Summary: Blu-ray players and software are among the 3D-capable product categories that garner the highest consumer awareness, but DVRs–combined with digital copy protection issues around HDMI–pose major challenges to market adoption.

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Throughout the recession of 2009, one of the few bright spots in the industry burned with the glow of a blue laser: Blu-ray players. Spreading beyond the base of the

In its early days, Blu-ray and HD DVD fought for the legacy of the DVD, one of the most successful consumer electronics products ever launched. Indeed, this year, the Blu-ray Disc format made substantial inroads against the DVD juggernaut that hindered its progress, even after its victory over HD DVD.

According to NPD’s Household Penetration Study, 81 percent of U.S. homes had a DVD player in 2010, down from 87 percent in 2009.

Blu-ray is also a stronger format thanks to its competitive origins. Answering the mandated connectivity of its rival, HD DVD, the Blu-ray Disc Association developed BD-Live. It was originally conceived as a way to bring online extras to the disc-playing experience, but manufacturers have leaped on it to make Blu-ray the first affordable media technology beyond video games to bring the promise of Internet connectivity to the living room.

Many Blu-ray players now support on-demand content services from companies such as Pandora Media, Slacker, Vudu, Amazon.com, Netflix, and several based on the RoxioNow platform. They are now being joined by Hulu Plus, the subscription-based follow-on to the popular Web aggregator of TV (and a smattering of movie content) from Walt Disney, Twentieth Century Fox Film, NBC Universal, and others.

Furthermore, Blu-ray has been at the forefront in literally taking home entertainment to a new dimension with the advent of 3D-capable players and content. Blu-ray players and software are among the 3D-capable product categories that garner the highest consumer awareness, according to NPD’s 3D 360 Monitor.

Stumbling blocks

However, as Blu-ray heads toward the mainstream, it has also inherited a less fortunate legacy from the DVD–challenges in getting a recordable format off the ground in the United States. One of the major stumbling blocks in the development of recordable DVD technology was a trio of major formats that stymied adoption, particularly at the critical time when more of the market was getting exposed to DVRs. Drive manufacturers ultimately supported all formats, but most of them found their homes in the drive bays of PCs.

There is no such format war for recordable Blu-ray, but DVRs–combined with digital copy protection issues around HDMI–pose major challenges to the prospect of Blu-ray recorders springing up below U.S. televisions. Moreover, with a focus on thinner, less expensive notebooks, Blu-ray drives have achieved limited penetration in the PC market. While Apple joined the Blu-ray Disc Association during its battle with HD DVD, an iMac with a Blu-ray drive is not among the billion configuration options it touts with the recently launched revisions to its all-in-one desktop, and the company has portrayed its optical-disc-free MacBook Air as presaging the future of notebooks.

Blu-ray will likely continue to show less of a convergence bias, in the sense that made DVD associated with the term “digital versatile disc”; today that convergence is happening online, not on physical media. Blu-ray players will continue to bring access to Web-based video services to the television, while competition from those same kinds of on-demand video services influence decisions to keep it out of most PCs, until the price drops to levels that don’t pose much incremental expense from DVD recorders.

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