OCTOBER 28, 2008 Retailers Slash Blu-Ray Player Prices
By MIGUEL BUSTILLO Wall Street Journal http://online.wsj.com/article/SB122514674049473763.html Electronics manufacturers and retail chains are slashing prices of Blu-ray players in a bid to boost adoption of the high-definition movie format, which has yet to catch on with American consumers. Entry-level Blu-ray players have dropped to below $230 at major retailers including Target Corp., Wal-Mart Stores Inc. and Best Buy Co. Some experts predict that promotional prices may fall below $150 on Black Friday, the big shopping day after Thanksgiving. Earlier this year, most Blu-ray players retailed for $400 or so. Sales picked up at Best Buy after prices were cut, said Mike Mohan, Best Buy's senior vice president of consumer electronics. Still, he said, some consumers may not understand the benefits of the technology, which can offer crisper images than standard DVDs when viewed on high-definition TVs. "We have a job to do in explaining to customers why Blu-ray is important," Mr. Mohan said. Another impediment to Blu-ray adoption: The price of Blu-ray discs, at about $30, is still often twice that of DVDs. Industry analysts believe stores may have been overly optimistic in ordering Blu-ray players for the holiday season. That's another factor behind the price cuts, especially since some older models in retailer inventories can't connect to the Internet, which is necessary to tap interactive features on some Blu-ray discs. There is another motive for the markdowns. Manufacturers and retailers want to speed the mass adoption of Blu-ray before digital-movie downloads and video on demand overtake movie disc sales and rentals -- a looming development that already may be damping sales. "Up to this point, the category has not performed to expectations, but manufacturers sense the urgency, and are making sure that they lower prices to the point that Blu-ray players will become irresistible to consumers this holiday season," said Bruce Tripido, a vice president of marketing at Sharp Electronics Corp. Blu-ray movies depict images in 1,080 lines of resolution compared to 480 for DVDs. They were expected to make up a bigger slice of disc sales after Blu-ray won the backing of Hollywood studios earlier this year over the rival HD-DVD technology. But as of last month, only 4% of U.S. movie disc sales were Blu-ray, according to Nielsen VideoScan. Many consumers remain happy with mainstream DVDs, surveys show. And "upconverting" DVD players that cost less than $100 can boost the image quality to a level that many consumers would be hard-pressed to distinguish from Blu-ray. Big-box retailers rely on sales of movie discs, not just because of the profit they generate, but because they lure customers into showrooms where they may be enticed to buy flat-panel TVs and surround-sound systems. Sales of DVD discs have begun to decline, however, and Blu-ray has yet to take up the slack, leading some analysts to conclude that retailers risk losing sales to movie downloads, much as they lost CD sales to music downloads. Cable-TV, phone and satellite providers as well as electronics makers are still piecing together the infrastructure and alliances necessary to offer a large library of downloadable and video-on-demand movies and TV shows in high definition. But as soon as that happens, "Blu-ray is done," predicted Rob Enderle, an analyst who advises companies including Microsoft Corp. and Hewlett-Packard Inc. on technology trends. "Retailers have every reason to be worried." Blu-ray boosters remain optimistic that they will see a consumer breakthrough this Christmas season. They note that retailers are devoting generous shelf space to showcasing the technology, despite the soured economy. Andy Parsons, a senior vice president at Pioneer Electronics Inc. and member of the Blu-ray Disc Association, an industry consortium, said he was heartened recently to see a full aisle of Blu-ray products at his local Target. "That sends a message to the consumer that this is real." The vast majority of the estimated 6.5 million Blu-ray devices now in U.S. households are Sony Playstation 3 game consoles, rather than dedicated movie players. The Playstation 3 can play Blu-ray discs, but surveys show that gamers are not buying many Blu-ray movies. After combing the Blu-ray movie racks at a Best Buy store recently in search of entertainment for his PlayStation, David Allen bought just one disc: "Iron Man," which was on sale for $25.99, compared to $14.99 on DVD. "It's excessive," Mr. Allen, a manager at a Texas auto parts distributor, said of the price. "It's definitely worth it for certain movies, but I'm not going to be buying as many" as DVDs. The challenge for retailers such as Wal-Mart, which has been featuring eye-catching Blu-ray kiosks alongside inexpensive DVD players, is how to balance promoting the new technology with providing the DVD values that consumers crave in the current economy. "We expect to see continued interest in Blu-ray this year as more people continue to embrace HDTV," said Kevin O'Conner, Wal-Mart's vice president of consumer electronics, adding, "We will continue to grow Blu-ray in line with the customer's desire." ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
