Why last week's fire sale was a mistake...

[Blu-Ray Buckeye]

Originally Posted by Oblivion

Not sure I agree with that theory - Toshiba is the only major HD DVD producer but we and they know that and it isn't going to change overnight. What the firesale does do though is entrench the brand. The latest figures - 100,000 standalones and 210,000 xbox addons in the last month - will account for 1 million+ disks before Xmas assuming 3 or 4 disk attach rates. That's alot and will encourage Blu only producers to add HD DVD to their devices to ensure sales. And I think in a dual format world we'll lose; studios will be drawn to the (alleged) cheaper production of HD DUD.

210k 360 add-ons in a month? You are going to have to link to that because I really don't buy it.

[dialog_gvf]

Originally Posted by bazie

The guy's estimate of toshiba making only 5 cents per disk is more likely an underestimate. If royalties are only 5 cents a disk...then think about the BDA...they split the royalties amongst several different companies....so each company gets what only 1 cent per disk? I think the royalities have to be much higher then that.

There is also the hardware and codec IP royalties in the players.

Each HD player has about $30 - $40 in royalties associated with it. DVD got under $100 because of royalty cheats, and I expect nobody paying the $20 per DVD player royalties is making any money on their sub $100 players.

Gary

[radagast]

Rob Enderle thinks that Toshiba can buy the war by continuing to sell players as cheap as this fire sale. I tried to reason with him, but of course I was casting pearls before swine. There are so many things wrong with that thinking and this sale mentality. If the BDA gets the point across that Blu-ray is QUALITY, then paying a few extra bucks will be worth it. There is always the impulse buyer that thinks that a low sale price can't be ignored, but those people end up wasting a lot of money in the long run.

A good example of the why the differences between dud and Blu are important can be found from what happened in the 1980s with electronic keyboards. There were some companies that produced a quality keyboard that had top-notch sounds in them. There were also companies that made cheaper keyboards that didn't sound as well but had a lot of bells and whistles to try and make up for the inbferior sounds they made.

Guess which companies are still around? Guess what used synthesizers from the 1980s are more sought after?

[Blu-Ray Buckeye]

Originally Posted by bazie

I definitely don't agree with that. Sure some of the HDDVD fan boys will pick up a second one, but of the 90k i am sure teh vast majority of them will be either new customers, of HDDVD buying for family members...so....new customers.

Remember most people arn't like the select few that frequent HDM forums and spend all their money on home theater.

Exactly, which is why your statement is so incorrect. Who was more aware of the cheap HD-DVD players than anyone else? People who follow the HDM forums. Who bought a lot fo those cheap players? People who were already in that camp.

Your 2nd statement actually tears your main argument down, it does not support it.

[mdm1699]

Originally Posted by JTK

Probably a bit early to gauge, but thus far I'm not seeing any signifigant software sales boosts to go along with these firesaled A2's.

In the end, it's still about content, folks.

These 90,000 A2's that a lot of DUDers bought for themselves as replacements or additional players still aren't going to play all the great, exclusive content that we're seeing now starting with the Spideys on through into January.

Content is king.

It is indeed!

[TauRus]

Originally Posted by radagast

Rob Enderle thinks that Toshiba can buy the war by continuing to sell players as cheap as this fire sale.

After all, all depends on Toshiba's definition of "winning" this war. Who knows, maybe they already consider HD DVD dead, but are fighting just to see Blu following the same way? I know at this point this is becoming less and less likely, but going back to their definition, maybe that is what they continue fighting for ...

[dialog_gvf]

Originally Posted by Oblivion

Not sure I agree with that theory - Toshiba is the only major HD DVD producer but we and they know that and it isn't going to change overnight. What the firesale does do though is entrench the brand. The latest figures - 100,000 standalones and 210,000 xbox addons in the last month - will account for 1 million+ disks before Xmas assuming 3 or 4 disk attach rates. That's alot and will encourage Blu only producers to add HD DVD to their devices to ensure sales. And I think in a dual format world we'll lose; studios will be drawn to the (alleged) cheaper production of HD DUD.

Sorry, sounds like HD DVD propaganda.

(1) Inflated numbers with no backing
(2) Claims of big HD DVD disc sales coming
(3) Universal players are the future
(4) Studios with choose HD DVD

Gary

[Steverhcp02]

Something still bothers me about this whole sale. I mean, with something liek this....why was Toshiba not screaming from the mountains about how development costs are so far down. Why, if this is a wal-mart endorsement for the future, has Toshiba or Graffeo or anyone commented on it.

It just seems to me that the HD DVD group and Toshiba/Universal have been very vocal about the "positives" of their format even while taking a beating.....now, we see the GREATEST "positive" in the history of HD DVD....yet not a peep from Toshiba, Graffeo about it? Not a peep about dev costs lowering so much so that they can offer this? something is fishy here about this whole scenario...I'm starting to see an dbelieve %100 this is a move Toshiba never wanted to make....they were forced......when a company single handedly holding up an entire formats future (IE toshiba stops making HD DVD players, HD DVD stops) is making insane forced decision, not well thought out or advertised with any PR or official announcement, the future is definitely bleak.

