Blu-ray economics 101

[JadedRaverLA]

Originally Posted by paidgeek

The player pricing debate is tough for me because I see it as a race to the bottom. If hardware companies can't make a dime (or in fact have to subsidize) in order to sell players, then where do they go from here? We have a symbiotic relationship between hardware and software. The fact that a companies pride can get the better of their sensibilities is a pity. Is a $200 price difference so much compared with the rest of the investements you make in your display or audio reproduction chain? To get a good HD video/audio experience you can easily drop $5K or more, does it make sense to fret over $200 for the device that will feed that system? I don't think so...

I agree, though I'm starting to have reservations. With HD DVD players retailing at $299, I really don't pay too much attention. When they're widely available in stores for $199 (and $169 on Black Friday), there are A LOT of people who would otherwise not care who may be tempted to jump in. Fortunately, I think that unless the HD DVD camp does domething major regarding disc pricing, most of those players will used (nearly exclusively) to play upscaled DVDs. But if Warner is really looking at player sales in Q4, it could be a big boon to the HD DVD format.

Personally, I think the $399 40GB PS3 is a great start at getting the Blu-ray players where they need to be, but basic standalone players need to be at that price (instead of $499), and, there needs to be some decent sales for the holidays bringing those prices closer to $300 to make sure Blu-ray dominates holiday sales.

Just my $.02. What do insiders think?

[quetzalcoatl]

Originally Posted by paidgeek

The player pricing debate is tough for me because I see it as a race to the bottom. If hardware companies can't make a dime (or in fact have to subsidize) in order to sell players, then where do they go from here? We have a symbiotic relationship between hardware and software. The fact that a companies pride can get the better of their sensibilities is a pity. Is a $200 price difference so much compared with the rest of the investements you make in your display or audio reproduction chain? To get a good HD video/audio experience you can easily drop $5K or more, does it make sense to fret over $200 for the device that will feed that system? I don't think so...

Where I agree with everything you said it is aimed at the early adopters. Not those that are on the fence or just looking to get into the game. The problem comes here in that they will sell every unit they put out at that price. And for every unit sold that is one more person that will buy the media and keep this war going. So every unit sold is a person lost, at least for now,to the red team. And because of this it somehow needs to be countered.

Or do you not see it this way?

[frank_t]

Originally Posted by paidgeek

The player pricing debate is tough for me because I see it as a race to the bottom. If hardware companies can't make a dime (or in fact have to subsidize) in order to sell players, then where do they go from here? We have a symbiotic relationship between hardware and software. The fact that a companies pride can get the better of their sensibilities is a pity. Is a $200 price difference so much compared with the rest of the investements you make in your display or audio reproduction chain? To get a good HD video/audio experience you can easily drop $5K or more, does it make sense to fret over $200 for the device that will feed that system? I don't think so...

Absolutely correct -- it's a race to the bottom. Why?

Because there's a lot of people at the bottom. They are the same people who make DVD so profitable today.

[mdm1699]

Originally Posted by paidgeek

DVD software is profitable, players are not. The reason we have a healthy business in DVD is partly the fact that the CE companies had their boon to make some money on players while we grew the business. You know, healthy as in support for advertising, retailer training, important stuff like that.

Agreed! There is no need to be irrational at this point. At the end of the day, the market has to be viable for all involved. Do you think that WB dual format stand is meant to protect their distribution channels? I don't see Time Warner shooting themselves in the leg. Cable is very profitable. Would Disney and Fox be dual format if they owned such delivery channels? There are so many interest jockeying for position.

[Wet1]

Originally Posted by frank_t

Absolutely correct -- it's a race to the bottom. Why?

Because there's a lot of people at the bottom. They are the same people who make DVD so profitable today.

To a point, I have to agree this is very concerning for the BR format. In the past I haven't been too concerned about HD-DVDs hardware pricing advantage, but it's looking like it could bite into a significant piece of market share during Q4.

HD-DVD now has almost half of the studio support these days and to hear of hardware prices under (some well under) $200 (plus many freebies), this should stimulate a lot more consumer interest in that format. Yes, BR has made big gains this year. The BDA has also lost some critical studio support and with Walmart selling HD-DVD players on end-caps for a small fraction of the price of the cheapest BR hardware, the tables could turn very quickly.

I understand your logic regarding the $200(+) difference is a small amount to pay when it comes to the bigger fish playing in the A/V world, but I know very few average folks with $5k+ systems like many of us have... this is simply not mainstream. I do expect to see many sale prices in the $150-$175 range for HD-DVD players during Q4... that's mainstream pricing to go along with the mainstream sub $1k pricing on flat panel displays that are selling by the millions.

The BDA should be concerned about this. Even I will likely adopt HD-DVD sometime within the next 6 months as I'm suck of this BS war... and HD-DVD is making it very inviting to test the waters.

