Blu-ray is facing its biggest challenge yet, and it's all because of the economic downturn, says Disney.

Speaking recently about the high-definition format, Lori MacPherson, GM of domestic home-entertainment at the comapny, said: "The economy is the biggest challenge, because there are just so many pieces to the Blu-ray puzzle that consumers face.

"You need the high-definition television set, you need the player, you need the cables, you need the software."

Diamond in the rough

The comments were made at the HD3 conference in Los Angeles this week, where a group of movie industry heads got together to discuss the future of the home entertainment industry.

MacPherson was also quizzed on DVD upscaling and whether this had anything to do with the slow sales of Blu-ray. "For me, it's the difference between costume jewelry and a diamond," she remarked. "Costume jewelry is nice, but I still want the diamond."

Other people who were at the event had similar monetary concerns, with Danny Kaye, ExecutiveVP Research and Tech Strategy at Fox, saying that: "The economy is hitting everybody. But we still look forward to a great fourth quarter."

Paramount's vice president of marketing Chris Saito explained that things are tough, but prices are dropping: "I know the economy is tough right now, but the manufacturers are really bringing down the price of their HDTV sets."