Blu-ray Pricing Needs To Drop To Meet Expectations, Piper Jaffray Reports (DLB, DTSI)

The standalone Blu-ray player market is a significant opportunity, “but the Blu-ray PC drive market is >2x the size and, therefore, more critical for companies like Dolby Laboratories Inc. DLB or DTS Inc. DTSI,” Piper Jaffray reports. “As a benchmark, looking at std def, in 2010 115m DVD players were sold, but 303m PCs shipped with DVD drives,” Piper Jaffray writes. “Blu-ray standalone player prices are improving and unit sales are rising, but we think there is reason to believe that unless pricing comes down significantly, Blu-ray PC drive adoption will remain slow and, ultimately, PC Blu-ray drives (and software associated with them) are the bigger driver (vs. standalone Blu-ray players) for Dolby and DTS. “We believe consumers are unlikely to pay a premium for a Blu-ray drive on a PC (vs. a DVD drive), so pricing needs to come down in order for Blu-ray PC drive units to meet expectations.” Dolby Laboratories closed Monday at $48.64; DTS closed at $45.32.