The desperate, sort of hopeless quest to save the CD

July 30, 2013: 1:46 PM ET

Sony and Panasonic are trying to give more life to the old format.

Believe it or not, Blu-ray disc sales continue to climb.

Believe it or not, Blu-ray disc sales continue to climb.

FORTUNE -- Thought physical media was dying? Sony and Panasonic think otherwise.

Earlier this week, both tech companies announced an agreement to develop an advanced optical disc due in 2015 capable of storing over 300 gigabytes (GB) worth of data, according to The Wall Street Journal -- five times the amount Blu-ray discs can currently hold. Their rationale: as television technology migrates from the current 1080p picture quality standard to 4K -- images with roughly quadruple the number of pixels onscreen -- this kind of higher-definition content translates to larger files and demands, the case of physical media, much more space.

Doing so behooves Sony (SNE) and Panasonic (PCRFY). Popularizing yet another disc format could in turn spur sales of next-gen disc players from the two companies. That would be a boon in Sony's case, at least, given its electronics division continues to lose money.

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But will consumers want it? Proponents will argue "Yes, of course." And they'll point to Blu-ray sales as Exhibit A. While DVD sales tumble, sales of Blu-ray discs are rising. In fact, Blu-ray revenues jumped 28.5% year-over-year in the first quarter 2013, likely due to a combination of a growing content catalog and lower prices. Surely, that's a sign in Sony and Panasonic's favor, no?

In the short-to-medium term, sure. But as many have already figured out anecdotally, content downloading and streaming appears inevitable. As Kleiner Perkins partner Mary Meeker pointed out in a recent report, the number of global Internet users climbed 8% to 2.4 billion between 2008 and 2012 -- a figure that will only grow. Spending on digital distribution spiked 26% during the first quarter of 2013 compared with the time time last year. (Meanwhile, overall sales for packaged media, including DVDs, declined 10% last year.) And with content-streaming companies like Netflix (NFLX) continually adding subscribers, it's obvious the long-term involves more and more people cozying up to Roku boxes, Apple TVs and Internet-ready television sets than next-gen optical discs with ever-rising storage limits.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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