[Elandyll]

Honestly Paidgeek and Penton, I think everyone appreciates the effort made by Sony with a PS3 @ $399 including a Spiderman3 (genius move, educating the average gamer into knowing that his/her console is also a great next gen HD player), but imho the BDA camp absolutely need an entry level player between $299 and $349. Make it a 1080i only player, with only Dolby digital 5.1 support or something, but there need to be a complete lineup of products for BD.

Last time I went to BB, I checked the HD player section.
First, annoyed, I saw that the HD Toshiba TVs were bundled with HD DVD players for free. Meh, giving away stuff only cheapens it, but still.

As for the players, there were two Toshiba HD DVD models, one at $299 (A2 I think) and one at $399. Both were not looking too good (in the dark, dusty), and were outnumbered by at tleast 4 or 5 differnt Blu-Ray players from $349 (open box) to $499, on top of having a display showing Disney Blu-Ray next to them. At that moment, being more of a perfectionist, I thought, HD DVD looks more like a cheap version of HD player.

-But- the lineup didn't look complete on the BD side. The low end was open box stuff. The only way to choke HD DVD on this market is (while not stepping down to a $200 imho, at least not yet) to have a sub $399 player available as entry level.
$349 would do it, but $299 would be perfect.

With XMas coming, Toshiba/MS are getting desperate (see the Xbox Add on offers, and the $198 HD DVD players - literally insane). Their practices probably won't tip the war over, but they might transform what is now a Blu-Ray lead to a stand still with two equal sides in terms of market shares, only delaying the end of this stupid format war...

[Sonny]

People need to see SONY S300 BD players for sub 300$ pricing this year or it could get very ugly I want Universal in BD or I mite end up with a 170$ hd-DUD player this is getting old

[Go Blu]

As you can see the cheap players should def be a serious concern that needs to be addressed within the BDA.

As you can see there are a number of Die hard Blu's even thinking about going neutral because of the cheap players imagine the general public that is much less biased nor influenced already.

I myself will not be influenced.
I will stand by Blu; the studios will come around, give it time.

[Luis_A51]

Originally Posted by JAGUAR1977

Do Blu-ray have any plans to counter a $169 HD-DVD player this Q4.

Even Blu-ray insiders have to admit a $200+ price differnce is a little too much for comfort?

Isnt that a Black Friday sale? Im from Canada, so ive never been to one, but isnt that the day for OUTRAGEOUS sales in every store? The kind of thing that makes Americans trample people to death?

A 1-day sale isnt a huge worry Id say. BD could very well have their own drastically reduced black-friday sale. Even if they dont, a 1 day sale wont save their format.

[Wet1]

HD-DVD will routinely have hardware on sale in the US for $150 to $200 (plus freebies) during this holiday season, you can bank on that.

[ottscay]

Originally Posted by Wet1

HD-DVD will routinely have hardware on sale in the US for $150 to $200 (plus freebies) during this holiday season, you can bank on that.

It won't matter, because most consumer's have no interst in HD DVD. Formats do not sell just because they are cheap, and products with interest behind them sell well even at higher prices. What I'm curious about (this is the question portion of my post...) is how standalone sales have gone in the U.S. the last few months. BD standalones caught and superceded HD DVD standalones for at least one month this summer (despite their higher price) and niether side has said anything sense then, so I assume they are neck and neck.

If BD standalones can take the lead in Q4 despite the price difference, the war is over, and BD hardware companies can stay profitable. Toshiba's attempt to drain all profitability from the market should not be seen as a plan to be copied!

[Farscape1]

Originally Posted by Sonny

People need to see SONY S300 BD players for sub 300$ pricing this year or it could get very ugly I want Universal in BD or I mite end up with a 170$ hd-DUD player this is getting old

I don't think you will end up with a Dud player even if the unthinkable happens. The S-300 does a great job of upscaling normal DVDs and it is a great CD player too boot... Hell I still have my S-7000 with the switches that only plays Dolby Digital Discs because DTS wasn't out at the time and it doesn't play DVD-R or DVD-RW etc.. But it still is running in my house, still plays my CDs and DVDs very well after all these years. So I doubt you will ever have a dud....

[JAGUAR1977]

Originally Posted by WickyWoo

It's only for 5 hours on black friday, then it goes back up to $299 at noon

But won't they then have the $200 A2?

I agree the difference is insignificant compared to the investment in a TV etc, but it's the perception that counts with many.

If Blu-ray could hit the market with a $299-$349 player without free titles, that would, IMO, be of greater benefit than the current policy of giving away titles with higher priced hardware.

[JAGUAR1977]

Originally Posted by Sonny

People need to see SONY S300 BD players for sub 300$ pricing this year or it could get very ugly I want Universal in BD or I mite end up with a 170$ hd-DUD player this is getting old

Not wishing to clog up the insiders thread, but that's the crucial point.

The cost of entry into HD-DVD is now so low you could pick up a player and a handful of exclusives for pretty much beer money!

The BDA cannot expect Blu-ray owners, who have likely paid top dollar for a Blu-ray player/TV/surround sound, to ignore these $200 HD-DVD deals when there appears no early end to the format war.

