First, it was Oppo Digital; now it is Samsung halting production of DVD and BluRay players. The moves illustrate how far the market for discs has fallen, but the decline is far from over.
Samsung stopping disc player production
In April of 2018, high-end audio and video device maker Oppo Digital announced it would exit the US market for disc players. This week, Samsung announced it would stop making Blu-ray players and abandoned plans to deliver a high-end 4K player original slated for later this year. According to the company:
“Samsung will no longer introduce new Blu-ray or 4K Blu-ray player models in the US market.”
The move represents yet another sign of the rapid decline of the video disc market in the US. It also paints a bleak picture for the future of UHD Blu-ray.
Why Samsung is backing away from UHD Blu-ray players
According to DEG, the number of UHD disc titles continues to grow, though the number available digitally is growing faster. As of Q4 2018, there are 445 UHD disc titles available and 682 4K digital titles. Part of the problem for UHD discs is that some studios are opting to skip the format altogether. For example, the movies The Favourite and Stan & Ollie will not be available as UHD discs but will be available in UHD through digital delivery.
The ability of consumers to watch 4K content is growing. DEG reports that 48 million US homes have a 4K capable TV, an increase of 61% over 2017. Further, the number of 4k capable players in consumer homes increased by 66%, to 13 million. However, most of the increase is likely due to 4K capable streaming media players like the Roku Ultra and Amazon Fire TV rather than dedicated UHD Blu-ray players.
Though the number of homes with a UHD Blu-ray player is growing it is likely a tiny market, particularly when compared to Samsung’s other businesses. Also, it looks like consumers are getting comfortable with streaming their 4K content. So, the need for a UHD Blu-ray player is fading. With these two points in mind, it is clear why Samsung decided to stop investment in developing new UHD disc players.
DVD and Blu-ray’s slide toward niche
It may have taken two decades for the LP to become a niche format after the introduction of the CD player. However, it looks like the DVD and Blu-ray disc are moving down that curve much faster. The penetration of disc players in US homes has fallen 2% to 3% per year since 2012. However, between 2017 and 2018 penetration fell 6%, to 66%. The data suggest that when a DVD or Blu-ray player breaks many consumers aren’t bothering to replace them.
To understand why consumers aren’t replacing their disc players we need look no further than disc sales and rentals. Disc sales have collapsed over the last five years. DEG says that Q4 disc sales revenue was $2.17 billion in 2014. By Q4 2018, revenue had almost halved, turning in just $1.24 billion. It is the same story for disc rentals. Revenue fell from $830,000 in Q4 2014 to $420,000 in Q4 2018.
In such an environment, investing in new Blu-ray player development would be a waste of money. Something which Samsung is apparently not willing to do.
Where is the bottom?
In the music business, streaming now dominates the revenue picture. Two-thirds of music revenue came from streaming in 2018. The rest was divided roughly evenly between physical and digital audio sales. In Q4 2018, sales and rentals of video in the US generated $2.8 billion while streaming subscriptions delivered $3.5 billion. It could be that disc sales and rentals have a way to go before their decline bottoms out.
Why it matters
Samsung is stopping production of disc players in the US for two reasons.
The small but growing UHD Blu-ray player market looks like it will be strangled by 4K streaming
Consumers aren’t replacing existing players when they break because they aren’t renting or buying nearly as many discs.