Looks like it wasn't the HD DVD/Blu-ray battle that was keeping potential customers away from high-definition video players after all.
The NPD Group released some of its retail sales tracking data Wednesday that showed sales of Blu-ray standalone players (not a PlayStation 3, combo player, or PC with Blu-ray drive) had mostly decreased since the beginning of the year.
Standalone Blu-ray player unit sales in the U.S. decreased 40 percent from January to February and saw a very slight increase (2 percent) between February and March, according to NPD.
HD DVD players fared even worse--player unit sales dropped 13 percent from January to February, and 65 percent from February to March--which was expected. Toshiba stopped production of HD DVD units in February, and the format's promotional group disbanded in March.
So what does this mean for Blu-ray player vendors? Why haven't sales experienced any sort of substantial uptick without a competitor? Prices offer one clue. Blu-ray player prices were at their peak for the year in mid-March, around $400. During the holiday shopping season the average price had been closer to $300.
But more likely is what NPD's high-def video analysts have been harping on for a while: that DVD is "good enough" for most consumers. And that the picture offered by a Blu-ray Disc and accompanying player doesn't appear so overwhelmingly better than a standard DVD and an upconverting player that many consumers can't justify the dramatically increased cost.
To that point, sales of significantly less expensive upconverting DVD players have actually increased 5 percent over the first quarter of 2008, compared with the same quarter a year ago. Standard DVD player sales dropped 39 percent over the same period.
Blu-ray player prices are going to have to drop dramatically, to around $200 probably, to make themselves more attractive to consumers outside of the early adopter/home theater enthusiast crowd. Sony, one of the largest producers of Blu-ray players, says $200 players aren't likely until next year at the earliest.
If you're among the majority of Americans, you probably aren't watching high-definition on your television yet. But come Monday, you may start to see HD commercials on your PC.
San Francisco-based BrightRoll is offering advertisers the ability to run large-format, high-quality video ads across its network of Web site publishers.
The ads initially appear as banner ads on the page. When a user click on one, a large separate window opens up on top of the Web page.
There are trade-offs for serving up high-definition video in terms of time it takes for them to load, but these ads seem to load pretty fast, according to Bobby Tulsiani, a consumer video analyst at Jupiter Research.
"The critical thing is that it doesn't get in the way of the user experience," he says. "For advertisers, the higher quality matters for the brand recognition, especially ads showing off a car, or travel ads in which the scenery is important."
It's becoming clear that early adopters of the HD DVD video format will find fewer and fewer products that will play their discs.
Samsung will halt its plans to release the combination HD DVD/Blu-ray player, the BD-UP5500, introduced in January at the Consumer Electronics Show. Samsung issued a statement late Wednesday, saying that though the product "remains a practical solution...the window of opportunity is smaller than it was before. In light of recent announcements, Samsung will not introduce the BD-UP5500 Duo HD Player."
Samsung pulls the plug on its latest combo drive before its release.
(Credit: Samsung)The announcement doesn't come as much of a shock. Even at its launch there were questions whether the product was relevant, and if so, for how long, since just a few days earlier Warner Bros. made its bombshell announcement that it would support Blu-ray exclusively, effectively dooming the HD DVD format.
There are very few options left for owners of HD DVD discs. Last month Toshiba decided to bow out, followed soon by Microsoft's announcement it would no longer produce external HD DVD drives for its Xbox 360 video game console. Samsung has one other combo player and LG Electronics still makes two combo players.
Samsung will, however, keep moving ahead with plans to release its next Blu-ray only player, the BD-P1500, which is still on track for a spring release.
SAN FRANCISCO--Though times may be tough for other TV manufacturers, Sony says it isn't feeling a thing yet in its electronics division here in the U.S.
At a press briefing with reporters here Wednesday evening, Sony Electronics President Stan Glasgow said that despite indications of a weakening U.S. economy, all is well with the Japanese electronics giant.
"I don't think consumers buying consumer electronics yet feel that," Glasgow said. "Sony did particularly well during the holidays. It was the best in the history of Sony Electronics in the U.S."
A boon to Sony's bottom line has been the growth of its Sony Style stores, both brick-and-mortar outlets, and its online presence. Glasgow said Sony Style experienced a 34 percent growth in sales over the 2007 holiday shopping season.
Another high point was its TV business. According to data collected by market research company DisplaySearch, Sony lead all LCD TV manufacturers in the fourth quarter of 2007 with 12.3 percent of worldwide shipments, considered a major comeback for the company.
One of the things that appeared to help Sony in 2007 was its expansion of specific television models made to sell in Wal-Mart Stores and Target. Glasgow said the company is expanding that commitment to supplying those retailers with 40 percent more variety of TV models this year.
