Can Avatar send the Blu-ray technology into a new dimension?

Record-breaking blockbuster could prove crucial in format sales battle

It is probably ironic that a blockbuster movie should choose Earth Day on which to stamp its carbon footprint, however strong the film's environmental overtones. But 20th Century Fox, the studio behind Avatar, released the DVD and Blu-ray versions of James Cameron's sci-fi epic last Thursday with a perfectly straight face – and a deafening fanfare. HMV Oxford Street was transformed into a low-rent facsimile of the lush planet "Pandora" for yesterday's launch in the UK, while a replica of the film's "Tree of Souls" was unveiled in Hyde Park. Like its big-screen release, which was hailed as a coming of age for 3D cinema, Avatar is expected to be huge for home entertainment – specifically the burgeoning Blu-ray format of high- definition DVDs.

It took Avatar just four days to become the biggest-selling Blu-ray film ever, shifting 2.7 million discs in North America alone. On Sunday it surpassed the second-placed Batman sequel The Dark Knight, which has sold 2.5 million – and taken 16 months to do so. Four million more copies of Avatar were sold over the weekend in the standard DVD format. All told, that's $130m (£84.1m) in sales for Fox, almost double the domestic US box office receipts from the film's first week in cinemas last December. That makes Avatar the fastest-selling home entertainment release of all time in the US; it has already broken records in Germany and France, too.

Tesco, which on Sunday opened 180 of its stores at midnight to mark the release, expects to sell 20,000 Blu-ray copies of Avatar. In a prophecy that he doubtless intends to be self-fulfilling, Keith Metcalfe, the chain's home movie buying manager, called it a "historic moment in the development of the Blu-ray format – potentially the tipping point that many people have waited for to get their first Blu-ray player."

But is Blu-ray ready to have its day, or is this just another play from an industry frantically trying to keep people paying for its product? Is the format truly revolutionary, or is it just the MiniDisc of movies?

The high-definition Blu-ray format was developed in the early 2000s by a collaborative group of electronics manufacturers and movie studios, including Fox. By the time Blu-ray discs made it to market in mid-2006, however, they were not alone. HD-DVD, a rival high-definition format championed by Toshiba, had beaten them to the shelves by a matter of months. After a "format war" frequently likened to that between VHS and Betamax in the 1980s, Blu-ray won the support of enough major studios and retail chains to claim victory. In 2008, Toshiba announced the demise of HD-DVD.

A combination of the recession, internet piracy and the increasing popularity of rental services such as LoveFilm, meant DVD sales slumped by at least 10 per cent in 2009, hence Hollywood's relief at the boost in box-office takings from blockbusters such as Avatar. In the same period, however, Blu-ray sales increased by 167 per cent, and analysts predict that the format will forge a larger and larger proportion of the home entertainment market in the next five years. Today its share of US DVD sales typically hovers between 10 and 15 per cent, according to the market monitoring site blu-raystats.com.

Richard Cooper, a senior analyst at Screen Digest, said: "Adoption of Blu-ray has not been as wholehearted as the industry would have liked. But it's certainly beginning to be taken up, albeit by a high-end viewing niche: those people who have high-definition televisions over a certain size, and who really want to enjoy the full HD experience that you can only really get from Blu-ray. Avatar was always going to be a film that drove people towards Blu-ray, and it will also raise consumer awareness of the format."

Mr Metcalfe has compared the release of Avatar to the launch of The Matrix in 1999, which sold 3 million copies on DVD and significantly boosted sales of DVD players. Now that HD televisions are on sale for around £500, and Blu-ray players for less than £200, both are within reach of the average consumer – but only if they choose to upgrade their home entertainment set-up in these economically uncertain times. Unlike the early days of DVD, Blu-ray must compete with a variety of formats, not least digital downloads, both legal and illegal. DVDs have been the film industry's greatest source of income for some time and, as with its attempt to attract audiences back to cinemas with 3D, Blu-ray is its great white hope for home entertainment revenues. But while it may offer a high-end viewing experience, the evidence that Blu-ray can counteract the desertion to downloads remains insufficient to calm the nerves of studio executives. Like their music industry counterparts, they will surely have to imagine more novel ways to monetise their content in future.

"Statistics on illegal downloading are vague and unreliable," Mr Cooper said. "But consumers are currently spending more on Blu-ray than on digital downloading. A single download obviously doesn't cost nearly as much as a Blu-ray disc, but as a group of consumers we're still quite entrenched in a culture of purchasing physical media. Blu-ray still offers a premium product that's difficult to obtain elsewhere; downloading HD video is an overnight process for most people, so that slows the adoption of HD as a digital medium."

With broadband speeds increasing, it won't be long before downloadable HD becomes a more manageable prospect for consumers, at which point Blu-ray's days may be numbered. Sony, one of the format's leading developers, has just announced it is to stop making floppy disks – a reminder, if one were needed, that almost all technologies are transitional. Still, Avatar was originally sold on the premise that it had to be seen on a cinema screen, preferably an IMAX one, and in 3D. That campaign helped it to become the highest-grossing film of all time. Now consumers are being told that Blu-ray is the only way to watch James Cameron's blockbuster on a small screen. And for the moment, at least, we seem to be taking that advice.

On the losing side

Betamax

The Sony-developed video cassette was released in 1975. JVC's VHS format was released a year later and eventually defeated its rival, despite its inferior quality. The key to VHS's victory was the format's greater recording time: two hours compared to Betamax's one. As market share dwindled Sony accepted defeat in 1988 and started to manufacture its own VHS players. The last-ever Betamax machine was built in 2002.

MiniDisc

Another ill-fated Sony product, the MiniDisc was an attempt to replace audio cassettes as the editable music format of choice. The first player hit the market in 1992, and Sony, keen not to repeat the mistake it made with Betamax, allowed other companies to make their own versions of the device. Initially the format did very well, but was soon rendered obsolete by the rise of the internet and the MP3.

HD-DVD

Toshiba briefly went head-to-head with Sony's Blu-ray format for domination of the high-definition DVD market. Companies were forced to choose between the two, and as time wore on an increasing number – including Warner Bros – opted for the latter. Sony's Playstation 3 games console was made with a built-in Blu-ray player, giving the format another selling point. Shipments of HD-DVD machines ceased in March 2008.