison is more aptly described by the graph below, sourced from Howstuffworks (2007, How Blu-ray works), which shows the size of the storage medium, the amount of standard definition viewing time and the amount of High Definition viewing time for the Blue laser technology over the standard red disk.

DVD Vs Blu-ray Capacity

It is clear to see from the above graph that the blue laser technology far outweighs the standard red laser disk in terms of the amount of data that can be stored. It is also noticeable that there is no attempt to even quantify the amount of HD viewing achievable by the standard disk size, as the viewing time would be so short it would be totally impractical to use it for this purpose.

Another advantage of the Blue laser technology is that it has a higher data transfer rate of 36 megabits per second (Mbps) compared to current DVDs which have a transfer rate of 10 Mbps. This means that a Blue laser disk could record 25 GB of data in around an hour and a half.

This all contributes to the inevitable result of the standard DVD being almost completely replaced in the marketplace. The reason the term ‘almost completely’ is used as the common DVD has been the most successful form of home entertainment storage medium in history, storing films, music and games. It can be used on both the computer and a traditional DVD player, and all of this means that it will be very difficult to replace completely. The two most likely candidates must be considered, with the introduction to the two technologies in order to appreciate the manufacturing backgrounds of the two technologies competing for the market, at the manufacturing is the thing that sets these two technologies apart most.

HD DVD, the technical information and suitability of the technology

The High Definition, Digital Versatile Disk (HD DVD) was initially designed to be the successor to the standard DVD format (Wikipedia, 2007, HD DVD). It can store about three times as much data as the standard DVD (15 GB per layer instead of 4.7 GB). The HD DVD standard was developed by Toshiba and NEC. On the 19th November 2003, the DVD Forum voted to support HD DVD as the high definition successor of the standard DVD. At this meeting, they also renamed it HD DVD, as it had previously been called the "Advanced Optical Disc" (AOD). The HD DVD uses a similar technology to ‘Blu-ray’, utilising the shorter wavelength to increase the amount of information that can be stored on the disk. This is where the similarities end, as the amount of potential information stored by Blu-ray is far greater than that of the HD DVD, however the current production lines can be easily modified from DVD to HD DVD production. The main difference in the amount of information that is stored by the two differing types is due to the formats they use to store information, this will be discussed further in the comparison section. Below is an image sourced from Toshiba. (2006, How does HD DVD work?)

How HD DVD Works

‘Blu-ray’, the technical information, suitability and manufacturing techniques of the technology

‘Blu-ray’ is a new technology devised by Sony (Wikipedia, 2007, Blu-ray), and due to its encoding types and other advances is able to store significantly more information than HD DVD’s. The information is stored on a thin sliver of material 1.1 millimeters (mm) thick (Howstuffworks, 2007, Building a Blu-ray disk). Traditional DVDs and HD DVDs are made by injection molding two 0.6 mm disks, applying the recording layer to one of the disks, and then gluing the two disk halves together, with the recorded data sandwiched between the two layers. ‘Blu-ray’ only uses a single moulded disk 1.1 mm thick, with the data recorded onto one side. Using only one moulded disk is much cheaper than using two separate ones, however due to the data being added to the surface an extra protection layer must be added to prevent against scratches. This balances the production prices out, meaning that the end price of manufacturing a ‘Blu-ray’ disk is the same price as that of manufacturing a regular DVD.

Blu-ray disk

Above is a photo of a Blu-ray Disk Read Only Memory (BD-ROM) being held up to the light, sourced from Howstuffworks (2007, How Blu-ray reads data), showing how thin it is.

With the basic information on the two differing technologies it is possible to see that both evolved differently and both have differing desirable qualities, but the most important thing is that they are both suitable for the new HD viewing. By comparing the two technologies in depth it will be possible to decide which one has the advantage in the marketplace. It will also be possible to compare the HD battle with the VHS, Beta max battle.

Comparisons between HD DVD and Blu-ray

The main advantage to HD DVD is that it uses a similar format to the traditional DVD and is thus able to be manufactured using the same equipment with little modification, which will be a saving on costs. The main disadvantage of HD DVD is that is unable to match the amounts of storage achievable using the ‘Blu-ray’ technology, and it does not have the interactive capabilities that are currently being offered by ‘Blu-ray’ (Sony Inc, 2007, Marketing war looms for duelling DVD formats). The main disadvantage of the ‘Blu-ray’ is that it is currently more expensive than HD DVDs, although its potential is generally greater than that of HD DVD.

