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Some Ideas to Get HD DVD Owners to Help Blu-ray in Its Struggle Against DVD for Mainstream Acceptance

Posted on Wednesday, January 23rd, 2008 4:45 PM by Scott Jentsch

For those of you following the developments of the format war that has been going on for nearly two years between the high definition media formats HD DVD and Blu-ray, you already know that the scales between the two are tipping in Blu-ray's favor.

Warner's announcement on January 4, 2008 to begin releasing its titles on Blu-ray exclusively as of June 1, 2008 rocked the HD DVD boat in a very considerable manner. I have seen the format war described as "two fleas fighting over who owns the dog," and considering how very small the HD media market is in comparison to DVD, I think the comparison is a good one. That said, the blue flea just gave the red flea a good lashing!

So, assuming that Blu-ray has the HD media market all to itself, it still has a much larger fight for mainstream acceptance in comparison to DVD. Getting Universal, Paramount, and Dreamworks to join in the fun is probably just a matter of time and/or money, so the two biggest challenges are:

  1. Full-featured players at reasonable prices
  2. Gaining momentum in the marketplace

Full-featured players at reasonable prices

In my overview of Blu-ray players announced at the 2008 CES earlier this month, only one really stood out as satisfying #1. The Panasonic DMP-BD50 will join the Sony Playstation 3 as the only players capable of fully realizing the Bonus View and BD-Live features that have been already released on discs or announced for the near future. I have since found out that the Sony prototypes that were shown at CES will become the BDP-S350 and BDP-S550, and both will have Bonus View and BD-Live capability. Only the PS3 is available now, with the others available sometime in Spring (Panasonic) and Summer (Sony).

Sony Playstation 3

The Sony Playstation 3 is the only Blu-ray capable player that we can recommend at this time.
Check prices on Amazon.com

None, I repeat, none of the standalone Blu-ray players currently available for sale are able to play all of the features of the discs that have been released and/or announced for release in 2008. Bonus View (Profile 1.1) features on Blu-ray started to arrive this month, and Disney has announced that Finding Nemo and Sleeping Beauty will contain BD-Live (Profile 2.0) features when they are released this fall. For this reason, I do not recommend buying any player not capable of both features.

Sony has delivered Bonus View on the PS3, and has promised BD-Live by summer, a promise that I believe they will keep. There are far too many PS3's in the market for them not to do so. That makes the PS3 the only Blu-ray capable device that I can recommend at this time.

The prices of all Blu-ray players are still incredibly high, in relation to HD DVD players that have similar (or better) functionality, and especially now that Toshiba has dropped the prices of its HD DVD players considerably. Hopefully, time will fix this problem and prices will come down.

Gaining momentum in the marketplace

This is purely a marketing challenge, and its up to the Blu-ray companies to step up to the plate and do what it takes to make their products succeed. There has been some talk on various forums and opinion sites about the Blu-ray group extending a sort of "peace offering" in the form of a discount or trade of HD DVD movies for Blu-ray movies to those that bought into the rival HD DVD format as a way to smoothe over any hard feelings and to get them on board with Blu-ray. I first heard the idea floated by Bill Hunt of The Digital Bits web site, who has been an ardent supporter of Blu-ray recently.

I think that this is an excellent idea.

People who have purchased HD DVD players are the exact market that the BDA hopes to attract. Except for those that bought into both formats, those buyers spent disposable income on a machine that cannot play Blu-ray discs. It's also possible that, now that a purchase has been made, it may be difficult or impossible for those same people to make another purchase just because the format war didn't go the way of HD DVD.

The low-hanging fruit can be picked in the next couple of weeks. Enthusiasts watching the events of the past few weeks might have already purchased a Blu-ray player if they were on the fence, or are planning to in short order. That's the easy sale.

The next easiest sale is to those that have bought into the hobby, but haven't purchased a Blu-ray player.