Glasgow kept the gloating to a minimum, however, when it came to Blu-ray's recent victory in the format spat with HD DVD. As one of the leading investors and supporters of Blu-ray, Sony does see prices dropping on standalone Blu-ray players over the next couple years, but it will be 2009 before a $199 unit becomes a reality, he said. Price drops will happen, but it needs to be done in an orderly fashion, Glasgow said.
"I don't see any reason to do it stupidly and lose money," he said.
In the meantime, Sony is "in discussions" with a number of partners in order to get them on the Blu-ray bandwagon. An Microsoft Xbox 360 console with Blu-ray is certainly "a possibility," he said.
But perish the thought that Sony will take trade-ins of now-obsolete HD DVD players. "Sony is not going to make up for Toshiba's sins," Glasgow said emphatically.
Other tidbits gleaned from the evening:
- Though 11-inch OLEDs are the largest size Sony is offering right now, bigger screen sizes are on the way--some day. But there are currently limits on exactly how big Sony can make them right now. Glasgow specifically said that there are major obstacles (mostly to do with the physics of creating the panels) to make OLED screens larger than 30 inches. "It would take another significant investment to get bigger than that," he said.
- Sony is apparently unfazed by Amazon.com's recent entrance into the electronic book reader market. "The Kindle has helped," Glasgow said. "I think the (Sony) Reader market needed a boost. We're selling more since the Kindle came to market."
Patience, HD video fans. Those of you hoping that the defeat of HD DVD would usher in a new era of lower-priced Blu-ray players will have to wait at least until the next calendar year.
In comments made to reporters at a New York press gathering Wednesday morning, Sony Electronics President Stan Glasgow said, "I don't think $200 is going to happen this year. Next year $200 could happen. We'll be at a $300 rate this year; $299 will happen this year," according to Gizmodo.
There's been quite a bit of media discussion over whether or not Sony and other Blu-ray supporters will start cutting prices on standalone players in the aftermath of HD DVD's death. Seeing as how the answer is "no" from Sony for now, that decreases the likelihood that Blu-ray will make major inroads with mainstream consumers, as a plurality cite price as the biggest barrier to their purchase of an HD video player.
At the same event, Glasgow also dished on other Sony-related news:
• Even in the face of a downturn in the U.S. economy, Glasgow says Sony's electronics sales are still going swimmingly. He said the company expects to sell 5 million Blu-ray players by the end of 2008. The company unveiled two new models last week.
• Sony has no plans to make digital converter boxes for next year's digital TV switchover, and will leave that to the lower-tier CE companies.
Glasgow will be in San Francisco to chat up West Coast reporters Wednesday night. Check back here for updates and additional comments from him.
We have a winner.
Well, that's it. Toshiba appears to be pulling the plug on HD DVD. Toshiba has not commented publicly, but a report on Japan's NHK says Toshiba has made the decision to withdraw from next generation high-definition DVD production.
This news certainly doesn't come as surprise to anyone remotely following HD DVD's format war with rival Blu-ray. HD DVD had suffered a string of defections, with Warner, Netflix, Best Buy, and Wal-Mart all recently pledging their alliance to Blu-ray.
The NHK report says existing HD DVD products will remain on the market for a while, but Toshiba will stop further development of HD DVD. The report also estimates that Toshiba will take a hit to the tune of "hundreds of millions of U.S. dollars" and will close factories in northern Japan.
Elsewhere this weekend, Sony and its Blu-ray buddies are going to make like VHS and party like it's 1989.
UPDATE: Reuters now points to an unnamed company source who says, yep, we're done. An official announcement from Toshiba could come next week.
Things have gone from bad to worse for HD DVD in the space of one week.
Wal-Mart Stores announced on Friday morning that it, too, has chosen a side in the battle for high-definition video supremacy: by June, it will stock only Blu-ray Disc players.
(Credit:
Crave UK)
A buyer in Wal-Mart's video division wrote this morning on her Wal-Mart Checkout blog that the retail giant had made the decision following Netflix and Best Buy's high-profile announcements that they will exclusively stock Blu-ray products.
Wrote Susan Chronister of Wal-Mart: "By June, Wal-Mart will only be carrying Blu-ray movies and hardware machines and, of course, standard-def movies, DVD players, and up-convert players."
"So," she continues, not mincing words, "if you bought the HD (DVD) player like me, I'd retire it to the bedroom, kid's playroom, or give it to your parents to play their John Wayne standard-def movies, and make space for a (Blu-Ray Disc) player."
That might be the best option at this point, as the dominoes keep falling in Blu-ray's favor. While Netflix and Best Buy were pretty damning evidence that the end was near, now it's glaringly obvious: it's over for HD DVD.
Now, that doesn't necessarily mean that consumers will automatically start buying Blu-ray players. As mentioned many times before here, prices will have to continue to fall on both Blu-ray players and packaged media for there to be any sort of mainstream adoption of the format.
