This can’t be good news for Blu-ray: Singulus Technologies, a leading manufacturer of Blu-ray replication equipment, said Friday that sales of complete Blu-ray production lines fell sharply in the first half of 2009 and show no signs of improving over the second half.
“[T]he optical disc market shows little impulses for the remaining months of the business year 2009,” the company said in a press release announcing its first-half earnings. “The orders usually placed by major customers towards the end of the 2nd quarter have failed to appear so far. The expected total number of Blu-ray disc production machines in the business year 2009 will therefore remain below the sales realized in 2008. A recovery in the entire business activities has not yet materialized and we also expect a difficult 2nd half of 2009.”
Last year Singulus sold 31 Blu-ray lines, according to Bloomberg News, but sales have fallen by roughly two-thirds this year. If the current trend continues, Singulus would end up selling about 12 lines this year.
That doesn’t augur well for Blu-ray replication demand, despite industry efforts to sound bullish about the format.
It’s also not good news for Blu-ray IP owners Sony, Panasonic and Philips, who have been gearing up a licesning program to start collecting Blu-ray royalties from replicators. The three companies recently created a one-stop shop for device makers to license essential Blu-ray technology, and are planning to start knocking on replicators’ doors later this year, The Media Wonk hears.
Replicators in general are facing a difficult year. DVD sales are falling sharply, which is hurting revenues. Gearing up for Blu-ray production, meanwhile, is expensive. Blu-ray machines from Singulus go for about $1.8 million a piece. Putting in any significant Blu-ray capacity represents a significant captial investment, which is tough to justify when demand is uncertain and revenues are falling.
Many replicators are are likely to try to get by for now with racks of less expensive Blu-ray burners, using finished discs, and defer the larger capital investment in Blu-ray molding and production equipment until greater demand is locked in.
When that demand eventually materializes, of course, perhaps sometime in 2010, the capacity to handle it likely won’t be in place, which will create a whole new set of problems for the industry, but I suppose a problem in meeting demand is better than no demand.