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Fire Sale or Incentive: Can Pricing Help HD DVD Survive? 01-14-2008
Following Warner Brother’s surprise announcement to back the rival Blu-Ray standard, the HD DVD camp canceled parts of their planned CES promotions and made a measured statement that they would “evaluate potential steps.” Wasting no time, it appear’s they’ve made a decision: the next generation DVD format war will now be a price war.
Beaten and battered by the decision of five of seven major Hollywood studios to bake their rival, Toshiba is striking back with price cuts and a planned marketing blitz. Toshiba said Monday that they will dramatically cut prices on their HD DVD lineup. The last expensive player, the HD-A3, will drop from $299 to $149. The high end unit in the product line will drop from $499 to $299.
Toshiba’s American Consumer Products VP of Digital Audio and Video, Yoshi Uchiyama said “while price is one of the considerations elements for the early adopter, it is a deal-breaker for the mainstream consumer.”
I agree with him. My question is: is it too late for a price cut to matter? Of major Hollywood studios, only Paramount and Universal remain in the support of HD DVD and they seem able to opt out on short notice. (Universal’s agreement has been confirmed expired). The rest of the big studios are with Blu-Ray now. And the absence of their support limits the amount of titles an HD DVD library can include. Even at a low price, will consumers accept that limitation and open their wallets? It’s hard to believe they will. No matter how inexpensive, why buy a format that doesn’t look like it will be around in a year? (As it stands, they’re already gambling that online distribution won’t replace high definition DVDs within the next 5 to 7 years).
It’s certainly possible (however remotely) that studios could shift their alliances again. HD DVD’s are cheaper to produce and offer some functionality that Blu-Ray does not. The HD DVD group also has deep pockets to provide incentives. But barring a change of that magnitude, Toshiba’s price cuts may look more like a closeout fire-sale to get rid of unwanted inventory than a true incentive.
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J . Green Jan 25
It is interesting that in these days if format wars that profit actually equals greed more so than ever before. The amount that both parties have put into capturing the market has nothing to do with anything other than control and “who wins.”
When you think about it with other formats such as SACD, did Sony die? The answer is no and they are making their money on licensing to manufacturers such as OPO who make up-conversion dvd players which carry the technology. So when I see this situation with the Hi def formats I am truly disgusted by the consortiums as they all stand to make a lot of money even if there were dual format production of the movie content. As it stands now this format war will do more damage to these companies than they realize as there were be fewer people to consider buying any new format the next time around.
Let’s consider the early adopters of blue ray who were force to buy a new player because of compatibility issues, or the HD DVD who were forced to buy a new player because of lack of format support. Make no mistake these company consortiums have caused more damage to their industries than they realize at this point. TO All OF YOU THAT GOT SUCKED INTO TAKING SIDES…shame on you for allowing yourself to be manipulated. Consumers should never have allowed themselves to be sucked in, there are issues with both formats.
I am totally fed up with this situation and am seriously considering giving up physical media for digital download which is closer than you think. Here the war will be about download speed and quality. Funny thing is, the studios will not have to worry because their content will still be being distributed. What can be said for these electronics companies who want to control markets.