Posted on 04/26/2007 8:22:22 AM PDT by mjp
There is one retailer that has the power to call the winner of the protracted Blu-Ray vs. HD DVD fight and that vendor is Wal-Mart. Over the weekend they apparently leaked plans to bring in a massive number of low cost (possibly sub $200) HD DVD players for Christmas.
The manufacturing side of this has apparently been in the works for a few years but this is the first time we have had projected prices for the result.
Why Wal-Mart, Why Now?
Wal-Mart uses DVDs to build store traffic. They tend to subsidize the price for the movies they feature to get folks into the stores and once there, these folks tend to buy other things. DVDs have been so effective for the company they threw their body at movie downloads initially and delayed the related services by several years. However, they have now realized that this kind of thing is coming regardless and have brought out their own movie download service to compete. But that doesn’t address the store traffic benefit that will be evaporating as people move away from DVDs for standard definition downloadable movies.
Wal-Mart sees the new high definition formats as a way to bring in store traffic again but they realized that won’t happen unless the players are affordable and there is only one standard. They recognized their own power in being king maker previously and are now using that power to drive the format that works best for them. They could care less about the technology as this is all about making money and they (like every other retailer in this space) know that two formats won’t allow the market to move outside of the fringes and the dual-mode players are simply way too expensive.
So they need one standard and a lot of players in market before their DVD customers wander off to download land and stops coming to Wal-Mart for movies.
Why HD-DVD and not Blu-Ray?
For Wal-Mart the only real metric is cost. Wal-mart doesn’t really make money off of the movies and do not sell high-end home theater equipment. They are known for aggressive prices and, as mentioned above, they subsidize their DVD sales. They needed something that could sell for under $200 soon and they needed the lowest cost of the new formats. This is where HD DVD shines, not only had Toshiba agreed to license to low cost manufacturers early on, but HD DVDs are pressed on the same lines that regular DVDs are, they require no major equipment change out and the blanks, when compared to Blu-Ray are less expensive as well.
This made the decision simple, Blu-Ray was just too expensive to make this work and any technical advantages were insignificant against Wal-Mart’s need for the lowest cost offering. For them it is about price and that is where HD DVD clearly has the sustainable advantage.
What does this Mean?
It means that any studio wanting Wal-Mart’s support after year end had better be selling HD DVD movies. Wal-Mart won’t be promoting Blu-Ray and, after year end, will increasingly focus their marketing on getting people to buy into HD DVD players and the related HD DVD movie from them.
In short, the Blu-Ray aligned studios will now have to either support both formats or risk losing much of Wal-Mart's business and given how material this business is to them, you have to think that an anti-Wall-Mart decision would have a material impact on their bonuses and career longevity. It certainly puts Columbia Pictures, which is owned by Sony, in a particularly uncomfortable position.
So, if this move by Wal-Mart is true , and it appears to be (but we won’t know for sure for a few months yet), the format war is likely over and Wal-Mart has declared the winner.
Sony’s business model is starting to look as solvent as SCO’s.
You can buy one of each for less. The battle goes on.
But what will a combo player cost in 2010? When I first got a 2X CD-R writer it cost over $600, because it was one of the first that could also read/write CD-RW. Nowadays you can't find a CD burner that can't handle both formats, and they operate at speeds 40X and above and cost less than $100 and many of them can read DVD's too.
Thanks for the ping.
According to an article posted her at FR.
You rascal - how did you know what the porn industry decided.
You’re no Dead Dog ....
You’re alive and kicking young man.
Doubtful. Other than one obscure brand there are no players that play both SACD and DVD-Audio. So these high end audio formats stayed mostly in the fringes.
If you buy something you don’t need, but you get it on sale, it’s still a deal, right?
:-)
I guess it depends on how much the LG player costs, and how much the movies in Blu-Ray format cost, versus the HD DVD format.