In the table below sourced from Wikipedia (2007, HD DVD), ‘Blu-ray’, HD DVD and DVD are compared on varying factors to see what the differences are, and which media format has advantages over its competitor in specific areas. The Numerical Aperture (NA) refers to the amount of angles over which a system can accept or emit light. The larger the amount of angles that light can be emitted or received, the better for the Medium, as tilting or angling in the player will not distort playback.

Table Comparing Blu-ray and HD DVD

From the above picture it is possible to see that both HD DVD and ‘Blu-ray’ are both far superior to the previous DVD technology. It also becomes apparent that both HD DVD and ‘Blu-ray’ use a laser with the same wavelength of light in their new technologies. This is significant as this means that both the differing technologies have different capacities and functionality only due to the manufacturing process and methods for encoding the information on the disk. From the previous sections the main thing differentiating the two technologies is in the manufacturing process, where the data is stored in differing sections of the disk. This means that ‘Blu-ray’ can store much larger volumes of information, due to the fact that the surface being read is much nearer to the lens reading the information. This is shown in the increased storage capacity over HD DVDs, which need slightly larger tracks due to the fact that the stored information is below a layer, and thus also further away from the lens reading the information. The increased storage time also leads to increased playback times for ‘Blu-ray’, which is an important strategic advantage. This manufacturing feature also gives ‘Blu-ray’ another advantage in that it has a higher NA, which means that that it can accept or emit light over a greater angle, thus meaning that if the player is moved or the laser jogged, this is less likely to affect playback compared to HD DVD.

The next section that is compared is Audio, which is how the stored audio information is decoded and played back to the user. For HD DVD more of the possibilities are mandatory, meaning that the customer must use them, whereas ‘Blu-ray’ has the same abilities, however some of them are optional. This may mean that displayed HD DVD’s will have a higher minimum sound quality, however there will not be as much choice as with ‘Blu-ray’.

The maximum bit rate comparisons Show that ‘Blu-ray’ is much faster in terms of reading information from the disk, and burning information to the disk. This adds extra functionality in the form of being able to burn information to the disk whilst playing information from the disk. The improved transfer rate will also help to improve playback, so long as there is sufficient buffering capacity in the device playing back the information. The improved burning rate will mean that data can be quickly stored, which may prove important to people with limited amounts of time, making ‘Blu-ray’ more appealing than its HD DVD counterpart.

Most of the other comparisons show that there is little difference, however ‘Blu-ray’ does have more content protection, and selected regions. This is an advantage for HD DVD, in that the HD DVDs that are produced can be easily shipped all round the world, allowing for a quick response to the changing market, however it is rare for films to travel across the Atlantic. This may change as the lack of region encoding would allow customers to order unreleased films from countries where the films have been released at an earlier date.

Below is a picture sourced from Sony (2007, Blue Steal) simply comparing the main features of ‘Blu-ray’ and HD DVD , along with the main films that have been released in both formats, and the main corporate backers. This helps to show how various companies are distributing their support for the two technologies.

Basic Comparison

From all of the compared information it is possible to see that ‘Blu-ray’ has an advantage in the area of data storage, functionality and quality, whereas HD DVD has advantages in the area of cost, availability and the ability to recycle previous technology.

Other HD competitors

Other competitors in the HD market (Howstuffworks, 2007, Blu-ray competitors) include Warner Bros. Pictures who have developed their own system called HD-DVD-9. It uses a high compression rate in order to put larger amounts of information onto a standard DVD (up to two hours). Taiwan has created a Forward Versatile Disk (FVD), which is an improved version of the current DVD which has a slightly improved storage capacity over the standard DVD, with 5.4 GB on a single side. China has introduced the Enhanced Video Disk (EVD), which is another high definition disk.

As well as the aforementioned there are also professional versions of the blue laser technology. Sony has developed XDCAM for broadcasters and Professional Disk for Data ( ProData ) which is primarily designed for data storage (backing up servers for example).

These competitors are not widely known and usually only used for a specialised purpose, so will not be included in market comparisons for home entertainment, as they will not be applicable in this sector, or will not take up a sufficient amount of the market to be considered.

Looking backward to look forward, how does the VHS, Beta max battle indicate what will happen

The ‘Blu-ray’, HD DVD battle is somewhat reminiscent of the VHS, Beta Max battle of the late 70’s (Strategic Finance, 2006, Tools of the trade). In the end, the customers demand for longer recording times over sound and picture quality saw the end of the Beta Max. The main difference was that the VHS, Beta Max battle was for a new market at the time, whereas the ‘Blu-ray’, HD DVD battle is aiming to replace the most successful storage medium of all time, the standard DVD. Also, the customers needs have vastly changed form the late 70’s. No longer are people satisfied with being able to record one movie, the emphasis is on picture and sound quality, data storage, availability, functionality and cost.

