Digital-media sales stalled in Q1

DonnyDC · 07-02-2009, 01:46 PM

My Best Buy movie section is pretty much 30% BD. If thats how much space they have for a format with less than 10% of the market imagine how much space DVD will have years from now.

Lee Stewart · 07-02-2009, 01:48 PM

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Originally Posted by DonnyDC

And? the difference is still dollars and cents in manufacturing.

You are ignoring volume and level of maturity of the formats.

DonnyDC · 07-02-2009, 01:56 PM

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Originally Posted by Lee Stewart

You are ignoring volume and level of maturity of the formats.

Ok just saying the difference wont be manufacturing related.

ack_bak · 07-02-2009, 02:03 PM

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Originally Posted by Dare

It takes both? Well, I suppose nobody can buy anything if nobody is selling anything, but that's as far as you can take it. The consumer decides what is bought. The consumer can refuse anything the seller offers. And most importantly, all the seller cares about is making the sale. If the consumer doesn't want the new thing and prefers the old thing, guess what the seller pushes? You guessed right, the old thing.

I think you are grossly underestimating the power of product placement, marketing, and sales. There is a reason why CE and content companies often have to pay the stores money for the best real estate spots in the store. There is a reason why companies spend vasts amounts of money on marketing and promotions.

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You're talking about the time when DVD players came down in price to the point where everyone and their dog got a DVD player for christmas. Of course DVDs were front and center by then. Consumers were demanding them loudly. The handwriting was already on the wall for VHS, because fewer people wanted them, and they were less of a priority for shelf space by then. That change was driven by consumers.

This was set into motion well before DVD hardware sales started spiking back in 2003-2004. VHS was started taking a backseat in most of my local big box stores near me (Alexandria, VA at the time) back in 1999-2000.

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I go into Best Buy and Wal-mart today (but not Circuit City because they're dead and gone

), and I don't see Blu-ray front and center. My Wal-Mart puts them off to the side out of the way (at least they aren't locked up anymore), and my Best Buy gives them a shelf in the back. And Target... I had to walk through the video department twice before I found the Blu-ray shelf. Maybe that'll change when or if consumer demand goes up enough, but the consumers will have to make the stores put them up front. The stores aren't going to do it on their own. There are priorities that are dictated by consumer activity. Oh, they'll do what they have to do to clear the inventory from their stockrooms, but they can't make people buy. Look how well the marketing effort for UMD worked.

Well I guess it depends on where you live. The Best Buy I go to in Salt Lake City has Blu-Ray front and center and takes up a good chunk of real estate. I would say 25-30% of their shelf space is allocated for Blu-Ray. Best Buy, Walmart, and Target all have BD players hooked up to HDTV and are playing demos. My local Costco does as well. My local Target and Walmart have Blu-Ray front and center on the new release end caps as well and both stores have greatly expanded their Blu-Ray section since the same time last year.

UMD and Blu-Ray have little to nothing in common with each other. Completly different CE and retailer support and different markets.

Lee Stewart · 07-02-2009, 02:21 PM

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Originally Posted by ack_bak

That is not what I was talking about. I am talking about the price to manufacture a BD disc vs a DVD.

But the manufacturing difference doesn't exist in a vacuum. You can't just compare the two and say; "Ta-da!" because manufacturing means all kinds of things which have to be brought up.

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Not in 2009. But by 2012-2014?

No idea. We are talking about a format that presses out well almost 2 billion discs WW. How many did BD predict this year? 100 million?

The only way for your scenerio to work is for BD to be as successful as DVD and I just don't see that happening - ever.

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Because you are comparing apples to grapefruit. Most new release video games are priced from $49-59. Most new release movies are priced from $14-29. A bargain priced catalog DVD title costs $2.99-7.99. A bargain priced video game is priced around $19.99.

No - I am comparing at the basic level. More than 3 VG formats have shelf space and there are 2 HV formats sharing shelf space. We have already been told that retailers are not going to be stocking the slow moving catalog titles of DVD. They are giving that business up. Go to an E-Tailer for low volume production/selling titles.

The same thing could happen to BD.

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And since we are on the subject of video games, look what retailers do with concerns to previous generation game console shelf space. Compare the shelf space for the Xbox 360 vs the original Xbox, the PS2 vs the PS3, the Gamecube vs the Wii. Retailers are very quick to phase out the previous generation of games and hardware for the newer generation.

And they replace them with the newest rendition - all three or four versions.

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Why do you think that is? I mean there are far more PS2's out there than any other current gen game console. Companies are still making games for it. Yet when I go to my local stores that are pushing PS3, Wii, and 360. The PS2 gets little shelf space.

Game Stop seems to have alot of shelf space for PS2 games - new and used. They are a real force in the video games market.

