Sales of next-generation DVD players are not seen as likely to take off for another 18 months as consumers are still waiting for prices to fall and for the battle over two competing technologies to be resolved.
Referring to the high-definition DVD format war between HD DVD and Blu-ray, Forrester Research said in a report on Monday that while the two camps have "been fighting what seems to be a war of attrition for consumers' hearts and minds," few consumers are warming to either type of device.
Sony Corp. backs the Blu-ray standard against Toshiba Corp's HD DVD.
Hollywood and electronics manufacturers hope new high-definition DVDs, with better picture quality and more capacity, will revive the slowing $24 billion home DVD market.
But the format war has curbed adoption in a way reminiscent of the Betamax-VHS videotape format battle of the early 1980s, experts say.
Forrester analyst J.P. Gownder stood behind his company's view that Blu-ray would eventually win out over HD DVD, but he said the Blu-ray camp needs to cut prices.
A stand alone Blu-ray player sells for about $500, while HD DVD players cost about $400, and prices are expected to drop further as the holiday shopping season nears.
Gownder said Blu-ray's content advantages are somewhat diminished since the recent decision by Viacom's Paramount studio to commit exclusively to HD DVD. HD DVD hardware prices have also dropped into consumers' preferred price range, he said.
"Weakened by these developments, Blu-ray needs to offer a viable hardware model at the $250 price point by Christmas 2007," he said in the report. "The Blu-ray camp must also stave off further studio defections, and employ more aggressive promotional tactics to counter HD DVD's recent momentum."
Forrester said typical owners of high-definition televisions are not willing to pay more than $200 on average for a new HD DVD or Blu-ray player.
"Failure to alter strategy would open up Blu-ray to a possible upset defeat at the hands of HD DVD," Gownder said.