HD-DVD Breaks $200 Mark

[Master of Ossus]

Well, this is what some people have been waiting for.

Earlier this year the HD DVD camp expressed optimism that this holiday season would prove big for HD DVD, particularly because aggressive pricing was expected to deliver a solid HD DVD player into the sweet sub-$200 spot. It's widely believed that consumer adoption hinges on the players themselves becoming more affordable, which is why folks were getting excited about reports this past week indicating that Wal-Mart would be rolling out a $198 Toshiba HD-A2 HD DVD player next weekend.

As it turns out, plenty of retailers are about to get behind a big push for the HD-A2, whose sweet new price is only soured by its 1080i max output (1080p would be best, but at $200 right now, that's asking too much). Since Toshiba launched its third-generation HD DVD players last August, the second-gen HD-A2 was poised to get a price reduction.

The Wal-Mart plans were first revealed by a user of the eProductWars forum, who also provided a picture of an endcap stocked with $198 players. Wal-Mart won't confirm when the pricing will be official, but "Jim" from eProductWars indicated that the sale is expected to start next weekend. Nevertheless, we're hearing from readers who have found the units on sale already, so perhaps Wal-Mart has stepped up the timetable, at least in some regions.

You don't have to wait for Wal-Mart, Ars has learned. Doing the rounds, we found that Circuit City is selling the HD-A2 for $197.99, both online and in stores. A source at Best Buy tells Ars that a price cut is also planned, but that most stores are out of stock of the unit right now, and they cannot be ordered online. Amazon has the player for a puffier $220. A week ago, the HD-A2 was priced near $299 almost everywhere.

While we all knew that a price reduction in the HD DVD camp was imminent, I don't think anyone was expecting to see the sub-$200 units come in the form of a Toshiba player, which has for the most part been very well reviewed. Rumors earlier this year suggested that a no-name brand would be the first player to dip into the red zone, like this unit.

Perhaps best of all, the five free HD DVDs promotion is still on, meaning that buyers can score a HD DVD player and five movies for $200. The movie selection isn't the hottest, though.

Will a quality player available at less than $200 spur adoption of HD DVD? It's anyone's guess right now, and it's still anyone's game. Seeing the name "Toshiba" on the box will certainly help, though, as it's a brand that enjoys some consumer confidence (which is important when it comes to the inevitable "is this a piece of junk" question that comes along with such price cuts).

[General Zod]

You know, this almost makes buying one for Christmas tempting. Almost.

[Glocksman]

You know, this almost makes buying one for Christmas tempting. Almost.

I'd jump on it if I had an HDTV.
As it is, my 1987 Sony Trinitron (top of the line 27" model at the time) doesn't even have S-Video inputs.
And I'm a cheap enough bastard to not buy another set until this one gives up the ghost.

[General Zod]

I'd jump on it if I had an HDTV.
As it is, my 1987 Sony Trinitron (top of the line 27" model at the time) doesn't even have S-Video inputs.
And I'm a cheap enough bastard to not buy another set until this one gives up the ghost.

Yeah. HDTVs still costing $600 at the low end and up are a real turnoff.

[Glocksman]

I'd jump on it if I had an HDTV.
As it is, my 1987 Sony Trinitron (top of the line 27" model at the time) doesn't even have S-Video inputs.
And I'm a cheap enough bastard to not buy another set until this one gives up the ghost.

Yeah. HDTVs still costing $600 at the low end and up are a real turnoff.

Tell me about it.
Hell, I paid almost $1000 in 1987 dollars for that Sony TV.
God knows what that same $1000, adjusted for inflation, would buy me now.

[Shogoki]

I'll bite when it goes below $100.

[Admiral Valdemar]

How about the discs not being extortionately priced too and a lot of films only being on one format or the other?

No, I'd rather not be what they call a "sucker".

[phongn]

I'll bite when it goes below $100.

As it happens, the Toshiba HD-A2 will be on sale for $98 at Wal-Mart tomorrow with HD-DVDs for $15.

[Vympel]

I'll wait for the players that can play both formats.

[Drooling Iguana]

I'll wait until they stop making DVDs.

[Flagg]

How about the discs not being extortionately priced too and a lot of films only being on one format or the other?

No, I'd rather not be what they call a "sucker".

Exactly. The best bet is to wait until they start putting out multi-format players and the disks themselves go down in price by a third.

[Spanky The Dolphin]

The Digital Bits had an opinion piece about this matter today:

How in the world does Toshiba think it's ever going to make any money from the HD-DVD format? I mean, seriously.

You may have heard by now that Toshiba has made pre-Black Friday arrangements with Wal-Mart to effectively dump its HD-A2 HD-DVD player starting this Friday (this weekend only) for just $98.87. You may also have heard that Best Buy has followed suit. Supplies are limited, of course, and the offer is apparently not valid in some parts of the country that have state anti-dumping laws.

Wikipedia defines dumping as "the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production." Toshiba's move isn't really anti-competitive, because there are no U.S. manufacturers making HD-DVD players. But it's that "below its costs of production" part that applies in this case. The HD-A2 arrived in the States with an original MSRP of $499.99. Now, Toshiba is letting it go for just $99. There's no way the player cost less than $100 to manufacturer. Just. No. Way.

You might wonder: How can Toshiba possibly have enough HD-A2s left to sell at just $99 at large, nationwide retailers? Simple. It's because they didn't sell originally, so plenty of stores still have them sitting on shelves, gathering dust. Toshiba is eager to clear them all out at this point, and Wal-Mart and Best Buy are happy to help.

