Battling it Out – Skirmishes Continuing

Implications: Did you read How To Lie With Statistics in college? Do you practice it in your business? Do you own a high definition TV and also subscribe to a high definition service? Do you own an hd – next generation DVD player of either format?  If not, why not? Have you watched a standard definition (sd) DVD on your HD TV? Looks good, doesn’t it?? As reported in the article, 1 million units may seem like a lot, but that only represents an approximate $20 - $30 million dollars in an industry that generates a total of over $25 billion on an annual basis. There are many hurdles to be cleared before a winner can be declared, if ever that happens. Until then, declaring Blu-Ray the leader is lying with statistics.

Analysis: It seems as though there is a different news article every day touting who has won the latest skirmish in the battle of the formats for the next generation DVD system.

While this is not a scorecard, alternating press releases from both the Blu Ray (Sony led) and the HD DVD (Toshiba led) camps, might lead one to believe that the latest battle was won by the organization putting out the most recent release. That may be true, but it is lying with statistics – stretching the truth to make a point – not necessarily a fallacy.

The announcements all have high profile organizations touting their role(s) in the roll out of the next generation DVDs. These include but are not limited to (in alpha order) Amazon, Blockbuster, Disney, DreamWorks, Fox, Paramount, Sony Pictures, Target, Wal Mart and Warner Bros.

The next generation DVD systems will not be able to gain any traction until a number of things occur. These include:

1.More HD TVs are sold. There must be a larger installed base of next generation TVs before the “winner” in the format battle will be won, if at all. There is no sense in having a next generation DVD player until you buy a new HDTV. But with the price of the TVs still high, albeit decreasing, it is still an expensive purchase, sometimes necessitating deferring the purchase of a next generation DVD player.

2.Next generation stand alone players are sold in significant numbers - so that the statistics are not relying on the Xbox 360 and the Sony Playstation 3 for next generation DVD.

3.Standard definition DVD players, the current generation, play a great picture on a new HD TV. Those players cost less than $100, often less than $50. Why would one need to spend even $300 for a next gen DVD player, let alone $1,000 for a high end player?

4.Upconvert DVD players can also be purchased for less than $100. These players increase the resolution to make a standard definition DVD look even better on a new HD TV.

5.A significant number of people have bought the new HD sets, but are not subscribing to a high definition service. If they are not interested in what is basically a small incremental cost on their cable/satellite bill, why would they spend on a next generation DVD player?

6.Next generation DVD players are very expensive, especially for those other than the very early adopters. There will not be any kind of traction toward critical mass until the prices on the players drop dramatically. This will need to start at no more than $200.

7.Content must come down in price. One only needs to review the Sunday newspaper ads for Best Buy, Wal Mart, Target and others to recognize that the prices of both new and old/library product are low. Have you seen the $4.99 table in these stores? These stores represent 45 – 50% of the market for packaged media.

In the end, a next generation DVD player and related format will make headway with the consumer. It will not happen though until the manufacturers recognize that it is time to price for the average consumer.