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Video Format War: Blu-ray vs. Streaming

Blu-ray Discs are growing in popularity--but how long until streaming surpasses them?

Just as Netflix and its customers are ditching plastic DVD media, Blu-ray discs and players are growing in popularity. The two trends seem incongruous, so what gives?

The Blu-ray format is holding its own, say analysts--and that isn't likely to change anytime soon. What has changed, the experts note, is this: Streaming video services are becoming more reliable and more popular. The causes? ISPs are boosting their bandwidth capacity, more devices and services to pipe video to your living room via the Internet are coming to market, and Hollywood is increasingly offering popular on-demand content, making it more widely available.

High-Quality Video Still Counts

So how is the high-definition Blu-ray format bucking the trend toward streaming? For millions of videophiles, high-quality video still counts, and so do the advanced features that Blu-ray discs and players offer.

"For me, Blu-ray has great picture quality and awesome special features," says Dallas Rostad, of Fergus Falls, Minnesota. "And being able to go online and get information about the film is a plus."

Norm Bogen, a media analyst for In-Stat, estimates that about 18.5 million Blu-ray players will ship in 2011, up from 12 million in 2010. Sony, which makes Blu-ray players, is also bullish: Sony spokesperson Neil Manowitz estimates that the number of U.S. households with Blu-ray players will jump by 30 percent this year.

Betting on the Wrong Horse?

The real question, though, is whether Blu-ray has a long shelf life and is worth the commitment.

Movie buffs and TV fans want to know whether they should invest in Blu-ray technology--such as whether they should buy a portable Blu-ray player for the kids and stock up on Blu-ray movies, which typically cost more than their DVD counterparts (for instance, Transformers: Dark of the Moon will cost you $20 and the recently released Star Wars: The Complete Saga is $140).

Rob Enderle, an analyst for Enderle Group, sees the Blu-ray format sticking around for at least another 15 years--an unheard-of run for a technology to remain relevant. He says that streaming services will put the final nail into Blu-ray's coffin around 2025, when 100-megabits-per-second Internet access will be ubiquitous in metropolitan areas.

That isn't to say, however, that high-quality video-streaming technology doesn't pose a threat to Blu-ray. It does.

Streaming Video Not Too Shabby, and Getting Better

In-Stat's Bogen says that at the beginning of this year, media-streaming services such as Hulu and Netflix had 25 million subscribers. That number will hit 35 million by early 2012.

Video streaming is gaining momentum as a convenient way to watch movies and TV shows on an HDTV, a computer, a tablet, or a smartphone. Consumers now have at least a dozen ways to stream content to the living room (see "Netflix Inside: A Comprehensive List of Netflix Streaming Devices" for some examples), including the latest offering, which allows users to get Xfinity content via an Xbox 360 game console. Video options for tablets, meanwhile, are expanding to include apps from Blockbuster, Hulu, Netflix, and assorted cable providers.

One reason for the growth of streaming's popularity is that broadband speeds--wireless and wired--are increasing. The Verizon LTE network can handily stream high-quality video at 15 mbps. Charter and Comcast offer speeds up to 100 mbps.

The challenge for Blu-ray is that the profitability of the streaming video market is growing faster than that of the Blu-ray market. Studios are putting streaming profits ahead of visual quality.

Quality Comparison

Even the best streaming services that claim to be in HD stream at only about 1 mbps, or 5 to 10 mbps at the most, says Mark Waldrep, president and chief engineer of AIX Media Group. That's about the same as a standard DVD disc, which presents video at 4 to 8 mbps.

In comparison, a Blu-ray Disc pumps pixels at up to 36 mbps, says Waldrep. As a result, when you're watching 1977's Star Wars: A New Hope, for example, you can see the grime on C-3PO's golden shell and laugh at Princess Leia's bad makeup job.

One potential roadblock for streaming is that ISPs and wireless carriers attempt to curb bandwidth hogs by throttling speeds and capping downloads. For example, Verizon Wireless charges some of its customers an extra $10 per gigabyte if they exceed a predetermined gigabyte threshold. Under a Verizon plan, someone with a big appetite for feature-length movies could see their costs go up--or they could see the quality of their movie streams degrade--toward the end of the month.

[Related: "Phone Data Caps: Five Things You Shouldn't Do (Too Often)" and "Bandwidth Limits Make a Comeback")

"Because bit rates for HD movie streaming are under 10 mbps, including audio, your entertainment experience is dependent upon the bandwidth and integrity of your Internet connection and the capabilities of the playback device," says Danny Kaye, executive vice president of global research and technology strategy for 20th Century Fox Home Entertainment. "With Blu-ray you get consistently reliable, flawless playback."

So, will streaming ever catch up to Blu-ray? Ross Rubin, an analyst with NPD, says that one format is worth watching: The Vudu HDX format, found on Blu-ray players from Samsung and other manufacturers, matches the quality of a 720p cable video-on-demand movie. But HDX still streams at only about 20 mbps, well short of the 36-mbps bit rate for Blu-ray, says Rubin. And most streaming services, such as those of Blockbuster and Netflix, throttle the video quality to match your bandwidth.

The Future of Media

Waldrep says that movie studios either choose the extreme quality that Blu-ray provides or shoot for the lowest-common denominator in Web streaming--video bit rates that accommodate a 1-mbps bandwidth pipe.

For the foreseeable future, consumers will have a choice between Blu-ray discs and mediocre to good-quality video streams. Meanwhile, DVD sales will continue to nosedive. DVD sales in the United States dropped by 20 percent during the first three months of 2011 compared with the same period last year, according to a report by the Digital Entertainment Group.

Nevertheless, the Blu-ray format will not last forever. As Enderle predicts, streaming will overtake Blu-ray within another couple of decades when 100-mbps Internet access becomes commonplace.

By then, streaming's bit rates will exceed that of Blu-ray--and physical movie discs will finally go the AOL-disc route.


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