Wal-Mart Names HD DVD The Winner

MidnightWatche

Wal-Mart Names HD DVD the Winner

"There is one retailer that has the power to call the winner of the protracted Blu-Ray vs. HD DVD fight and that vendor is Wal-Mart. Over the weekend they apparently leaked plans to bring in a massive number of low cost (possibly sub $200) HD DVD players for Christmas.

The manufacturing side of this has apparently been in the works for a few years but this is the first time we have had projected prices for the result.

Why Wal-Mart, Why Now?

Wal-Mart uses DVDs to build store traffic. They tend to subsidize the price for the movies they feature to get folks into the stores and once there, these folks tend to buy other things. DVDs have been so effective for the company they threw their body at movie downloads initially and delayed the related services by several years. However, they have now realized that this kind of thing is coming regardless and have brought out their own movie download service to compete. But that doesn’t address the store traffic benefit that will be evaporating as people move away from DVDs for standard definition downloadable movies.

Wal-Mart sees the new high definition formats as a way to bring in store traffic again but they realized that won’t happen unless the players are affordable and there is only one standard. They recognized their own power in being king maker previously and are now using that power to drive the format that works best for them. They could care less about the technology as this is all about making money and they (like every other retailer in this space) know that two formats won’t allow the market to move outside of the fringes and the dual-mode players are simply way too expensive.

So they need one standard and a lot of players in market before their DVD customers wander off to download land and stops coming to Wal-Mart for movies.

Why HD-DVD and not Blu-Ray?

For Wal-Mart the only real metric is cost. Wal-mart doesn’t really make money off of the movies and do not sell high-end home theater equipment. They are known for aggressive prices and, as mentioned above, they subsidize their DVD sales. They needed something that could sell for under $200 soon and they needed the lowest cost of the new formats. This is where HD DVD shines, not only had Toshiba agreed to license to low cost manufacturers early on, but HD DVDs are pressed on the same lines that regular DVDs are, they require no major equipment change out and the blanks, when compared to Blu-Ray are less expensive as well.

This made the decision simple, Blu-Ray was just too expensive to make this work and any technical advantages were insignificant against Wal-Mart’s need for the lowest cost offering. For them it is about price and that is where HD DVD clearly has the sustainable advantage.

What does this Mean?

It means that any studio wanting Wal-Mart’s support after year end had better be selling HD DVD movies. Wal-Mart won’t be promoting Blu-Ray and, after year end, will increasingly focus their marketing on getting people to buy into HD DVD players and the related HD DVD movie from them.

In short, the Blu-Ray aligned studios will now have to either support both formats or risk losing much of Wal-Mart's business and given how material this business is to them, you have to think that an anti-Wall-Mart decision would have a material impact on their bonuses and career longevity. It certainly puts Columbia Pictures, which is owned by Sony, in a particularly uncomfortable position.

So, if this move by Wal-Mart is true , and it appears to be (but we won’t know for sure for a few months yet), the format war is likely over and Wal-Mart has declared the winner."

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bruceames

Pretty darn good read for any HD DVD supporter, but I'll start jumping up and down if/when Walmart themselves make a statement even remotely reflecting the above comments.

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RIP Kosty.

MidnightWatche

I don't think they'll be making any official announcements until late Q3 or early Q4. This keeps the BDA guessing just what the heck is going on.

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"Without struggle there can be no progress."

bruceames

That's been HD DVD's game all along, a small, elusive target is much harder to hit.

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RIP Kosty.

drock912001

I'll beleive this propaganda when I see it.My local Walmart's 4 out of 6 I have visited in the last 30 days stock both formats movies.And the same 4 stock Blu-Ray players and hddvd is hit and miss and I only seen it in 1 store and it was the RCA.It didn't sale until they put it on clearance under $300.

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BiggNewt

This is the same guy who said this...

http://news.digitaltrends.com/talkback158.html

This is the Bill Hunt of HD DVD

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rockaway1836

No. He's worse than Bill Hunt. This guy is a paid agent for HD DVD.

borromini

I for one don't believe that an entity like Wal-Mart determines who wins the war.

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Lee Stewart

They sell 40% of all the DVD's sold in the USA. Last year it was $16 billion total sales - you better believe they are a factor in the war.

johnnyd1

I agree.

Lee Stewart

We have to assume that the news about the Wal-Mart player is real. Too much evidence.

Don't you think that WM didn't take an option to order more if the initial 2 million is a hit? In these kinds of cases, there are price reductions for greater quantity orders. If 2 mil was the first order and they sell like hotcakes, the next order will be for 5 million.

Lee Stewart

So neither of you agree that the LARGEST retailer IN THE WORLD can not affect the outcome of the war?

PLEASE take those blue colored glasses off . . just for a moment and understand that PRICE is THE best selling feature for any piece of CE equipment.

90% of households in the world (with income) shop at Wal-Mart.

Superman

Then you might want to read this.

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cousin eddie

Blu Ray is already dead, it's like a chicken with it's head cut off. The body will still run around crazily (Sony making silly statements) for a little while, but we all know it won't last long.

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PFC5

I am surprised to here you say this. Your a very smart guy and Walmart has dominated in EVERYTHING they get into. I am not sure that Walmart wiping out all competition in any region they move into is good in the long-term, but it is very good news for HD DVD and bad news for BD.

ANY company competing with Walmart that takes them lightly or underestimates their influence does so at their own peril. This is history and the most probable future results IF they take sides in this war.

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