How quickly fortunes change. Analysts are adjusting their previous estimates for the large-screen LCD panel market and Blu-ray players downward as the economy continues to sour.
Earlier this year, LCD panel makers could not meet demand and were running at 100 percent capacity. Now, Taiwanese tech publication DigiTimes reports that production could be cut by as much as 20 to 30 percent in the fourth quarter of this year and into the first quarter of next year.
Meanwhile, digital technology research firm Parks Associates is lowering its Blu-ray DVD sales projections by 25 percent for the next few quarters. However, Kurt Scherf, principal analyst with Parks, said the firm is sticking by its long-term projections that annual Blu-ray player unit sales would jump to about 40 million by 2012.
Van Baker, a research analyst with Gartner, said he's not surprised at the decline. "The cutback on LCD is no surprise, because an awful lot of that goes into TVs, and TVs are going to get slammed this Christmas," he said.
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The problem is the cost of Blu-ray movies. Blu-ray requires whole new production lines, whereas HD DVD, the high-def format that Blu-ray vanquished, could be made on old DVD production lines. The studios typically pass the extra cost of Blu-ray production onto consumers, with the result that Blu-ray movies cost much more than regular DVDs.
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McCarron also backed up Apple CEO Steve Jobs's previous comment that Blu-ray for computers is "a bag of hurt." A Blu-ray drive in a laptop is $150, whereas a standard DVD is $20, and the license agreement between PC OEMs and Sony, the lead developer of Blu-ray, only adds to the pain.
"Prices are so excessive and licensing burdens are so onerous," McCarron said. "What it comes down to is the motion picture industry is paranoid about piracy to a degree they are creating a barrier of entry so high they are creating a disincentive for PC guys."