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And look at the shelf space at Target/Walmart/Best Buy. Compare the video game section to the home video section. They are not even close to being the same size. Home Video has a much larger presence. In other words video games have smaller shelf space but have higher margins.

But we were also told that not only were the top retailers moving out catalog DVD and CD for BD, but also for Games. HUGE market with megabucks and doing very well (with the exception of May) for quite some time now.

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So you see the PS3 as a failure with regards to being a BD player and I just don't. Look at the Nielsen numbers. Somebody is buying movies on the BD format.

It sure isn't PS3 owners, except mayber once or twice a year if we are to believe the analysist(s). Yo9u can Poo Poo attach rate all you want - the studios look at it ALL the time. Just another part of their market analysis. And it isn't new news either. They have lnown about it for years.

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But you once again missed my point. BD players play DVD's. Once the price of BD players drops to under $50 there is little incentive for retailers to promote and stock DVD players and little incentive for consumers to buy a DVD player when they can get a better player for slightly more money. Even if they have an SDTV, why not spend the extra money and get a player that supports HD for down the road. At some point that person will most likely have to buy an HDTV when their SDTV breaks. Again, we are talking 2012+ here. I can barely find SDTV's now in any of the stores I go to.

I didn't miss your point. I am trying to explain to you that having a BD player that is never used to play BD's is worthless to the growth of the format. It's like it isn't even there.

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And lets also put this into perspective. Lets say in 2014 that 80% of US households own an HDTV. The 20% that is left clinging to SDTV. Do you think these are the people that are the core demographic that studios, retailers, and CE's are worried about? That this demograhic makes up the types of people who rush out to buy movies on release day?

I got 3 TV's on my home (two are HDTV's) how about you?

My next door neighbor has 4 TV's - one HDTV and 3 SDTV's. He doesn't plan to replace anithing unless it breaks.

It isn't enough to get just one HDTV into the home. It fares much better if all TV's in the home are HDTV and that won't happen for another 10 to 15 years - if that short. Could be 20 years.

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CD and DVD. And they have expanded their Blu-Ray and video game sections. Is your local Wal-mart/Target/Best Buy not doing this? What about Blockbuster? Are you not seeing Blu-Ray being expanded at the expense of DVD?

To be honest - my local retailers made "the switch" last year and I haven't seen any difference since then - talking WM and Target. No idea on BBi as I don't frequent that chain.

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The general public is not enamored with PQ and AQ and extras like many people are. But the general public will also fall in line and buy what is being offered to them if it is priced right.

Ack

. . . you paint the studios, retailers and CEM's as the Puppet Masters drawing on the strings of the consumer.

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I would venture to say that many people upgraded to DVD from VHS simply because it made sense to them when their VHS player broke or they bought a new TV, and especially when DVD players hit critical price points. If your VHS player broke back in 2002 it just made sense to buy the DVD/VHS combo player because that is what the stores carried and were pushing.

Someone once said to me:

"Your greatest strength is your greatest weakness."

You ever heard that expression?

IMO, BD's greatest strengh is it's backwards compatability to DVD . . .

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The writing was on the wall for VHS back in 2001-2003 and consumers knew it. It was pretty obvious to them that VHS was being phased out and DVD was taking its place.

They caused that to happen. Sure there were a few nudges from the studios who desperately wanted out of VHS for a miraid of reasons. There is no evidence that I see that says the same condition exists with DVD.

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So the question is this. What will the consumer see when they walk into Best Buy in 2012-2014 and they need to buy a new DVD player. Do you think that DVD will have equal or more shelf space for hardware/software? Do you think the retailer and studios will be marketing and promoting the two equally? Do you think that $49 will be too steep a price to pay for a BD player vs a $19 DVD player?

We keep talking about the price of the players. How about talking about the price of the BD's that go into the players?

Basic question for you . . .

Will BD's, on the over all, cost more than DVD's? If the answer is yes - that represents a choice for the conumer. Only thing that tops price in the consumers mind is convinence. BD more convinent than DVD? Hardly.

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Time will tell if DVD will continue to capture the majority of the market over the next 3-5 years.

Agree - future is not easy to read.

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I have my doubts. I think by 2014 DVD will be on the way out. I think there will continue to be support for it for another 5 years after that, but it will be limited new releases, bargain bins, and super cheap generic players. I think you will see a huge push for Blu-Ray once players hit the $99 and under price point and that it will just be an afterthought for anybody that has an HDTV and needs/wants a new optical disc player.

VHS had almost 30 years of support. LD had over 20 years of support and DVD - the most successful CE product in the history of CE products - is going to be phased out after 17 years . . . for BD.