Clearly, the HD-DVD camp understands that low price is really the only card they have left to play in this format war. Porn hasn't won the war for them as predicted, nor have online bells and whistles, or combo discs/players. The obvious question would be: Why in the world would any other hardware manufacturer want to join Toshiba's foolhardy strategy of driving player prices down to next to nothing? It's no accident that not a single other major manufacturer has released a stand-alone HD-DVD player (and no, the Venturer doesn't count). Given how dramatically Toshiba has slashed prices on HD-DVD players over the last year, you have to wonder how long they can keep losing money.

Forget for a moment that the HD-A2 isn't capable of delivering full 1080p video - that doesn't matter. Why? Because anyone who is so price sensitive that they wait until a high-def player price hits $99 to buy one isn't likely to have an HDTV set yet. Being super bargain shoppers, they aren't likely to want to pay $30 for an HD-DVD movie either. I'd bet many of the people who jump on this sale will either be using them primarily as upconverting DVD players, or they're already diehard HD-DVD supporters and are buying them as second players. For those regular consumers who take the bait, I wonder how they'll feel when they realize they can't play those big Disney titles in the "blu" boxes due next week.

Speaking of which... a couple weeks ago, when Disney and Sony launched the successful strategy of counter-selling their Blu-ray software titles 2 for 1 the same week Paramount and DreamWorks released Transformers on HD-DVD, we got a few e-mails from HD-DVD fans telling us how lame that was. Is it any accident that Toshiba didn't wait for Black Friday to sell their $99 players, instead carefully planning the 3-day sale for the weekend before Disney and Pixar release Cars, Ratatouille and the Pixar Short Films Collection on Blu-ray? Not a chance. So Toshiba is slashing HD-DVD hardware prices to counteract the release of blockbuster Blu-ray software. What does that tell you about the viability of HD-DVD going into a fourth quarter that, by all accounts, is make or break for the format? (Especially with Warner Home Video now hinting that they're looking at the fourth quarter to "reevaluate" their dual format support)

There's no doubt that thousands of eager consumers will get a deal on cheap hardware this weekend. But it still isn't going to be the format war winner for HD-DVD that some would like to believe. On the contrary, it means that Toshiba is getting desperate enough to adopt an all-or-nothing strategy... and is going even more deeply into the red with this format. Meanwhile, given the strength of their rhetoric this week, it's a safe bet that the Blu-ray camp will pull their gloves off too in the fourth quarter, and start getting more aggressive in the weeks and months ahead.

It boggles the mind to think that any reasonable person can still believe at this point that the HD-DVD format represents a viable long-term business. Even if Toshiba's strategy has the desired effect (which seems primarily to be garnering splashy headlines in the press), what do they ultimately win? A tie? The best case for HD-DVD, even if Warner were to be so impressed by this sale that they go HD exclusive, would be to effectively create a 50/50 split in terms of studio support. In other words, a total quagmire. High prices were the number one reason most surveyed consumers cited for staying away from high-def discs in the recent NPD Group survey, but the existence of two competing formats was not far behind. And just as many people who said that price was their chief concern also said that they're happy enough with current DVD to have no interest in upgrading to high-def discs anyway. So all this seems to be more a battle waged for the press and PR spin than the actual hearts and minds of consumers.

Keep in mind, contrary to the opinions of some online, we don't think HD-DVD is a bad format at all. If it were the only HD format around, we'd be all over it here at The Bits. But Toshiba is effectively paying studios to support it, and now they're practically giving the hardware and software away. Do you suppose we'll see free HD-DVD player offers in Cracker Jacks and cereal boxes next? $50 players? $25 players? 2 for 1 players?

Experienced fighter pilots will tell you that when you dive your aircraft at the deck, you very quickly run out of maneuvering room. It seems to me that the ground is coming up awfully fast for HD-DVD. Either way, it's looking more and more as if this fourth quarter could decide the format war... one way or another.

And to think... there was once a time when we all hoped that these two sides would work out their differences and create a single, unified high-def disc format. Those were the days, as they say.

http://www.thedigitalbits.com/#mytwocents

[Guardsman Bass]

I'll add this on to the "eventually will buy" list. There are 19" and 22" HDTVs selling in stores around here starting at $349 and up, which isn't too bad. I'm not buying it yet, though, because my current tv has a built-in headset slot, so I can watch without disturbing the roommates.

[atg]

KMart drops blu-ray

KMart drops blu-ray over price

As HD-DVD players have dropped below $200, Blu-ray is starting the feel the pressure. In one such move, Kmart has decided to drop Blu-ray players from its stores, mostly because of pricing.

Of course, Kmart will continue to sell the Playstation 3, which includes a Blu-ray player.

Wal-Mart and Circuit City are offering the Toshiba A2 player at below $200, as is Amazon.com. The downside of the player, of course, is it is 1080i only. However, the lower prices seem to be turning the tide, which seemed to be in favor of Blu-ray after events such as Blockbuster choosing to rent Blu-ray only.

And deals like the Sears Black Friday special on the Toshiba A3 ($169) and the current Buy.com Xbox 360 HD-DVD external drive ($164.99 bundle with Heroes Season 1 and five movies) just add downward pressure.

However, even at these lower prices, many are still concerned with ending up with "Betamax" hi-def DVD player. We'll see what the holiday sales bring.

[Netko]

The Digital Bits had an opinion piece about this matter today:

http://www.thedigitalbits.com/#mytwocents

To be fair, DB threw in their lot with Bluray a while back, so their opinions on the topic aren't unexpected. I think they're a bit peeved that their backing of Bluray based on early adopter sales might get proven wrong in mass retail, which realistically is only going to start happening now that players are dropping to sub-200ish $ prices.

Its right around my comfort point for unplanned electronics purchases, for example, and I'd likely go for it if it was available here for the price and if I had an HDTV.