Both the products are relatively level in the field of picture and sound quality, and were relatively level in availability until recently. The availability issue has been vastly altered in the past year by Sony’s release of the PlayStation 3 (PS3). This has interestingly encouraged people to buy the console for the high quality games, but has also put a ‘Blu-ray’ player into their house as well. In the fields of data storage and functionality ‘Blu-ray’ has a significant advantage due to the fact that the design lends itself to extra features such as internet compatibility and multiple recordings. The Improved size of ‘Blu-ray’ is one of its most publicised features, and if the battle were the same as that of the VHS, Beta Max battle the ‘Blu-ray’ would win hands down. There is also the field of cost, where HD DVD has a major advantage, due to the fact that an old technology can be recycled, thus reducing costs.

The cost factor is possibly the only reason that HD DVDs have not already ceased to exist, with the modern world being encouraged to recycle as much as possible. The mentality of recycling in order to save costs has leaked into this market keeping the HD DVD a viable option in this modern environment, whereas the old Beta Max did not have this advantage. This makes this situation much more complex than the old VHS, Beta Max battle, making it prudent to look not so far into the past at the initial DVD situation to help better gauge the situation.

Initially there were competitors in the DVD market, but a single standard was called for, and main traits were taken from the leading brands in order to form the modern DVD. The main reason that this cannot happen with the differing types of ‘Blu-ray’ are that they are totally incompatible. This is partly due to the different way of manufacturing the disk, but is mainly due to the differing standard of encoding the information. This means that both types will continue to compete until one of three things happens

If the first situation were to occur, a prediction could be made based on current information on the surviving technology, however the marketplace is not a stable environment. The adding of new technologies and varying consumer requirements can dramatically change, thus potentially changing the situation to suit previously unsuitable technologies. As an example, if global warming was not such and issue, nuclear power would have ceased to exist due to its instability, and it was predicted for some time before the issue of global warming that there would eventually be no nuclear power stations. Just as equally before this when nuclear power was first discovered it was thought that it would replace all other methods of power generation!

If the second situation were to occur, it may be possible to predict which consumer groups each technology would be marketing their product at, and the likely market sectors that each one would occupy. The final situation is inevitable, though it is difficult to predict when breakthroughs will occur making new technologies available. It is much more efficient to look at the potential new technologies, and the benefits offered by them, as it will usually take a long time for a new advance in technology to make it into the consumer market.

The current market for home entertainment

The first thing to consider is the market that the two types of storage media are entering, below is a graph sourced from Video Business (2007, C City plugs in HD DVD) showing the amount that international consumers spend on home entertainment.

Customer Spending On Home Entertainment

It is possible to see from the graphs that the DVD market is a billon dollar market, forecast to increase in coming years. The largest amount of spending in 2006 was in the DVD sales, which produced 16.5 billion dollars. This was followed by DVD rentals at 8.5 billion dollars, and trailing with a mere 1.5 billion dollars were downloads. From this it is evident that consumers are willing to spend large amount of money on DVD’s and will therefore be more likely to spend large amounts of money on HD TV.

HD DVD’s and Blu-ray’s share of the current market

HD DVDs were the first to the market, and due to this fact had the initial advantage. Since HD DVD started releasing HD DVD players, they have sold 200,000 players worldwide, however Sony have sold over one million ‘Blu-ray’ players (Video Business, 2007, C City plugs in HD DVD). This is a 10 to 2 advantage in favor of ‘Blu-ray’, which is a phenomenal success considering that it took longer for the technology to enter the market. The amount of a specific player in the market is an important factor, as the larger the amount of players, the more likely it is that customers will be buying films for them, ensuring the survival of the technology.

At the moment the HD DVD players and storage media are cheaper to produce, and this is displayed with the cost of HD DVD players and films generally being cheaper than ‘Blu-ray’ equivalents. This makes it even more impressive that more of the ‘Blu-ray’ players have sold, as the consumer is obviously willing to pay the extra money. This shows that the customer believes that HD DVDs are not likely to be a long lasting HD solution.

With the initial setup for 'Blu-ray' complete, the highly expensive initial price is slowly lowering to a price similar to that of the HD DVD players and storage media. This reduction in price just strengthens the current hold that 'Blu-ray' has over the market, as the HD viewing quality is becoming more affordable for the general public. It may be that companies such as Microsoft are forced to change their views on 'Blu-ray' players, as the storage media could offer significant advantages over HD DVD in terms of storage capacity, which would be very beneficial for computer storage, backup and transfer of large amounts of information.

