New blus $20 and under becoming standard?

[Batman1980]

New BD Releases Dropping Below $20 to Drive Mass Adoption
Posted November 11, 2009 04:31 AM by Juan Calonge
In the fourth quarter of the year, studios are sacrificing BD premium pricing and applying aggressive discounting for faster mass adoption of the format. Several major retailers now sell new BD releases at under $20 – barely above special-edition DVD releases, or even below. This is beyond what industry analysts expected at this stage.

To illustrate that one can look for instance at the Amazon price of the DVD and BD releases of the highest-grossing movies of the year and compare its prices on Blu-ray, special-edition DVD and single-disc DVD.
Transformers: Revenge of the Fallen (Paramount/Dreamworks): $21.99 / $20.99 / $15.99
Harry Potter and the Half-Blood Prince (Warner): $16.99 / $20.99 / $9.99
Up (Disney): $19.99 / $19.99 / $14.99
The Hangover (Warner): $17.99 / $20.99 / $15.99
Star Trek (Paramount): $21.49 / $22.99 / $9.99
In three of the top five biggest movies of the year, the BD was actually cheaper than the two-disc special edition DVD of the same title. One had the exact price, and one was one dollar more expensive.

Wal-Mart has also started offering new BDs of theatrical films at $19.96 their first week on shelves.

“There's a lot of aggressive discounting going on,” said Tom Adams, president of Adams Media Research. “We expect to see more of that.”

“There's something about that $20 market in business that doesn't change, despite 3% inflation in the last decade,” Adams added. “DVD sales at mass market exploded after falling below that $20 barrier. That seems to be the magic price point.”

According to a Home Media Magazine survey of pricing at Best Buy, Target, Wal-Mart and Amazon, the average shelf price of a new Blu-ray Disc of a theatrical film has dropped nearly $2 from the first half of 2009 to the second. And from the third quarter to the fourth quarter, the price has dropped nearly $3, based on pre-release pricing from the stores' Web sites.

“Premium prices were going to shrink,” Adams said. “But we didn't expect to see prices under $20 this year.”

Adams projects 9 million Blu-ray ready homes at the end of this year, up from 3 million at the end of last year. He said the format still has less than 10% market penetration, after discounting those PS3 gamers uninterested in buying movies.

Once the number of homes hits the 25 million to 50 million range, Adams said, studios should be able to safely phase out DVD completely.

“[Blu-ray is] going to be adopted, in our view,” Adams said. “It's the next player you buy. It will be under $100 for the holidays this year, and under $100 permanently starting next year. The adoption curve is healthy. It gives the studio a lot of options.”

Source: Home Media Magazine | Permalink | Relevant for:
I'm sure all the big collectors here like me noticed this, actually now expect blus to start coming out on release day at $15 and below next year to really force people to consider switching.

[Grand Bob]

Good news for those of us who have already spent thousands getting the format started.

[Terjyn]

I think this is more of a holiday promotion than a long-term standard, because frankly it doesn't make any sense long term. All you would do is make Blu-Ray less profitable than DVD...how does that make any sense?

I think they are targetting the wrong audience though. New releases are already doing fine, they need a draw to convince people to buy catalog titles.

[Batman1980]

The problem with cutting the prices on catalogs like that all the time is as far as I can tell catalog titles actually cost more to do. Re-mastering and all that fun stuff, i guess.

[BillieCassin]

Originally Posted by Terjyn

I think this is more of a holiday promotion than a long-term standard, because frankly it doesn't make any sense long term. All you would do is make Blu-Ray less profitable than DVD...how does that make any sense?

It makes a lot of sense long-term. There was actually another article elsewhere I saw this morning talking about the same thing.

Basically, Blu-ray is starting to attract more than early adopters now (people like myself who are new to Blu-ray). I just bought my first Blu-ray player a week ago, when I purchased my first HDTV. I'm a huge movie fan (I have about a thousand DVDs, not to mention laserdisc and old VHS) but I just wasn't going to invest in either format until the "format war" was over, and then once it was I waited until I was really ready to upgrade.

