One of the most respected names in video disc player sales is calling it quits. The decision confirms what everyone in the movie industry hoped was not true: 4K Blu-ray will not rescue the dying disc business.
Oppo Digital gracefully exits
Oppo Digital, the high-end maker of disc players and audio equipment, is bowing out of the U.S. market after a 14-year run. Starting April 2nd, it will begin to wind down its manufacturing operations, though it will continue to sell inventory through its website. Oppo will continue to support existing products for an unspecified period.
Oppo’s demise is the result of the rapid contraction of the physical media market and the equally rapid expansion of cheap streaming media players. Both trends effectively quash any reason to purchase a new disc player.
Disc sales and rentals are plummeting
The end of the year is the biggest season for disc sales as people give the gift of a movie at the holidays. For example, in the US in Q4 2013 the industry generated 2.8 billion dollars in disc sales. Q4 2017 saw that revenue almost halve, generating just $1.5 billion. Electronic movie sales did not pick up the slack. Sales increased from $0.4 billion in 2013 to $0.6 billion in 2017.
Disc rentals did little better. Physical disc rentals more than halved, falling from $500 million in 2013 to $200 million in 2017. Digital rentals lost ground over the period too. Revenue fell from $550 million in Q4 2013 to $420 million in Q4 2017.
Whether disc player owners were using their device to watch or stream purchased or rented movies, they did a whole lot less of it in 2017 versus five years earlier.
Disc player ownership is falling
With such a dramatic fall in disc purchases and rentals, it is no surprise that disc player penetration has begun to fall. In 2012, 85% of US television homes owned a DVD or Blu-ray player. However, it looks like as those devices fail, consumers simply aren’t replacing them. The decline in penetration has accelerated in the last two years, falling to 72% in 2017.
Streaming media players were the last nail in the coffin
For a while, it looked like Blu-ray players were right in the sweet spot for consumers. At the beginning of the decade, Blu-ray disc availability and sales were expanding rapidly. The streaming video business was just getting started, and higher-end players like Oppo built Wi-Fi streaming into their devices. The consumer could buy one box to take care of all their home entertainment needs, outside of pay TV.
However, the continued evolution of online streaming made it difficult for a disc player to keep up. For Oppo, playing in the high-end market meant that a replacement device could cost $300 or more. Many consumers realized they could get the latest Netflix interface or new SVOD service more cheaply. All they had to do was buy a $50-or-less streaming media player, like Roku and Chromecast. Today, only 7% of Wi-Fi homes use a disc player to stream video, while 40% using a streaming media player.
No sales bounce from Ultra HD
Before the Ultra HD Blu-ray disc specification was final, consumers could buy a $149 Roku that supported 4K video. Netflix, Amazon, and Hulu began to make shows available in 4K before the first Ultra HD discs were released. Today, $50 will get a 4K streaming media player, and there are many shows and movies available in the format through top SVOD services. Recent movies can also be purchased or rented in the format from popular online movie stores.
The managers at Oppo are acutely aware of these trends. They realized they could expect no huge sales bounce from the arrival of 4K Blu-ray. There is no reason for most people to go out and buy a new 4K Blu-ray disk player at all: the precipitous decline in disc player sales will continue unabated.
Why it matters
Oppo Digital made the right call to exit the disc player business.
Disc sales and rentals will continue to fall.
Consumers will continue to watch online video through streaming media players, not their disc player.
Ultra HD will not reverse the decline in the disc as people can stream 4K already online.