‘Blu-ray’ does have a strong strategic advantage in the market in the form of the PlayStation 3 (PS3), as this new game console has an integrated ‘Blu-ray’ player, which has helped to bring the ‘Blu-ray’ technology into many homes all over the world. HD DVD has fought back by introducing an ‘add-on’ HD DVD player for the Microsoft XBOX 360. This external player can be purchased at an additional cost of around 200 dollars (Around 100 to 150 pounds).

During the period of January 2007, two 'Blu-ray' discs have been sold for every one HD DVD title sold (Video Business, 2007, C City plugs in HD DVD), this means that the advantage of extra 'Blu-ray' players is already paying off and if sales continue HD DVD will be forced to take the sideline in the market. Added to this only one studio, Universal, has not committed to the 'Blu-ray' format, while HD-DVD has yet to attract Fox, Disney, MGM, Sony, and Lionsgate (Sony, 2007, Blue Steal). This failure to attract strong studio backing means that HD DVD cannot reach its full market potential, thus leaving the only alternative, 'Blu-ray', with the advantage in the marketplace. All in all, 'Blu-ray' currently enjoys 83.3% of the current HD market, which is already worth in excess of several million dollars. With this market set to expand until it almost entirely engulfs the current DVD market (which is several billion dollars), this is a very comfortable position to be in.

HD DVD or Blu-ray to take control of the market

In considering the possibility that one or other of the technologies will become more dominant there are many factors to consider, such as

When it came down to cost, HD DVD is far cheaper, however ‘Blu-ray’ is slowly becoming cheaper. Due to this it seems likely that HD DVD has an advantage if cost is the main issue.

When it came down to the amount of initial startup work, HD DVD is far cheaper due to the recycling of DVD plant technologies. This also reflects in the above point that ‘Blu-ray’ is more expensive, and adds another issue of how recyclable the technology is. This is a large issue at the moment with global warming, and would be another reason that customers may choose to use HD DVD.

When it comes down to Storage capacity, ‘Blu-ray’ has an advantage, and if this were the VHS, Beta Max battle then the ‘Blu-ray’ technology would win control of the market. This illustrates how important this issue has been in the past, and may prove useful when predicting the outcome.

With functionality in mind, The ‘Blu-ray’ has many additional features such as internet connection, one touch download, and the ability to record whilst playing back at the same time. The lack of any additional functionality with the HD DVD gives ‘Blu-ray’ the advantage in this area.

When it comes down to sound and picture quality HD DVD has the best basic sound quality, however the ‘Blu-ray’ players have the ability for the customer to choose to match this sound quality, allowing them the ability to upgrade. For the picture quality, as mentioned earlier ‘Blu-ray’ has a far faster transfer rate, allowing for more checking before the picture is displayed, more frames per second, and potentially a much better quality picture. This means that ‘Blu-ray has the greater advantage in this section.

With availability, initially HD DVD players had control of the market, but since ‘Blu-ray’ players have reduced in price and the PS3 has been released, the amount of sold ‘Blu-ray’ players outnumbers the amount of HD DVD players with a 10 to 2 advantage. This means that the ‘Blu-ray’ currently have a larger proportion of the market, so revenue generated from ‘Blu-ray’ disk sales is likely to be greater than that of HD DVD sales. This means that ‘Blu-ray’ already has the long term advantage of a larger customer base.

Customers current stance in the market is mainly displayed by the much larger amount of ‘Blu-ray’ players that have been sold (PC World, 2007, High-def video superguide). Another indication that consumers are interested in the HD technology is the increase of sales of HD TV’s. The PS3 was a well timed incentive to incorporate many of the younger gaming generation into this area. This has allowed many people to get a ‘Blu-ray’ player in their house when they were only intending to get a games console. This means that 'Blu-ray' is currently enjoying 83.3% of the current HD market, and with spending increasing on HD technologies, is seems apparent that spending will be reduced on old technologies such as DVD's.

The predicted stance of the consumer market is a continued movement from traditional DVD’s to HD storage media, with the main focuses on storage size, quality and cost. For this reason, if one of the aforementioned technologies were to take control of the market it would be ‘Blu-ray’ that would stand a better chance of gaining control of the entire market (80% or above). This is based on all of the above mentioned reasons, where ‘Blu-ray’ has many advantages over HD DVD. The one factor that may sway the result the other way is the cost of ‘Blu-ray’, however the disk costs are constantly being reduced and are almost the same price as HD DVDs. It is far more likely that the consumer will pay a little extra for the additional storage capacity and improved functionality. However with the introduction of the first Blu-ray and HD DVD player, maybe there is room in the market for both types of medium.