There are rumors that Toshiba might soon be declaring defeat: The Hollywood Reporter has sources telling it that Toshiba, the main backer of HD DVD, might drop its allegiance with the format in the next few weeks.
Toshiba denies it, but stay tuned. There's likely much more to come in this drama.
Already starting the week off on a bad note, HD DVD's day just keeps getting worse.
Starting next month Best Buy says it will prominently display Blu-ray players and discs in its stores and recommend the format over rival HD DVD, according to a Reuters report.
"Because we believe that Blu-ray is fast emerging as that single format, we have decided to focus on Blu-ray products," Brian Dunn, Best Buy's president and chief operating officer, said in a statement Monday.
It's not an exclusive arrangement since Best Buy says it will still continue to offer HD DVD. But having Best Buy's valuable endorsement in the form of Sunday circulars, front-and-center store kiosks, and staff recommendation seems to be the icing on the cake for a Blu-ray victory in the format war, and potentially the death rattle for HD DVD.
Earlier Monday, online movie rental service Netflix announced it would phase out its offering of HD DVD discs by the end of the year. Netflix's position likely will have less of an immediate impact on the format battle since its business depends on people who have already made a decision on which format they support. In other words, Netflix availability isn't the reason most consumers will lay down $400 for a video player.
But Best Buy is different. It's the nation's largest consumer electronics store, and in a situation where consumer education is one of the biggest battles, much of the actual fighting of the format war needs to be won at the sales level. When someone looking to upgrade to HD video goes in to a store and asks their friendly sales associate which format they recommend, the answer is going to have a serious impact.
Update, 4 PM PT: The HD DVD Promotional Group responded with a statement that's strikingly similar to the one issued earlier in the day: "We have long held the belief that HD DVD is the best format for consumers based on quality and value, and with more than 1 million HD DVD players on the market, it's unfortunate to see Netflix make the decision to only stock Blu-ray titles going forward. While the Best Buy announcement says they will recommend Blu-ray, at least they will continue to carry HD DVD and offer consumers a choice at retail."
If Warner Bros.' decision to go exclusively with Blu-ray Disc was an industry-rattling earthquake, Monday's news that Netflix would begin to phase out HD DVD rentals is an inevitable aftershock: much smaller impact, potentially damaging, and still leaves everyone feeling unsettled.
By the end of the year Netflix will no longer offer HD DVD movies to customers, opting to exclusively stock Blu-ray Discs in its online rental service. In the company's announcement, Netflix said it made the decision based on Blu-ray's recent momentum--Universal and Paramount are the only remaining major Hollywood studios with agreements to release titles exclusively on HD DVD.
For HD DVD backers like Toshiba, Microsoft, and the studios, Netflix is probably yet another sad loss, but it won't have the demoralizing repercussions the Warner decision did.
But for the average consumer, in reality, not much changes. That's because the overwhelming majority of DVD renters don't rent high-definition discs. In fact, most of Netflix's own customers don't rent high-def discs. But those who did were renting Blu-ray more than HD DVD, hence Netflix's decision.
Sure, Netflix is one less place to rent HD DVD, but finding copies of the beleaguered disc format is not impossible--Blockbuster stores don't offer HD DVDs to rent, but its online rental service still stocks both formats.
In all, the announcement doesn't do much to make the muddled format picture any less murky for consumers right now. High-definition video players and discs are still too pricey for most buyers, and the quality improvement over DVD isn't as apparent to anyone but the hardcore videophile crowd. Plus, standard DVD players that can convert discs to high-def resolution get the job done reasonably well. Until any of that changes, high-definition video will be stuck in neutral no matter which studio or rental service makes an offer of exclusivity.
Update: The HD DVD Promotional Group's response: "We have long held the belief that HD DVD is the best format for consumers based on quality and value, and with more than 1 million HD DVD players on the market, it's unfortunate to see Netflix make the decision to only stock Blu-ray titles going forward."
For further discussion, hear the guys at CNET's The 404 talk about it on Monday's podcast.
It's a lot harder to find an analog television at Best Buy these days. That's because as of the beginning of October, Best Buy stopped selling them, according to an Associated Press report. The largest consumer electronics chain in the U.S. will now only sell televisions with digital tuners.
It's not a huge surprise. The government-imposed digital television mandate is fast approaching. By Feb. 18, 2009, TV broadcasters will be required to broadcast only digital signals, and TVs with only analog tuners will be unable to pick up the new broadcasts. As part of the gradual step up to digital broadcasts, all new televisions larger than 13 inches shipped to retailers after March 1, 2007, need a digital tuner. Stores are allowed to sell any analog sets already in stock.
Best Buy deciding to sell only digital likely means it has shipped all or most of its analog inventory.
