Some Blu-ray disc (BD) players can be found at below $150 price-point in the U.S., but players are still expensive in Europe, especially on smaller markets. According to a market research firm, the situation is not going to change in the coming weeks, hence, this holiday shopping season will not become a breakthrough for the high-definition format on the mainstream European market.

“A shortage of cheaper Blu-ray players means that the sub-$300 machines that are already appearing on U.S. shelves are unlikely to materialize in Europe this Christmas. Combined with the recession, this means the format is unlikely to move much beyond the early adopter market this year,” said Screen Digest analyst Richard Cooper in a report.

Screen Digest has recently lowered its European Blu-ray sales forecasts for 2008 and beyond. Contrary to increasingly widespread suggestions, this is not due to ‘disappointing’ consumer take-up of the new format; instead, hardware supply constraints earlier in the year meant that the anticipated European BD promotional campaigns had to be reined in. Rather ironically, the unexpectedly rapid withdrawal of rival format HD DVD from the market in early 2008 caused a problem for Blu-ray by stimulating retailer demand for BD players when a severe shortage of an essential component meant that manufacturing could not keep up, according to the market research firm.

Although the supply of hardware is now assured, the industry was left with insufficient BD hardware to meet global retailer demand for entry-level players over Christmas 2008. The majority of the available players are being headed into the more developed markets of the USA and Japan, with the result that there will be fewer affordable players in European stores than the industry had hoped.

Meanwhile, as the economic downturn takes hold, a lack of entry-level players will mean that many consumers will defer upgrading their home entertainment system. This does not mean that they will stop buying and renting DVDs, which have now been commoditised in markets like Europe and provide a value-for-money alternative to an evening out, Screen Digest said. But it does mean that the shift to Blu-ray may take longer.

Mr. Cooper believes that consumers will start to acquire more Blu-ray supporting hardware in 2009 once the prices start to decline.

“BD hardware prices will start to fall in 2009, and in due course even price-conscious consumers will start upgrading, not least because the format’s backwards compatibility means they can continue to make the most their existing library of DVDs,” the analyst said.

It should be noted that hardware prices are not the only to blame for slow adoption rate of the high-definition media format: Sony PlayStation 3 can be bought for €399 ($514) and even get the ability to play video games in addition to Blu-ray disc playback. However, each Blu-ray movie costs another €17.5 ($22.5) when acquired online or €32.90 ($42.4) for some titles in retail, which is considerably higher compared to the price on DVD titles.

Packaged media formats have been the primary drivers of the movie business for many years, with video sales (initially VHS, now DVD and BD) accounting for 41% of studio revenues from worldwide movie exploitation last year. Rentals generate a further 10%. As a result it is crucial for the entertainment industry for the new format to get popular.