Blu-ray and digital downloads: Best frenemies

LOS ANGELES--Rather than waging a war to make consumers choose sides between digital downloads and physical media, some content makers are calling a truce.

Instead of defending Blu-ray Disc's longevity as a physical format or predicting when downloads would finally reign supreme, they focused on how the two together can benefit consumers and content makers alike. It's as if two high school girls from opposing cliques just realized that if they team up, they're actually likely to attract even more attention and popularity than ever.

"It's a mistake to think it's either a physical (media) or an electronic (download) business," said Danny Kaye, vice president of research and technology strategy at 20th Century Fox. "That's arbitrary. They will coexist."

It's been widely assumed that digital downloads will wipe out physical disc media as soon as broadband Internet access becomes ubiquitous. But there are plenty of details to work out until that happens, such as consumers' continuing endorsement of DVD as an entertainment format.

NPD revealed at the DisplaySearch HDTV Conference here Tuesday that while DVD sales are flat, they still dwarf downloads. The old standard-definition disc format still stands tall over Blu-ray Disc, but that will change eventually. What's certain, is that most people who favor DVDs won't be skipping Blu-ray entirely to start downloading all their entertainment.

"Consumer habits change slowly," said Russ Crupnick, senior industry analyst for the NPD Group. "Discs are not likely to go away anytime soon."

The numbers support this. NPD asked 1,500 consumers that own high-definition TVs and subscribe to HD channel services how they spent their discretionary income on movies. Fifty-two percent said they buy movies or TV shows on DVD, 29 percent rent movies or TV shows on DVD, and 6 percent download entertainment, either to rent or own.

But, as Crupnick pointed out, it's also not a zero-sum game. For example, PS3 owners download games from the Internet, but they also buy physical console games, rent TV shows on DVD, and buy movies on DVD, according to NPD survey results.

Disney has apparently found its customers aren't in the habit of choosing sides either. Rather than targeting one group or the other, the company found physical media and downloading coexist "more than we expected," said Lori McPherson, general manager of Walt Disney Studios Home Entertainment.

"Consumers want to consume different movies and programs in different ways. To limit any of those things wouldn't be good for the industry," she said. "But as content creators, we have to be responsible about how that content is windowed so that we keep the industry healthy."

It's one of the reasons some content makers are trying out the Digital Copy initiative, where consumers buy a movie, and they get two discs: one that's a regular DVD, the other that has a copy of the movie in Windows or Mac OS compatible formats.

There weren't any sales figures provided to show how well this nascent initiative is doing, but it shows that the movie industry is far more adaptable to changing media consumption habits than, say, the music industry.

Of course all this truce talk is just temporary, until broadband is available to a majority of American consumers and downloading is as easy as popping a disc into a player.