The water the home-entertainment industry is treading is getting Blu-er.

That’s the news that came out of an Entertainment Merchants Association report this week about U.S. consumer spending on DVDs.

Studios celebrating Sony’s Blu-ray victory in the high-definition DVD format war in February were validated by an EMA estimate that spending on Blu-ray discs will overtake standard-disc sales by 2012. EMA said Blu-ray disc revenue will surge to $9.5 billion by then, up from $260 million last year.

In addition to the end of the format war, Blu-ray disc sales will benefit as U.S. consumers acquire Blu-ray disc drives at a faster rate than they did standard DVD players almost a decade ago. Blu-rays will reach homes largely through Sony PlayStation 3 videogame consoles, according to some estimates.

Blu-ray will be a bright spot in what appears to be a flattening market for DVDs. Overall home entertainment spending, which reached about $24 billion last year, will inch forward to $25.6 billion in 2012, or at a compounded growth rate of about 1.3% a year. By comparison, the U.S. population has been projected to grow at about 1% a year between 2000 and 2010, while inflation alone may account for 3% to 4% in overall annual spending increases.

Still, with studios ramping up Blu-ray releases to keep up with increasing demand for HDTV sets and introducing features like BD-Live interactivity and 3-D capabilities, greater consumer awareness of Blu-ray and falling prices for its players are likely to feed demand that will help Blu-ray disc sales cross what many analysts expect to be the $1 billion threshold this year.

“New generations of hardware and software, and alternative delivery channels, will ensure that home video and video games remain phenomenally popular entertainment options for the American public for years to come,” Bo Andersen, EMA’s chief executive officer, said in a statement.

source: http://www.tvweek.com/news/2008/06/bluray_takes_bigger_piece_of_t.php