Just wait until HD-A2s hit $99! Sony needs $75 blu-ray players. LMAO. I say let Toshiba bleed. Let's see how long they can keep this up. The BDA needs to focus on maintaining and getting new Studio exclusivity deals.

I completly agree, unfortunately Blu-ray lost Paramount, Warner is up in the air, and we are constantly told there's little chance of Universal coming over before Q1 2008.

HD-DVD now has plenty of exclusives that would justify a $200 outlay, even on a crappy 1080i player.

If studio support was rock solid, these players wouldn't worry anyone, but as we've seen studios can be bought out with, it appears, relative ease, loyalty to existing consumers seems way down on their list of priorities.

It must be clear to insiders we're pretty tired of this format war, loyalty only goes so far for us, nevermind the studios/CE manufactuers.

[stockstar1138]

Originally Posted by JAGUAR1977

Not wishing to clog up the insiders thread, but that's the crucial point.

The cost of entry into HD-DVD is now so low you could pick up a player and a handful of exclusive for pretty much beer money!

The BDA cannot expect Blu-ray owners, who have likely paid top dollar for a Blu-ray player/TV/surround sound, to ignore these $200 HD-DVD deals when there appears no early end to the format war.

ive seriously thought about buying one and trying to turn a buck with all the freebies. if i could get a hd dvd add on at BBY, sell it for 130 bucks, sell heroes for 50 bucks, id have profit from whatever i could get from the 5 free toshiba movies. you could easily make 50 bucks off hd dvd. so in other words toshiba pays your beer money for about a month.

[SS316SRV]

Originally Posted by JAGUAR1977

The cost of entry into HD-DVD is now so low you could pick up a player and a handful of exclusive for pretty much beer money!

I don't know about you but I can get fall down sloshed for about $35.

[bdrex28]

Originally Posted by SS316SRV

Where has Max been with his Hotspurs arse?

I would think that he would have some good info for us in this busy period for high def media.

I don't know what that could be. But I am sure he has some good info for us.

If he's a Tottenham fan, he might be crying in his pint somewhere. My best friend is a spurs fan and is about to kill himself. Just kidding of course.

As for the cheap players, yes there needs to be a $200-$250 player. But, seriously, why the hell does someone buy a HDTV for $1500-$4000 and then gripe about a $400 cost for a state of the art player?

[androvsky]

At the risk of going even more off-topic, keep in mind there are a lot of HDTVs that can be had for well under $1000. Yes, they're only 720p, but a buyer of one might be interested in something more than DVD to watch on it. With most of them going for around $700 - $800, a standalone HD player could push them over the $1000 mark, a big mental barrier to a lot of people.

On the other hand, Toshiba's tactics have a bit of a "fire sale" aspect to them... yes, less expensive is good, but when something drops too far below the normal price range, people start wondering if something is wrong with it.

On the gripping hand (name that reference), the BOGO sale seemed to work quite nicely. Any chance we'll see more of those through the holiday season, maybe not in a week where it's not just a move to keep Blu-ray barely on top?

[RUR]

Originally Posted by androvsky

On the gripping hand (name that reference)...

Larry Niven/Jerry Pournelle.

[BluOgre]

Originally Posted by Go Blu

As you can see the cheap players should def be a serious concern that needs to be addressed within the BDA.

As you can see there are a number of Die hard Blu's even thinking about going neutral because of the cheap players imagine the general public that is much less biased nor influenced already.

I myself will not be influenced.
I will stand by Blu; the studios will come around, give it time.

People still don't understand this simple point.....no matter how much money Toshiba is willing to eat to lower the price of their players, the one thing customers will notice is not the player prices....it's the software prices and availablity of titles. Targeting consumers with budgets so tight ($100-200) yet you have no software to complement the cheap hardware makes no sense. What does Toshiba expect....the cheap people to buy their cheap hardware and then go buy the HD disks that are super expensive? Not brightest strategy.

Toshiba loses most people when software is priced $10+ more than it's DVD counterpart. This idea that the "Wal-Mart" customer base is suddenly going to jump into HD DVD is completely laughable. Unless Paramount, Universal, and Warner are willing to lose money by selling their software cheaper (like Toshiba is doing with their players) those customers are not going to jump into this new format yet. The HD add on to the X360 should show you cheap players don't mean jack ****. It hasn't helped them really at all.

Catalog is at DVD New Release prices.....price sensitive consumers buying a player because it's $200 cheaper than the compeition doesn't make sense because they then can't afford to buy any of the software (which means they will rent it). On top of all this the best software is on the rival hardware......a lot might think it's not a big deal (HD DVD fans) however when you go rent a title (which I suggest highdef is more rental friendly because of the high priced software) people will notice when you can't supply them with more than half the titles. At least with BR you get over 70% of the titles out there.

$200 is nothing. Let Toshiba bankrupt themselves if they want to.....Sony should just worry about getting more awareness out there (commericals I've seen have been great) and turn around the downward spiral of PS3. If they work on those two things Bluray is going to win without having to sell their standalone players for a loss.