To get customers like myself buying, they really need to keep the prices down. No way I am spending $26-35 to buy a regular edition of a new film. Even $20 is steep to me - although for some films I'll pay it. With Netflix offering Blu-ray as well, there is even less incentive to buy.

Basically, they will make more money by lowering prices because the volume of sales will go up substantially. If you sell 100K Blu-Rays at $30 bucks, or you sell 1 Million at $18 bucks, you will obviously make a lot more money with the lower price.

This will be the trend going forward, prices will go down. Same thing happened with DVD which had a similar pricing structure when it was released. In any case, it's all good for us consumers - we will be paying less and less for Blu-ray, and it's in everyone's best interest for that to happen.

[Motown Luv]

Originally Posted by terjyn

i think this is more of a holiday promotion than a long-term standard, because frankly it doesn't make any sense long term. All you would do is make blu-ray less profitable than dvd...how does that make any sense?

I think they are targetting the wrong audience though. New releases are already doing fine, they need a draw to convince people to buy catalog titles.

+1

[The Dragon]

I don't care how long this lasts... If $20.00 or less is an option, I'm all for it!



What took the bastards so long?

[Terjyn]

Originally Posted by BillieCassin

It makes a lot of sense long-term. There was actually another article elsewhere I saw this morning talking about the same thing.

Basically, Blu-ray is starting to attract more than early adopters now (people like myself who are new to Blu-ray). I just bought my first Blu-ray player a week ago, when I purchased my first HDTV. I'm a huge movie fan (I have about a thousand DVDs, not to mention laserdisc and old VHS) but I just wasn't going to invest in either format until the "format war" was over, and then once it was I waited until I was really ready to upgrade.

To get customers like myself buying, they really need to keep the prices down. No way I am spending $26-35 to buy a regular edition of a new film. Even $20 is steep to me - although for some films I'll pay it. With Netflix offering Blu-ray as well, there is even less incentive to buy.

Basically, they will make more money by lowering prices because the volume of sales will go up substantially. If you sell 100K Blu-Rays at $30 bucks, or you sell 1 Million at $18 bucks, you will obviously make a lot more money with the lower price.

This will be the trend going forward, prices will go down. Same thing happened with DVD which had a similar pricing structure when it was released. In any case, it's all good for us consumers - we will be paying less and less for Blu-ray, and it's in everyone's best interest for that to happen.

You missed what I was saying.

If you sell the Blu-Ray for the same price as the DVD (or less), you make less profits on the Blu-Ray than the DVD. At which point you don't actually want people to switch to Blu-Ray, as it hurts your profits.

IE: It doesn't help me to go from 1$ profit per 1 million DVDs to 75 cents profit per 1 million Blu-Rays.

[Lepidopterous]

Originally Posted by Terjyn

You missed what I was saying.

If you sell the Blu-Ray for the same price as the DVD (or less), you make less profits on the Blu-Ray than the DVD. At which point you don't actually want people to switch to Blu-Ray, as it hurts your profits.

IE: It doesn't help me to go from 1$ profit per 1 million DVDs to 75 cents profit per 1 million Blu-Rays.

That's true, but whatever it takes to get blu-rays in more homes...

[Johnny Vinyl]

You can argue this until your blue in the face, but the bottom-line regardless of motive is plain as day...prices of Blu-ray discs are dropping and this will prove to be a long-term trend.

John

[Terjyn]

Originally Posted by John72953

You can argue this until your blue in the face, but the bottom-line regardless of motive is plain as day...prices of Blu-ray discs are dropping and this will prove to be a long-term trend.

John

No one is arguing that. What is being argued is whether Blu-Ray prices at DVD prices will stay. And that is far from assured, and in fact almost assuredly not true.