For all of the above mentioned reasons and the fact that 'Blu-ray' currently controls 83.3% of the current HD market, if one of the two competing technologies was to take entire control of the market it is going to be 'Blu-ray' based on its current performance, consumer market, strategically positioning itself and the general abilities of the technology compared to HD DVD.

Future technologies and long term forecast

It seems that the battle may prove to be only sort term in the end, with companies such as Pioneer developing technologies for optical disks that will have a much larger capacity than current hard disk drives. Pioneer is developing an optical disk that could potentially hold in excess of 500 GB of data (Howstuffworks, 2007, Blu-ray competitors), using a similar principle to the Blue laser technology. The new lasers will use ultraviolet light, which has an even shorter wavelength than blue light. However new technologies tend to take a reasonable amount of time to make it into the market place, meaning that the Blue laser technology should enjoy a reasonable amount of time in the marketplace, provided no major breakthroughs are made in other relevant technologies.

It seems much more likely that neither technology will take complete (100%) control of the entire market, it seems more likely that the differing technologies will evolve their product to aim for a particular customer base where their technology lends itself. For this reason it seems more likely that ‘Blu-ray’ will take control of the larger proportion (80%-90%) of the high end of the market which caters for the consumers looking for superior quality, functionality and storage capacity, whereas HD DVD will aim to cater for the area of the market looking to find a cheaper alternative with similar results (Which will be around 5%-10%). The rest of the marketplace (Which will be around 5%-10%) will belong to the current controller, the standard DVD.


‘Blu-ray’ currently has a 10 to 2 advantage in the marketplace (Video Business, 2007, C City plugs in HD DVD), and is aiming its product at the high end of the market where customers are willing to spend more money in order to gain extra quality, storage capacity and functionality. HD DVD are aiming at the low end of the market where consumers are more interested in cost, but with the ‘Blu-ray’ technology slowly becoming cheaper, it is highly likely that ‘Blu-ray’ will infringe on the HD DVD market area. For this reason this paper has shown that is likely that ‘Blu-ray’ will continue to expand until it takes the largest majority of the market, thus causing its market value to increase dramatically over the next five to ten years, until it peaks when it has a majority control of the market. This means that ‘Blu-ray’ is likely to observe a similar peak market value to that of the DVD, but may not be quite as successful due to the fact that it will have existing competitors and may not be included in devices such as computers. It is then likely to be replaced in the long term with a new technology that is able to offer far larger capacity.

It seems likely that the 'Blu-ray' technology will be able to take control of around 80%-90% of the market for home entertainment currently controlled by DVD's in the next five to ten years. This will be at the peak period of this technology and is dependant on other technologies being developed not having any significant breakthroughs. It is also dependant on competitors such as HD DVD not being able to gain any strategic advantage in the marketplace. This is a large market taking around 25 billion dollars worldwide last year and predicted to take around 27.8 billion dollars by 2011. The other 10%-20% of the market will be controlled by HD DVD and specialised versions of the technologies, as well as the remnants of DVD. Although DVD will shrink significantly due to the fact that does not provide enough storage capacity, it is highly likely that it will retain around 5%-10% of the current market it controls in the next five to ten years. This is partly because of how many people currently have DVD players at the moment, but also because of the few people unwilling to upgrade. These values are based on the current market value of DVD's, the current market value of 'Blu-ray' compared to HD DVD, and the prediction that the consumer market will be interested in upgrading from DVD to an HD alternative for superior viewing quality.

It is essential that this market is controlled by 'Blu-ray' for the ongoing success, as this will provide yearly revenue, generating large amounts of profit for the controlling company. 'Blu-ray' has started well by initially growing quickly and outselling its closest competitor in the market, now it must start to inform the consumer of the benefits of upgrading to 'Blu-ray'. The continued reduction in the cost of 'Blu-ray' will help to provide a financial incentive to upgrade, reducing the market for DVD's to around the 5%-10% area in the next five to ten years. Another reason for DVD's not completely disappearing from the market is due to the likelihood that DVD prices will reduce vastly to cope with its customer base switching to the new HD technologies. The real question on everyone's mind is will 'Blu-ray' be the next Beta max? It is very unlikely, and looks like HD DVD is far more likely to follow in Beta max footsteps. The initial signs point to 'Blu-ray' being successful, eventually taking control of at least 80%-90% of the market, based on its current performance against HD DVD, so now the question should be how successful will 'Blu-ray' be, and will its success compare to that of the DVD?

Reference list

All information has been sourced from the sites below. Some of the sites have been used to check information obtained from other sites, and all the information has been read and referenced when used in the text.