Is DVD movie pricing holding Blu-ray back?
Blu-ray U.S. disc sales have tripled in the past year, according to The Digital Entertainment Group, but there's a slight problem--Blu-ray sales are still lower than where film studios would like them to be, and there's no indication that Blu-ray sales will top DVD sales anytime soon.
The studios blame Blu-ray's performance on the economy, and claim that if we were enjoying better economic times, the format's sales would be higher.
But there's one person, Bill Mechanic, a film producer and former Fox Filmed Entertainment chief, who believes there's more to this story.
"I think it's one part recession, but there are bigger factors," Mechanic told The Wrap in an interview. "That's a misreading of consumer behavior as well as a misreading of the economic environment. It's devalued the libraries."
"If you can buy 'Titanic' for $4.99," Mechanic continued, "[consumers will say] 'Well, wait a minute...'" when they consider buying another film on Blu-ray at a substantially higher price.
"There's no rhyme or reason of what I see in the market place in terms of pricing," Mechanic said.
He has a point. Even on Amazon.com, where Blu-ray movies are usually priced at their cheapest level, there's a major difference between DVD pricing and Blu-ray pricing. In fact, an older film like "Independence Day" is currently being offered on DVD for $14.99 and on Blu-ray for $25.99. A DVD of a new film, "The Dark Knight," is retailing for $14.99 on the site, while its Blu-ray counterpart is going for $23.99.
It sure looks like DVD pricing is holding Blu-ray back.
There's no debating that Blu-ray is a superior format to DVD. But as Mechanic told The Wrap, studios are expecting consumers to replace their DVD collections with Blu-ray, so they're dropping the prices on DVDs to get every last dime out of the format. All the while, they're doing their best to keep Blu-ray prices higher to capitalize on what they expect will be high consumer demand for the high-def format.
Maybe the plan is starting to backfire. Last week, Viacom released its quarterly earnings and reported that its home entertainment sales dropped 6 percent in the last quarter. Fox Filmed Entertainment DVD sales fell 15 percent last quarter, while Time Warner's Warner Bros. division reported a 24 percent decline in DVD sales over the same period.
Those aren't reassuring figures. They also underscore another issue: Blu-ray may not be the savior the film studios are looking for. So far, the market has grown and each week, more Blu-ray films are hitting store shelves. But at some point, the DVD pricing conundrum will need to be addressed. After all, why should I buy the same film on Blu-ray for $24.99 when I can get it on DVD for $14.99? Sure, it's only $10 and I'm getting a superior format, but is the difference so great that it would make me want to switch?
Based on my testing with an upconverting DVD player and PlayStation 3 on my 50-inch Panasonic plasma, I'm hard-pressed to pick Blu-ray at such a drastic price difference. Sure, I get better quality, but is it worth $10 to me? Maybe once. But that difference starts piling up quickly and an entire library of Blu-ray films would cost me hundreds more than if I bought them on DVD. That's an issue.
Even rentals are more expensive
But it doesn't just end with sales. Rentals are also more expensive. In fact, Redbox, the rental company that puts kiosks in stores around the country and allows customers to rent a film for $1 per day, announced last week that its current Blu-ray pricing model of $1 per day isn't working and it would be forced to raise the price of Blu-ray rentals. The company's executives wouldn't say how much more the company would charge for Blu-ray.
Worse, Netflix, which adds a $1 monthly charge to its subscription plans for those who want to add Blu-ray rentals, announced in its earnings call last month that its online streaming service is outpacing Blu-ray rentals. According to Reed Hastings, the company's CEO, Blu-ray subscriptions grew 40 percent since September to about 700,000, but in the same period, "millions" of subscribers have started using the company's streaming offering.
Is that a response to convenience or to price? One thing is certain: there is a pricing issue in the space. How much longer can Blu-ray be priced more than $10 higher than DVD before movie studios wake up and realize that the closer Blu-ray is priced to DVDs, the more value consumers will see in the format?
Maybe they've already woken up to that reality. Just last week, a report from Josh Dreuth at Blu-ray.com, explained that movie studios have quietly started dropping the prices of Blu-ray discs and some films can be purchased at a price that's within $5 of their DVD counterparts.
In fact, Blu-ray versions of "The 40-Year-Old Virgin" and "Iron Man" are currently on sale at Amazon for $14.99 and $18.99, respectively. The DVD version of "The 40-Year-Old Virgin" is priced at $9.99, while "Iron Man" on DVD is on sale for $17.99.
Unfortunately, those two films are more the exception than the norm. Based on my research, there are a select few films that are priced so closely to their DVD counterparts, but I should note that each day, more Blu-ray films are being reduced in price. In fact, Tuesday, I received a list of 55 Blu-ray films from Amazon that it just lowered prices on. Some are priced as low as $14.99.
About time
To me, it's all about value. Am I getting more value out of a respective Blu-ray film that I'm paying more for than its DVD alternative? At a $10 difference, the film better be a blockbuster hit with outstanding visuals. If it doesn't have both, I'll choose the DVD. But if the price difference is nominal and rentals are priced just $1 apart, I'll pick Blu-ray every time.
Maybe my rationalization is all wrong, but I do put a price on value and so far, Blu-ray pricing is outrageous. The film studios would be right to drop prices quickly and bring them down to a level that's more consistent with DVDs. I realize Blu-ray is a superior format, but let's face it--it's not so superior that we can justify spending $10 more per film just to have it. Especially with HD streaming looming.
