This strong growth however is not enough to make up for the continued sagging sales of standard definition DVDs. In 2006, movie studios generated $25 billion USD in revenue for home video releases. In 2007 the number fell to $23 billion and Citigroup analyst Jason Bazinet believes that number will fall again this year to $21.4 billion.
Analysts also feel that consumers see less benefit in upgrading to Blu-ray then they did with the switch from VHS to DVD. Many consumers don't even have the necessary equipment to enjoy Blu-ray, including Blu-ray players, HDTVs or surround sound setups. Price of course is another significant barrier with most Blu-ray players costing about $400 USD, about $250 USD more expensive than even the best upscaling standard DVD players.
Sony Electronics CEO Stan Glasgow agreed in March that a price drop was necessary for more market penetration but that the necessary $200 price point wont be available until at least 2009.
“I don't think $200 is going to happen this year. Next year $200 could happen,” said Glasgow. “We'll be at a $300 rate this year. $299 will happen this year.”
Another factor is that Blu-ray movies usually sell at a $15 dollar premium over their standard definition counterpart (yes, even at Amazon) making the alternative not as pretty usually despite its much improved audio and video.