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Why so blu? - October 20, 2008

While some analysts are predicting a "dramatic" drop in Blu-ray sales in the fourth quarter an into next year due to economic woes, the Consumer Electronics Industry says CE products remain "must-have gifts" for this holiday season, including relatively big ticket items. Based on its most recent survey of consumer purchase plans, CEA is projecting an overall gain in gadget sales this Christmas of 3.5%. Included within that overall figure is a 3.9% projected gain in "audio/video" components, a category that includes DVD players (including Blu-ray) and HDTV sets. That ranks it ahead of computers (-1.0%) but behind digital cameras (+6.9%), video games (+5.6%) and mobile phones (+11.0%).

"Certainly with the recession in the early 1990’s and the burst of the dot-com bubble, consumers spent less of their discretionary income on consumer electronics," CEA economist Shawn DuBravac said in a statement announcing the survey results. "However, there has been a change in sentiment as consumers now view CE as a necessity rather than a luxury. Although this year’s projected fourth quarter growth is down from last year, discretionary spending on consumer electronics is at an all-time high."

DVD players ranked 6th on adults' top 10 wish list gifts in the survey, but for teens, if it ain't portable they don't want it. The only non-portable item on their list is a video game console, which ranked 2nd (and which, in the case of PlayStation 3, includes a Blu-ray player).

Significantly, though, consumers told CEA they're more willing to cut back on hardware in response to tighter household budgets than on content. Overall, 58% said they would either cutback (38%) or eliminate CE purchases altogether (20%) over the next six months. That was almost twice as many as said they would cut back (20%) or eliminate (11%) their cable or satellite subscription, and higher than those planning to cutback (32%) or eliminate (24%) purchases of CDs, DVDs and downloads.

Media Wonk will take the survey results with a grain of salt, however.W hile Christmas is only two months away, economic events are moving very quickly and consumers' mood could brighten or darken quickly in ways that are hard to predict right now.
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