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Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
HD video steaming is a long, long, long, way off. According to Pew Research, only "55% of adult Americans now have broadband internet connections at home." Of those, many have low-end DSL, which isn't fast enough for HD downloads.
I rent HD movies from iTunes and even on my 3.5 mb dsl they are ready to watch in 5-10 minutes.
Blu Ray simply doesn't offer anything beyond increased picture quality, which as many have pointed out, is negligible enough as to not be worth the difference in cost from DVD.
Your conclusion is correct, but your reasons paint a far rosier picture for the studios than they even deserve. They're up a creek and they wouldn't know how to use a paddle if one hit them in the face, some day they are going to figure that out.
Beyond some Pixar movies that my kids can't seem to get enough of, most DVDs are viewed a few times while new, but after a while just sit on the shelf and collect dust. Why would I pay to buy a Blu-Ray version of a movie I already own that I haven't watched in the past year or more? Off the top of my head, I can't think of anything I'd buy again just to get a little better picture.
For the most part, the idea of 'owning' a movie is done: why pay when you can rent for cheap (or download or stream) -- the extras and special features are seldom compelling enough to close the sale. Furthermore, the studios ticked off loyal customers with the endless parade of releases for a single feature (extended, extended director's cut, platinum edition, extended platinum unicorn edition, etc.) - who wants to commit when they fear a better release might be around the corner?
Wonder if the industry didn't take into account the fact that consumers have already collected a vast amount of DVDs over the years (mine is over 700) and have no desire to replace them for the limited increase one gets over upscaling. Since most titles have been available on DVD for a long time, purchases would be limited to new titles or the replacement of a handful of favorites.
There is a difference in video quality and I'm sure many of us have been tempted to go blu ray, but economicly, it doesn't justify junking an existing good quality DVD player in perfect working order for the few titles we would be adding to our collections.
Blu-ray disc are more expensive. However, they are coming down in price. Amazon currently a small library of about 50 Blu-ray disc that are actually cheaper than their DVD counterparts.
When DVD's where first introduced they were $30-50 dollars and many of their VHS tape counterparts where under $20.00. Prices really did not start to fall until retailers and manufactures, along with the entertainment industry systematically discontinued VHS.
$30-50 for DVDs when they came out? That's a bunch of hooey. I was the first consumer to buy DVD player in my area in early 1997, and the discs were consistently $20-$30.
When BR saves me money I'll jump, until them it's impractical.
I think this says much more about the state of Blu-ray. I do own a PS3 and I largely bought it for it's Blu-ray player and media player features in general. Having said that, though, I've never bought a single DVD and I won't ever buy a Blu-ray. I don't see the point of owning a movie. I used to rent a lot of DVDs before I got my first DVR 5 or 6 years ago. Since then, I rented about one DVD per year or less. The majority of the movies I watch at home were recorded on HBO HD and a very small number of movies were downloaded. Big movies, I go see at the theater.
If I'm not mistaken, the movie watching population is mostly young and childless, because they have the time to go to the movie theaters. Given that a Blu-ray today costs more than two movie tickets, I really question what the movie studios are thinking.
Many, many people rent or buy dvds. That is why you can find video rental stores in every town, red boxes in every walmart, and even grocery stores and gas stations sell dvds.
You really couldn't be more out of touch!
Personally I am not buying many Blu-ray discs because I can only play them in one room of my house. None of the other players I have (multiple laptops, bedrooms, in my truck) are capable of Blu-ray so a disc has to really be something special before I will even consider getting the Blu version, otherwise I'm going to go for portability.
Add to that the fact that once you start to watch a movie and get into the story you don't notice whether it's coming from a high def or standard def disc, and its hard to justify the premium of a BD.
For the format to become ubiquitous and mitigate the portability issue, the players will have to come down to the $99 sweet spot or below, so that buying one becomes a no-brainer when people go to replace an old player or buy one for another room. And the insane licensing issues, which Steve Jobs correctly called "a bag of hurt", must go away so that cheap players can be included in every computer. And yes, it goes without saying that "standard edition" Blu-Ray movies (without a ton of extras) must be priced about the same as a regular DVD.
Once again, stupid studios and media companies are racing each other to see who can slit their own throats first. It's anybody's guess whether they'll see the light before downloads become ubiquitous. My guess, based on the studios' clueless quotient over the last twenty years, is no.
I agree with you. The increase in quality isn't compelling enough in most situations to move me to spend more. And BluRay is so much more finicky than DVD. Long load times, players that freak out on small imperfections on the disc. Not worth the headache. Of course people into stats porn will be quick to disagree.
Blu-ray is FAR too expensive and until it drops to the same price as DVD, I'm not interested.
- by February 17, 2009 11:39 AM PST
- I'm not upgrading any DVD's to Blu-Ray. It's pretty easy to buy DVD's under $10.00 many for less than $5.00. I simply use Blockbuster mail and only buy very special ones for the kids to watch over and over. No need to buy blu-ray anytime soon, because all our other devices, (car/portable/notebooks etc) only play DVDs. I will rent Blu-Ray over DVD if it is not much more. As far as I'm concerned, every year the computer technology gets faster, better and cheaper. Should be the same with the content. It should keep up with the technology curve, but at the same prices or less. Streaming very well might supplant both formats. Why have a huge library when you might watch the same movie 2 or 3 times. Save your money!
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