The hardest sale is to those that haven't bought into either format and may not recognize the advantages of Blu-ray over DVD.

Applying simple marketing shows that you don't need to market to the first segment, because they are taking it upon themselves to make a purchase. The only marketing you need to do to them is to get them to purchase your player instead of someone else's.

The next target is the HD DVD buyer. The sale is easier than the last segment, and the two major obstacles you face are 1) price, and 2) value comparison to HD DVD. By offering a discount to this segment, you allay some level of concern about #1 and you generate goodwill to smoothe over any hard feelings that the potential buyer may have about how things turned out.

#2 is a more difficult proposition. HD DVD buyers know what their players and the format were capable of. Players of equivalent featuresets need to be offered so that the value is a little less lopsided. That rules out any non Profile 1.1 players, and one could argue that it could rule out any non Profile 2.0 players.

Panasonic DMP-BD50 Blu-ray PlayerOffer a discount on a Blu-ray player

Offering present HD DVD owners something on the order of the Panasonic DMP-BD50 for $350 and positioning it as an upgrade from their HD DVD player will make it easier for the fence-sitters to buy into the format. Once you have them, they become evangelists that will help you with that last segment of holdouts.

$350 for the DMP-BD50 may seem ridiculous if you're accustomed to the Blu-ray player market, but if you're coming in from the other side, it's the only player currently available or announced, besides the PS3, that approaches the functionality found in every HD DVD player made. Of course, its support of the advanced audio specs make it better than the HD-A30 and HD-A3, and 1080p24 makes it better than the HD-A3, but even at $350, it's also substantially more expensive than all but the HD-A35 HD DVD player.

If the PS3 entered the discussion, I think that a good price to get converts would be $300 for the 40GB version. It's been sold at that price before during various promotions, so I don't think that $300 is unreasonable. It also achieves Sony's goal of getting more PS3's in the wild.

To put these numbers into perspective, if the BDA were to buy 750,000 Blu-ray players valued at $300 each and give them away, that would be a $225M hit to the marketing budget. That's a lot of money, but not a lot when you consider that doing so would buy the entire HDM market and put the issue of multiple formats to rest.

Warner Bros. should offer to trade HD DVDs for Blu-rays

From the perspective of the movie studios, I definitely feel like Warner Bros. betrayed consumers. They were quoted as denying any change in plans as recently as mid-December. Not too many people are going to believe that they didn't know what was up by then. Maybe that's just business as usual in the board room, but they have a large contingent of people unhappy with them that they are hoping will buy their movies from them.

Turn this...... into this?
Harry Potter and the Order of the Phoenix on HD DVD Harry Potter and the Order of the Phoenix on Blu-ray

Warner Bros. could gain an incredible amount of goodwill by exchanging discs for consumers. They could even partner with a big box retailer to perform the exchanges for them, as the retailer would gain from getting people in the door and they would have the chance to market to those people and perhaps persuade them to buy more Blu-ray hardware and software while they were there.

Customers get immediate gratification without dealing with the delays and hassle of mailing discs, Warner Bros. doesn't have to deal with fulfillment (not a strong suit of the WB store at this point in time), and retailers get customers walking in the door. I don't see how the cost of such a program wouldn't be outweighed by the direct and indirect benefits.

Get a Big Box retailer to help

The hardware and software promotions could be combined. Instead of offering 5 free discs by mail, which might show up sometime around May, offer the players at a trade-in discount and an even exchange for the discs. The players get recycled by the pallet-full instead of being sent in one at a time or some such nonsense, and customers walk out with brand new hardware and most of the same movies (at least from WB) that they had before. That's a lot of happy customers!

This isn't about anyone asking for a handout

It's about using marketing to overcome obstacles to purchase. Every sale has a cost, and it's just a matter of how much cost-per-sale is acceptable to obtain one's goals. Blu-ray has a long uphill battle ahead of it against standard definition DVD. It needs as many happy customers as it can get.



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