This story is believable because the MSM says that it’s a hoax. It’s also believable because Sony hasn’t yet come up with a winning format.
ridiculous. No Disney movies, or Sony/Columbia, or Fox. Only Universal is on hddvd. Wal-mart never said they won’t sell Blu-ray, just now they’re on the losing bandwagon.
Why do people want the lesser technology to win? Blu-ray offers 20 more gigs and far better bandwidth which is much better for data transfer rates.
To want hddvd to win is crazy. Blu-ray’s got all the advantages. hddvd is still too expensive for the wal-mart types, and so are the TV’s. By the time it’s in the real cheapo market, Blu-ray will be there as well. The only difference is the Blu-ray is slightly more precision-based.
I wouldn’t call my PIONEER player “:obscure” and it plays SACD’s and DVD-A’s. I just bought a couplke Moody Blues sacd’s the other day. Sound great!
Sorry, but you've got it just backwards. Wal-Mart is THE big monkey in this. Once they introduce cheap HD-DVD players, Disney and the rest will be forced to support HD-DVD. Given that the porn industry has already decided, this is the last nail in the coffine of Blu-Ray.
"To want hddvd to win is crazy. Blu-ray’s got all the advantages. hddvd is still too expensive for the wal-mart types, and so are the TV’s. By the time it’s in the real cheapo market, Blu-ray will be there as well. The only difference is the Blu-ray is slightly more precision-based."
I don't "want" either format to win. This situation in the market has already been done experimentally---VHS vs. Betamax. This is producing EXACTLY the same way. Betamax was "technically superior" and VHS was less expensive. VHS won. (I had bought Betamax originally, so I "do" remember the debacle).
I basically don't CARE which one wins. I own neither at this point, and won't buy until one or the other DOES win, or the market produces a product that will handle both formats.
Actually, VHS and Beta were pretty much the same in price. It was capacity that really won it for VHS.. Something that Blu-ray has the advantage on.
Disney, Fox, and Sony will not go to hddvd. However, Universal will probably go neutral sooner than later.
In case you aren’t keeping track, hddvd is barely hanging on. LG just said they won’t make dual-formats anymore, only Blu-ray. RCA left them. Samsung may or may not make a dual player.
All hddvd really has is porn (everyone downloads it now), Universal, Toshiba, and MS. Almost the entire rest of the electronics industry supports Blu-ray.
The war was decided in January at CES, btw. Cheaper players aren’t going to win this. Blu-ray will quickly match the prices, they have been so far.
Wal-Mart could buy and sell Disney, Sony, and Fox out of petty cash.
But as I said, I don't CARE which one "wins", as I ain't gonna buy a player until it happens.
Walmart already marketed the RCA hddvd player. It flopped.
Without the studio support and movies, it’s not going to matter much how badly hddvd undercuts BD on price on the players. Eventually, all the prices will be more or less the same. These are chinese no-name manufacturers without any movie support. Wal-mart just can’t carry that.
See reply #17 to see why you are wrong. Do you honestly think that Disney can afford to have Wal-mart decide not to carry Disney products?? It ain't the studios who have the "whip hand" in this situation, it's Wal-Mart.
Just looking at market capitalization, Wal-Mart is ~$230 billion, Sony is $64 billion, Disney is $51 billion. And ALL Wal-Marts business is direct to consumers. If necessary, Wal-Mart can just BUY Disney, or more likely, the "movie studio" part of Sony. But it won't be necessary.
Wal-mart just isn’t going to decide the HDTV market. So far, they’ve hardly been the source of hi-def TV’s or content, even though they signed on early with the RCA hddvd player.
We're not talking about "the HDTV market". We're talking about subsegment of that market--specifically high-capacity "hard-format" discs, players, and content. And as far as I'm concerned, with their above announcement, they have ALREADY decided THAT segment of the market.
It's all over but the "shouting", of which there will be much, once Sony gets up and dusts the tire tracks off.
But I think this is all pretty much a side issue. The real future of movies is the "Ipod model". You download the movie and play it.
Mike
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