[Scenic Labs]

I agree with John72953 that this is a long term trend. Besides the cost of discs dropping at retail, the cost of replication is starting to be very competitive with DVD. And on a cost per GB, it blows DVD out of the water. We're planning some specials based upon replication costs that came in at much less than we expected. We literally didn't think that the pricing would be possible yet.

Now, I'm talking about BD25s. BD50s are still up there in price, but that will change too.

[SAIRUS]

Maybe, just maybe they'll wise up and release blu-rays before their DVD counterparts?

[Scenic Labs]

Sairus,
That probably won't happen just because of how quickly sales of DVDs are declining. It will literally be analogous to an album being released on CD and cassette simultaneously.

For one of the product lines I've worked with, the owners decided to release DVD versions of their products about a year after the Blu-ray versions. Even if it's a different format, you lose out on the new release momentum.

Now, what was very interesting was when we were able to do HD DVD combo discs. It was an interesting idea, but it fell flat. Buyers of the HD DVD combo discs wished they could pay less for a version without SD and the SD people who might have bought it weren't going to pay 2x the price of a DVD.

I think that this year will really be a tipping point in terms of adoption, which is going to be bad news for DVD, but good for BD prices.

[Sylin]

Originally Posted by Terjyn

No one is arguing that. What is being argued is whether Blu-Ray prices at DVD prices will stay. And that is far from assured, and in fact almost assuredly not true.

The studios knew that early adopters (and only early adopters) would tolerate $30-$40 Blu-ray disc prices for so long. As Blu-ray becomes more common, media prices will fall to what the market will bear, and DVD prices are the barometer for that.

Blu-ray is the official successor to DVD, which means DVD will eventually phase out the same way VHS did. Granted, you could still order some (by no means all) movies on VHS up until 2005-ish. But major retailers quit carrying VHS in 2002, a mere 5 years after DVD hit the market.

2010 is Blu-ray's 4th year. It is growing at a 20% faster rate than DVD did within the same time period (according to the laser manufacturers, who are comparing orders for Blu-ray devices from 2006-2009 vs orders for DVD devices from 1997-2000). Players are getting cheaper. HDTV's are proliferating. I'd say it's a sure bet we'll see lower BD movie prices moving forward. If studios do anything to keep their margins up, they'll probably include a DVD and a Blu copy in one package (a la Disney) for the time being as a way to trend consumers towards Blu-ray but not isolating their DVD audience.

[Afrobean]

Originally Posted by Terjyn

I think this is more of a holiday promotion than a long-term standard, because frankly it doesn't make any sense long term. All you would do is make Blu-Ray less profitable than DVD...how does that make any sense?

Because they see the lower profit in the here-and-now as worthwhile to push the format, because the sooner they can phase out DVD, the better. Pirating comes largely from DVDs, especially screener and review copies. Cut DVDs out of the equation and pirating will take a dip as well, especially the low-end piraters: people who rent things and rip or burn copies themselves. It won't stop pirating, no, but it will make it harder and less common.

New releases are already doing fine, they need a draw to convince people to buy catalog titles.

Catalogs aren't going to sell much better no matter what they do. Many of them are already priced VERY well. But with new releases, you get MANY hardcore Blu-ray fans who refuse to spend 30 dollars, 25 dollars, etc. on a title, even if it is new. I'll scoop up every new release I want on release day if I can get it for 20 bucks, but at 25, I'll get almost NONE and wait until they drop (if they ever do drop). As it is, I pre-ordered probably over a dozen movies in the coming months because of how cheap they were, when I never have bought so many new releases in such a small amount of time.

This probably is a special thing leading into the holidays, but don't expect the trend to completely reverse after the season is over. They may jump back up a little, but hopefully we can move beyond the time of Best Buy and Target selling so many titles priced at 30 bucks a pop.

Originally Posted by Terjyn

No one is arguing that. What is being argued is whether Blu-Ray prices at DVD prices will stay. And that is far from assured, and in fact almost assuredly not true.