Had anyone asked me 8 months ago if we would see a $99 HD DVD and no PR or hype form Toshiba i would have laughed in your face....but alas, a $99 player, a $299 player now with 10 free movies including 300 and Bourne plus 3 of any choice in store instantly and 5 mail ins? This just isnt sound business.

If warner is truly evaluating things in the 4Q, they will see calm BD progress, 1.1 player, PS3 sales and movies that "shouldn't" sell well on HD, like Ratty and Cars (family not action)......If Disney shows its "family" movies move it shows the format isnt obtuse.......i dunno, im just ranting now..but if Warner is TRULY giving this thing a fair shake, i cant see how they can look at the hardware give aways, and success of Disney films and BD software and see BD at least staying even if not pulling ahead (IMO for Q4) and honestly side with HD DVD. Why would warner want to put its business plan with an unstable format giving away 10 movies just to move a player or dropping prices to $99 just to move a player.....it seem stoo unstable for a good business like WB to proceed with HD DVD, or at least move form being deutral.

[bazie]

Originally Posted by Blu-Ray Buckeye

Exactly, which is why your statement is so incorrect. Who was more aware of the cheap HD-DVD players than anyone else? People who follow the HDM forums. Who bought a lot fo those cheap players? People who were already in that camp.

Your 2nd statement actually tears your main argument down, it does not support it.

uh no....

I don't think there is any way that people who post on forums about HDM had any large impact in the total sales. Surely not 40/90k were due to HDDVD forum members who bought a second player for their house. That just doesn't make any sense.

[Blu-Ray Buckeye]

Originally Posted by bazie

The guy's estimate of toshiba making only 5 cents per disk is more likely an underestimate. If royalties are only 5 cents a disk...then think about the BDA...they split the royalties amongst several different companies....so each company gets what only 1 cent per disk? I think the royalities have to be much higher then that.

Also, toshiba is hoping to recoup a lot of that money back on hardware sales (if HDDVD were to win). With economies of scale, there is no reason why they can't profit off cheap HDDVD players and if they have manipulated it so that they are the sole manufacture out there there is al ot of money in hardware sales to be made even at cheap prices.

Not this early in the game. It seems you are bending over backwards here trying ot make this all seem economically feasible when the simplest answer is that it is not.

[mdm1699]

Originally Posted by TauRus

After all, all depends on Toshiba's definition of "winning" this war. Who knows, maybe they already consider HD DVD dead, but are fighting just to see Blu following the same way? I know at this point this is becoming less and less likely, but going back to their definition, maybe that is what they continue fighting for ...

+1, or buying time.

[bazie]

Originally Posted by dialog_gvf

There is also the hardware and codec IP royalties in the players.

Each HD player has about $30 - $40 in royalties associated with it. DVD got under $100 because of royalty cheats, and I expect nobody paying the $20 per DVD player royalties is making any money on their sub $100 players.

Gary

definately true, but Toshiba isn't having to pay those royalties. Likewise for the patent holders in the BDA.

This is exactly why toshiba is hoping to win out....if they can get it so they are mass producing cheaply due to economies of scale AND they don't have to pay royalties since they are the patent holder then they will be able to take the lionshare of the market of all new HDM players for the next couple years.

If HDDVD won out (not saying at all that this is the case) all the big CE's in the BDA would have to pay toshiba royalties to make HDDVD players and so toshiba would win doubly.

IF they win, it will be huge for them. The problem is, i do'nt think they will in

[atomik kinder]

Originally Posted by spam.curitiba

wrong. I bet at least 40% were already hd dvd owners...especially since over at AV$ every single hd dvd fanboy said they got one....

I think I would tend to agree with this, considering that everyone on the forums became excited about this, they only way you really knew about the $99 players was on the internet on the forums. Wal-Mart never said their price in their adverts, many people who saw the commercial were probably like oh a cheap DVD player. Unless they did know what it was. I would bet a lot of these were picked up as second players or as a standalone replacement for the 360 add on.

[Blu-Ray Buckeye]

Originally Posted by bazie

uh no....

I don't think there is any way that people who post on forums about HDM had any large impact in the total sales. Surely not 40/90k were due to HDDVD forum members who bought a second player for their house. That just doesn't make any sense.

uh, yes. Also the commentary really wasn't limited to people who "post on these forums" now was it? That's a spin on your part. The point is that people who are very aware of the format war and already have a player are the ones who knew the deal was coming.... doesn't mean they have to be active posters.

You also seem to think that 90k is a huge number. While it might be a high number for HD players in a week, it really isn't a lot considering just how cheap that is. It certainly doesn't start to scratch the surface of understanding the "average consumer". How many people do ya think went into a WM somewhere in America last weekend? 40,000,000 maybe. Do the math... the average consumer didn't notice.