Dare · 07-02-2009, 02:35 PM

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Originally Posted by ack_bak

I think you are grossly underestimating the power of product placement, marketing, and sales. There is a reason why CE and content companies often have to pay the stores money for the best real estate spots in the store. There is a reason why companies spend vasts amounts of money on marketing and promotions.

I bet you have an iPhone.

Quote:

Originally Posted by ack_bak

This was set into motion well before DVD hardware sales started spiking back in 2003-2004. VHS was started taking a backseat in most of my local big box stores near me (Alexandria, VA at the time) back in 1999-2000.

I think your timing is off. 1999 was The Year of the DVD. That was the year player sales quadrupled, and although it continued to climb from there, such a drastic increase was not seen again. Even skeptical me got a DVD player that year. Jeez, I already had a massive DVD collection by 2003. It's only 2009 right now. This DVD thing has been happening longer than you think. (DVD is 12 years old, or 13 depending on where you are.)

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Originally Posted by ack_bak

Well I guess it depends on where you live. The Best Buy I go to in Salt Lake City has Blu-Ray front and center and takes up a good chunk of real estate. I would say 25-30% of their shelf space is allocated for Blu-Ray. Best Buy, Walmart, and Target all have BD players hooked up to HDTV and are playing demos. My local Costco does as well. My local Target and Walmart have Blu-Ray front and center on the new release end caps as well and both stores have greatly expanded their Blu-Ray section since the same time last year.

I wish I saw that when I go shopping. But I don't. What I see isn't very encouraging, which is bad, because I want everything on Blu-ray.

DonnyDC · 07-02-2009, 02:54 PM

The fundamental idea behind a DVD hitting bargain bin prices and HDDVD hitting $5 prices is pretty much the same. Thats what the market is willing to pay for them.
As BD reaches a larger, more thrifty demographic the studios will price movies with longer shelf times accordingly. The same way they did with dvd. We've established that manufacturing costs arent stopping them so theres no reason they couldnt.

In contrast LD never got more than 5% and always had the demographic willing to pay more, it was never sold at large retail chains, and I believe each disc cost about $10 to manufacture.

ack_bak · 07-02-2009, 03:16 PM

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Originally Posted by Dare

I bet you have an iPhone.

Yep, bought it on release week

Aside from that, there is a reason why companies pay $3 million dollars for a 30 second ad during the Super Bowl

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I think your timing is off. 1999 was The Year of the DVD. That was the year player sales quadrupled, and although it continued to climb from there, such a drastic increase was not seen again. Even skeptical me got a DVD player that year. Jeez, I already had a massive DVD collection by 2003. It's only 2009 right now. This DVD thing has been happening longer than you think. (DVD is 12 years old, or 13 depending on where you are.)

According to the CEA they sold 4 million DVD players in 1999. A nice chunk, but in 2003 they sold just shy of 22 million DVD players.

VHS was clearly the leader back in 1999 in terms of revenue and profit, but my point was that the shift had already begun. It was not until 2003 that DVD beat VHS for the first time ever in a week for overall rental revenue, and it never really looked back after that.

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I wish I saw that when I go shopping. But I don't. What I see isn't very encouraging, which is bad, because I want everything on Blu-ray.

Well it is odd that our markets are so different, but judging by the Nielsen numbers, Blu-Ray is on the rise. With an improving economy, lower prices, and a push from retailers, studios, and CE's I don't find it to optomistic to see Blu-Ray generate more revenue in the next 3-5 years then DVD.

From a consumer perspective, I believe, it will come down to price being the biggest barrier. Blu-Ray is clearly the superior product vs DVD. If the price differential between BD and DVD hardware and software is close enough in 2012-2014 I think you will see millions of people make the shift in both renting and buying.

If hardware and software prices do not drop enough, retailers do not phase out DVD, and HDTV sales remain flat over the next 3-5 years Blu-Ray could be second fiddle, but it would still be a healthy market for the studios.

Lee Stewart · 07-02-2009, 04:06 PM

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Originally Posted by DonnyDC

The fundamental idea behind a DVD hitting bargain bin prices and HDDVD hitting $5 prices is pretty much the same. Thats what the market is willing to pay for them.

No it isn't. One is a thriving format that has matured and has over production that is heavily discounted. The other is a failed format at fire sale prices.

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As BD reaches a larger, more thrifty demographic the studios will price movies with longer shelf times accordingly. The same way they did with dvd. We've established that manufacturing costs arent stopping them so theres no reason they couldnt.

And who says it will reach such a demographic? Current growth rates are not sustainable over a long period of time.

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In contrast LD never got more than 5% and always had the demographic willing to pay more, it was never sold at large retail chains, and I believe each disc cost about $10 to manufacture.

Hmmm . . .

