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Originally Posted by ack_bak
You have no proof that there is no profit being made on cheaper BD players. In fact recent Funai statements seem to suggest the opposite. Blu-Ray hardware has been out over 2 years now and there is no doubt that the PS3 has helped in terms of economies of scale. We simply do not know what the hardware costs and what profit margins are. The fact that there are more manufacturers and models than ever before seems to indicate that the CE's must be making money or they would stop making players.
The studios and CE's have forecasted high expectations for Blu-Ray. Sure they could have kept the prices sky high and hoped for 10% marketshare, but they have been clear that they want Blu-Ray to be much bigger than that. Price is going to be a huge barrier for most people and the only possible way for Blu-Ray to overtake DVD is if it is priced very close to DVD.
Then you have to factor in the economy. DVD sales are dropping. Redbox's are popping up everywhere. The studios and CE's have to be realistic. The days of people liberally getting multiple credit cards and racking up high debts on them are most likely over. We are already seeing the effects of the credit crunch on spending. People are being more careful with their money than ever before and if the BDA is serious about Blu-Ray market penetration they will have to get serious about the price. A Lionsgate analyst stated that Lionsgate is clearing $18-21+ per Blu-Ray release (catalog and new release). Clearing. And Lionsgate is one of the lower cost studios in terms of BD pricing. Time to wake up. I know I am not going to drop $20+ on a catalog title unless it is an absolute must have. And there are few of those. Catalog titles should be street priced at $15 and new releases should be $20 ($23-25 for a special edition). Budget catalog titles should be priced around $9 (street price). Remember I can get that same title on DVD right now for $3-9 on any given sale (in a B&M store mind you).
This is the reality if the BDA is serious about Blu-Ray.
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Excellent post!
I have no doubt that the profits all these CE companies expected/promised just are not there now and a large part of it is the economy as it is now. They expected a huge holiday season rush that likely isn't going to be there like they thought even at higher prices than we have now on BD players being much lower.
The thing is, that nearly everyone (including BDA industry sources) now is saying that BD movie prices are too high at this point and when LG stated the net profit they are making off of BD titles it shows me that the studios are just being too greedy and do not want to give up those huge margins they have.
The question is will the studios realize this in time and reduce prices as a way of securing a future large revenue stream, or will they be content with a niche market with much lower volume but keeping the high margins they have. At this point i don't know the answer, but I suspect before the holiday season is over we will have some indication.