No surrender - 2/1/2008 12:01:00 PM - ContentAgenda.com - CA6528154
No surrender
By Paul Sweeting
February 1, 2008
There’s a scene near the beginning of Gladiator where the Roman army under Marcus Aurelius is preparing for its set-piece battle against the Barbarian tribes. Thomas Arana, playing Quintus, turns to Russell Crowe’s Maximus and says, “People should know when they are conquered.”
A lot of people are feeling that way toward HD DVD these days. Since Warner Bros.’ surprise move on the eve of the Consumer Electronics Show to drop HD DVD and embrace Blu-ray exclusively, people anxious for an end to the format uncertainty have been declaring the battle over and all but demanding HD DVD quit the field.
A format should know when it has lost a format war.
Toshiba and its dwindling band of studio allies, however, seem to be channeling Russell Crowe, who replies, “Would you, Quintus? Would I?”
Far from quitting the field, Toshiba has continued to cut prices in an effort to spur sales and went ahead with a $2.7 million ad buy during the Super Bowl, with more TV and radio spots planned.
What’s more, consumers don’t appear to have quite gotten the message, either. In the week ended Jan. 19, HD DVD player sales accounted for 33% of all high-def hardware sales, according to NPD Group, not exactly a dominant performance but clearly still fighting.
“We still feel this [format] represents a significant value to the consumer,” Toshiba marketing VP Jodi Sally told VB’s Susanne Ault. “With a $149 price [for the entry-level HD-A3], you’ll get two free HD DVDs in the box, five movies by mail, and it supports all your standard DVDs, where they are upconverted to near high-def quality. There is no risk to the consumer.”
Not much risk at this point to Toshiba, either. Having sunk tens of millions of dollars into HD DVD and facing margin pressure and sliding profits in other segments of its business, it can’t be in a hurry to take a massive write-down on HD DVD.
With the format’s critical processing components now down to a single chip, manufacturing costs are falling, probably giving Toshiba room to continue playing the retail price game without losing too much on each player sold.
If it can whittle the price down to where HD DVD players are roughly competitive with upconverting DVD players, with the added bonus of playing some discs in full 1080p HD—the strategy it appears to be pursuing—it might be able to sustain a respectable level of sales for many months yet.
From the consumer’s perspective, moreover, nothing in the marketplace has actually changed at this point, except for the cuts in hardware prices, and won’t at least until the second half of the year when Warner titles stop appearing on HD DVD.
Some have no doubt heard or seen news reports proclaiming the format’s imminent demise, but evidence suggests they’re more responsive to price cuts than news reports.
Much will depend, of course, on what the two remaining major studios still backing HD DVD do. But absent some shift in corporate priorities, I doubt either Paramount or Universal is in a big hurry to make the switch, either.
Paramount has a contract with Toshiba that runs through 2009. Were it to break the contract now, it would likely have to return whatever sweeteners were in the original deal.
Having lost the race to be third, Universal isn’t likely to get much of a deal out of Blu-ray at this point. And the lack of major studio competition is probably boosting its HD DVD unit sales per title.
I think we’re going to be stuck with this one for some time yet.
Marcus Aurelius, by the way, defeated the German tribes during his reign, but the Barbarians eventually had their revenge on Rome.
And Gladiator, I hardly need mention, is a DreamWorks title, which means it will be coming out on HD DVD, not Blu-ray.
No surrender
By Paul Sweeting
February 1, 2008
There’s a scene near the beginning of Gladiator where the Roman army under Marcus Aurelius is preparing for its set-piece battle against the Barbarian tribes. Thomas Arana, playing Quintus, turns to Russell Crowe’s Maximus and says, “People should know when they are conquered.”
A lot of people are feeling that way toward HD DVD these days. Since Warner Bros.’ surprise move on the eve of the Consumer Electronics Show to drop HD DVD and embrace Blu-ray exclusively, people anxious for an end to the format uncertainty have been declaring the battle over and all but demanding HD DVD quit the field.
A format should know when it has lost a format war.
Toshiba and its dwindling band of studio allies, however, seem to be channeling Russell Crowe, who replies, “Would you, Quintus? Would I?”
Far from quitting the field, Toshiba has continued to cut prices in an effort to spur sales and went ahead with a $2.7 million ad buy during the Super Bowl, with more TV and radio spots planned.
What’s more, consumers don’t appear to have quite gotten the message, either. In the week ended Jan. 19, HD DVD player sales accounted for 33% of all high-def hardware sales, according to NPD Group, not exactly a dominant performance but clearly still fighting.
“We still feel this [format] represents a significant value to the consumer,” Toshiba marketing VP Jodi Sally told VB’s Susanne Ault. “With a $149 price [for the entry-level HD-A3], you’ll get two free HD DVDs in the box, five movies by mail, and it supports all your standard DVDs, where they are upconverted to near high-def quality. There is no risk to the consumer.”
Not much risk at this point to Toshiba, either. Having sunk tens of millions of dollars into HD DVD and facing margin pressure and sliding profits in other segments of its business, it can’t be in a hurry to take a massive write-down on HD DVD.
With the format’s critical processing components now down to a single chip, manufacturing costs are falling, probably giving Toshiba room to continue playing the retail price game without losing too much on each player sold.
If it can whittle the price down to where HD DVD players are roughly competitive with upconverting DVD players, with the added bonus of playing some discs in full 1080p HD—the strategy it appears to be pursuing—it might be able to sustain a respectable level of sales for many months yet.
From the consumer’s perspective, moreover, nothing in the marketplace has actually changed at this point, except for the cuts in hardware prices, and won’t at least until the second half of the year when Warner titles stop appearing on HD DVD.
Some have no doubt heard or seen news reports proclaiming the format’s imminent demise, but evidence suggests they’re more responsive to price cuts than news reports.
Much will depend, of course, on what the two remaining major studios still backing HD DVD do. But absent some shift in corporate priorities, I doubt either Paramount or Universal is in a big hurry to make the switch, either.
Paramount has a contract with Toshiba that runs through 2009. Were it to break the contract now, it would likely have to return whatever sweeteners were in the original deal.
Having lost the race to be third, Universal isn’t likely to get much of a deal out of Blu-ray at this point. And the lack of major studio competition is probably boosting its HD DVD unit sales per title.
I think we’re going to be stuck with this one for some time yet.
Marcus Aurelius, by the way, defeated the German tribes during his reign, but the Barbarians eventually had their revenge on Rome.
And Gladiator, I hardly need mention, is a DreamWorks title, which means it will be coming out on HD DVD, not Blu-ray.
