What Blu-ray's Blockbuster Popularity Proves

Movie rental giant says it sees a clear enough trend among its customers to pinpoint Blu-ray as its format of choice, adding clarification to the DVD wars.

Finally, there's some outside perspective on the so-called Blu-ray Disc vs. HD DVD format war.

Movie rental giant Blockbuster announced that it will roll out Blu-ray Disc movies for rental in 1450 corporate-owned Blockbuster stores in the United States. The decision followed a pilot program launched in late 2006, in which Blockbuster offered selected titles for rental and sale in 250 stores.

Seven months later, Blockbuster says it sees a clear enough trend among its customers to pinpoint Blu-ray as its format of choice. "This was a move that was driven by Blu-ray rentals outpacing HD DVD rentals 70 percent to 30 percent," says company spokesperson Randy Hargrove. "In our online rentals, it's favoring Blu-ray as well. We're not looking at this as a format endorsement; we're looking at this as following the demand of our customers. In the future, if that means adding more HD DVD titles, we'll do that as well."

The company will continue to offer both Blu-ray and HD DVD for rental and sales in the 250 stores that participated in the pilot program. However, the 1450 additional stores coming on board with Blu-ray will offer the discs for rental only (at least for now). Rental still comprise the majority of Blockbuster's business: first quarter global rentals revenue was $961 million, as compared with movie sales of $105 million.

Both formats will continue to be available through Blockbuster's online service--a world that is free of the space constraints that brick-and-mortar stores face. Likewise, for now this is a U.S.-only initiative: Blockbuster in Canada, for example, has been offering both Blu-ray and HD DVD in about 75 stores, and "they will continue to monitor the marketplace," says Hargrove.

Sony PlayStation 3 Effect

Blockbuster's own data offers the first confirmation outside of Sony that the company's PlayStation 3 is actively being used as a Blu-ray Disc player. "When we saw the Sony PlayStation 3 go into the marketplace, that's when we saw Blu-ray sales go up. PlayStation 3 has had an impact on the rentals at our stores," says Hargrove.

The PS3 impact makes more sense when you consider that PlayStation 3 owners already rent PlayStation games at Blockbuster. Picking up a movie seems like a natural extension of customer shopping habits.

Tempting though it might be, few think Blockbuster's actions alone spell the end of the format war. Says -- Parsons, chair of the promotion committee for the U.S. region of the Blu-ray Disc Association, "I think it would be presumptuous that this is the make or break in the format war. But it does reflect what we've said all along: if you have more content available, people will come. It's not spin, it's not hype--it's just reality. These are the titles people want to watch."

The impact of the Blockbuster announcement will depend on what happens next, notes Parsons. "If we see other retailers following their lead, that will be a very good thing for the format war resolution, and will be one positive outcome. Another would be that if consumers go to Blockbuster stores regularly and see nothing but Blu-ray disc titles on display representing the next generation, high definition version of DVD, that sends a strong message: They won't have a perception of a format war if all they see is Blu-ray."

Parson continued, "By making this call, [Blockbuster] is helping people see that Blu-ray is a safe buy, with so much support behind it. Even if they never even knew what Blu-ray was before, they will now."

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