[jkcheng122]

Originally Posted by Oblivion

Not sure I agree with that theory - Toshiba is the only major HD DVD producer but we and they know that and it isn't going to change overnight. What the firesale does do though is entrench the brand. The latest figures - 100,000 standalones and 210,000 xbox addons in the last month - will account for 1 million+ disks before Xmas assuming 3 or 4 disk attach rates. That's alot and will encourage Blu only producers to add HD DVD to their devices to ensure sales. And I think in a dual format world we'll lose; studios will be drawn to the (alleged) cheaper production of HD DUD.

i can't see other CEs joining Tosh in making HD DVD players to ensure sales for one reason, Tosh is losing money on the unit they're selling the most of. with a $200 player ($100 is only for one weekend) out there, other CEs making $400 players will not sell them. i don't know how long Tosh intends to keep this going. if they continue to sell at loss, they wont gain any CEs, if they bring prices back up to profitable margins, they won't sell players now that ppl are expecting much lower prices.

i'm hoping BD CEs can get a player out at $299, but it seems the cheapest player over the holidays is going to be at $399.

[mikem471]

Originally Posted by atomik kinder

I think I would tend to agree with this, considering that everyone on the forums became excited about this, they only way you really knew about the $99 players was on the internet on the forums.

There are plenty of "Black Friday" websites that had the info on them, not exactly High Def dedicated websites. I personally hope that the firesale bites HD-DVD in the ass big time, but I also won't bury my head in the sand and say that it didn't create a lot of new customers for that brand.

[dialog_gvf]

Originally Posted by bazie

If HDDVD won out (not saying at all that this is the case) all the big CE's in the BDA would have to pay toshiba royalties to make HDDVD players and so toshiba would win doubly.

IF they win, it will be huge for them. The problem is, i do'nt think they will in

You're making the assumption that there is any HD DVD market available for other CEs. Toshiba has crushed the margins out of HD DVD already. A few companies might try to sell a premium unit, but even the Chinese can't get into the low ball game Toshiba has set up.

At $30 - $40 per unit royalties, that's a mighty high level to start from for even hitting a $200 SRP. And no CE is going enter a market knowing they are going to lose money.

Gary

[mdm1699]

Originally Posted by Blu-Ray Buckeye

uh, yes. Also the commentary really wasn't limited to people who "post on these forums" now was it? That's a spin on your part. The point is that people who are very aware of the format war and already have a player are the ones who knew the deal was coming.... doesn't mean they have to be active posters.

You also seem to think that 90k is a huge number. While it might be a high number for HD players in a week, it really isn't a lot considering just how cheap that is. It certainly doesn't start to scratch the surface of understanding the "average consumer". How many people do ya think went into a WM somewhere in America last weekend? 40,000,000 maybe. Do the math... the average consumer didn't notice.

You tell em Buckeye! They just have lower expectations.

[bazie]

Originally Posted by Blu-Ray Buckeye

uh, yes. Also the commentary really wasn't limited to people who "post on these forums" now was it? That's a spin on your part. The point is that people who are very aware of the format war and already have a player are the ones who knew the deal was coming.... doesn't mean they have to be active posters.

You also seem to think that 90k is a huge number. While it might be a high number for HD players in a week, it really isn't a lot considering just how cheap that is. It certainly doesn't start to scratch the surface of understanding the "average consumer". How many people do ya think went into a WM somewhere in America last weekend? 40,000,000 maybe. Do the math... the average consumer didn't notice.

Fine I shall despin it if thats what you think and simply claim "I do not believe the claim that 40k/90k of the sales went to people who already had an HDDVD player in their house. Maybe I am wrong, but I just don't see how that could be the case. It doesn't matter how cheap something is, there is really no point in buying a second item for absolutely no reason. If it was 1080p and people were upgrading their old players it would be a different player, but the A2 is not an upgrade on anything people have.

And yes 90k isn't a lot but it sin't a small number either. Something like increasing the install base of HDDVD standalones by 20% in on weekend is pretty impressive. And they could have only sold more than this if they actaully HAD more then this. Most reports I have seen were that they had sold out at most stores, usually on friday. Admittedly this is a limited sample size, but I doubt very much they had much more then 90k avaliable to sell.

[tqlla]

I dont think it was a mistake. Given their availible options, it was there only move... other than to lay their King down.

I dont know how much it will help though.
1) a decent chunk of sales goes to previous HDDVD player/add on owners.

This was after all a "secret sale"... not a sale that the public really knew about.

2) People who are now aware of HDDVD after the sale... are also aware that the player cost people $100. They wont want to pay $200 for it now. Maybe $130 or so, but 2x the sale price?

3) New owners who paid $100 for a player. How will they react to $25-$35 discs?