The next step to this, once BD prices are "stuck" at the lower price is to ensure the price gap between the two remains similar. If new release BDs are sold for about 20 bucks, "special edition" new release DVDs need to drop down from about 20 to maybe 15~17 bucks.

Originally Posted by SAIRUS

Maybe, just maybe they'll wise up and release blu-rays before their DVD counterparts?

They tried this with Dance Flick, with obviously minimal success. Snow White did it differently and was MASSIVELY successful. High demand item, and market it as a DVD including a BD, rather than a BD with an extra DVD. If they did this with a blockbuster action flick, it'd be enormous.

[SAIRUS]

Originally Posted by Scenic Labs

Sairus,
That probably won't happen just because of how quickly sales of DVDs are declining. It will literally be analogous to an album being released on CD and cassette simultaneously.

For one of the product lines I've worked with, the owners decided to release DVD versions of their products about a year after the Blu-ray versions. Even if it's a different format, you lose out on the new release momentum.

Now, what was very interesting was when we were able to do HD DVD combo discs. It was an interesting idea, but it fell flat. Buyers of the HD DVD combo discs wished they could pay less for a version without SD and the SD people who might have bought it weren't going to pay 2x the price of a DVD.

I think that this year will really be a tipping point in terms of adoption, which is going to be bad news for DVD, but good for BD prices.

I suggest nothing too crazy of a time span. Something like a week. Hell, even releasing the blu on monday will get those compulsive buyers.

[surfdude12]

Originally Posted by Terjyn

I think this is more of a holiday promotion than a long-term standard, because frankly it doesn't make any sense long term. All you would do is make Blu-Ray less profitable than DVD...how does that make any sense?
I think they are targetting the wrong audience though. New releases are already doing fine, they need a draw to convince people to buy catalog titles.

i think you're right: if they lower prices for the next few months, they may lose $X dollars now, but by causing massive adoption a year or two sooner, they'll make $1000X dollars sooner. wise choice.

[Idioteque...]

Originally Posted by Terjyn

You missed what I was saying.

If you sell the Blu-Ray for the same price as the DVD (or less), you make less profits on the Blu-Ray than the DVD. At which point you don't actually want people to switch to Blu-Ray, as it hurts your profits.

IE: It doesn't help me to go from 1$ profit per 1 million DVDs to 75 cents profit per 1 million Blu-Rays.

With the recent price drop of Ps3, more people have gotten access to blurays. By the end of the next year, I have a feeling a lot more people will bluray players and people will opt to buy blurays. Don't forget recent blurays have begun to offer dvds and digital copies in their sets, so people rather have a bluray ready for the future rather than buy it again. And here's another thing, most studios are making dvds barebones and most people aren't going to get it if it's more expensive than a bluray or dvd player. Maybe they'll wait off till they get a bluray player.

[neos_peace]

Pricing Blu cheaper then expected isn't going to hurt anything. I disagree with the idea of saying it's going to hurt the $X amount.

Ex: say you sell a title at the $30 mark and say you get 100,000 units sold this equals out to be = $3,000,000, and say they make a profit of 10% this equals out to be a profit margin of $300,000.

now, with this calulation.

say they decide to sell a title for $20 just to get new audience's in. and say they sell and mere 75,000 more title's so you now have sold 175,000 now you have = $3,500,000 with the same profit of 10% this equals out to be a profit magin of $350,000.

end result is this with $10 off any given title and and gaining a certian amount of more sales they WILL make more money. It's mathmatically sound. Now granted, if they don't sell any more then what they did before or don't sell a certain amount more. Yes they will lose but that rarily happenes. Sometimes you have to take an IMMEDIATE hit per unit, to make a larger profit in the total sales. I work in the restarant business and very close with the management. In order to gain more you have to find a magic number that draws in more to sell more. Plus I have my own hobby business and it's good money managment. Yes you will take a hit on per unit or per pc sales but as long as you get more sales you WILL make more money.