A format for those that had to have the best PQ and AQ and features available, that was supported by all studios.

DonnyDC · 07-02-2009, 04:19 PM

Quote:

Originally Posted by Lee Stewart

No it isn't. One is a thriving format that has matured and has over production that is heavily discounted. The other is a failed format at fire sale prices.

You didnt disagree with me.
One is a thriving format that has matured and has over production that is heavily discounted - Priced to what the market is willing to pay
The other is a failed format at fire sale prices - Priced to what the market is willing to pay.

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And who says it will reach such a demographic? Current growth rates are not sustainable over a long period of time.

Who says it wont?

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Hmmm . . .

A format for those that had to have the best PQ and AQ and features available, that was supported by all studios.

Yeah thats why it failed..

Lee Stewart · 07-02-2009, 04:33 PM

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Originally Posted by DonnyDC

You didnt disagree with me.
One is a thriving format that has matured and has over production that is heavily discounted - Priced to what the market is willing to pay
The other is a failed format at fire sale prices - Priced to what the market is willing to pay.

The retailers control the price. Have you seen a major hollywood movie sell for $1 on DVD? I have seen this with HD DVD - Transformers. I believe there are also $1.99 priced HD DVD's - which don't exist on DVD - so yes - I am disagreeing with you.

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Who says it wont?

And who says it will? Analysists? Some of those same analysists forecasted there would be two HDM formats in 2011 so that's a big

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Yeah thats why it failed..

LD wasn't a faliure - not with 18,000 titles in the USA over a span over 20 years. it just wasn't a success when compared to VHS or DVD. It blew the doors off of S-VHS and ED-Beta and maybe even D-VHS.

BD's total life has not been written yet. Let's see what the future holds.

DonnyDC · 07-02-2009, 04:48 PM

Quote:

Originally Posted by Lee Stewart

The retailers control the price. Have you seen a major hollywood movie sell for $1 on DVD? I have seen this with HD DVD - Transformers. I believe there are also $1.99 priced HD DVD's - which don't exist on DVD - so yes - I am disagreeing with you.

And retailers price them according to what the market is willing to pay.

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And who says it will? Analysists? Some of those same analysists forecasted there would be two HDM formats in 2011 so that's a big

And who says they wont?
...you? well.. we all know how many unicorns youve let loose.

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LD wasn't a faliure - not with 18,000 titles in the USA over a span over 20 years. it just wasn't a success when compared to VHS or DVD. It blew the doors off of S-VHS and ED-Beta and maybe even D-VHS.

BD's total life has not been written yet. Let's see what the future holds.

Ok so less than 5% of the market isnt failing.

Lee Stewart · 07-02-2009, 05:00 PM

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Originally Posted by DonnyDC

And retailers price them according to what the market is willing to pay.

Not higher or lower?

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And who says they wont?
...you? well.. we all know how many unicorns youve let loose.

Ah - when in doubt - attack the poster instead of the post.

You want to address the analysists predictions or not? THAT was the post.

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Ok so less than 5% of the market isnt failing.

There is only one thing that BD can fail at - capturing the majority of the homes in the USA - as a viewed format - you know - people renting or buying BD's.

MikeRox · 07-02-2009, 07:03 PM

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Originally Posted by ack_bak

It takes both (ie the industry and consumers). But I don't know how you could not step into a Best Buy, Circuit City, Walmart, etc in 1999-2002 and not see what the retailers, studios, and CE's were doing. DVD was placed in the best real estate spots in the store and VHS was treated like the bastard step child. This was planned and calculated.

Yes, most consumers loved the idea of no longer having to rewind movies, and they liked the form factor and additional features that DVD offered, but clearly consumers were also pushed to upgrade as well.

I think "forced" is the wrong word, it's just, it gets to a point, where a newer technology becomes just as financially viable as an older one, making the older technology completely redundant.

Look at Hard Drives, Microsoft initially chose 8gb HDDs for the Xbox, but as the consoles life progressed, suddenly 20gb HDDs were cheaper to buy, than 8gb HDDs as those were the ones made en masse and 8gb HDDs became "specialist" components.

A similar situation may occur with DVD vs Blu-ray. Blu-ray hardware manufacturing will drop to the point by which, it is as cheap to make, as just a DVD drive (I believe this has already happened with CD drives vs DVD drives?) and so making a DVD only player will be utterly pointless. This will eventually lead to Blu-ray players being the only optical media players on the market (barring a new optical format being released). We've already got that case with HDTVs. It is impossible to buy an SD set in most stores in the UK now (if not all of them) because the HD resolution panels are mass produced so much, that through scales of economy. they're cheaper than SD displays to produce.

Why would you make an older product, if it costs the same (or even just a slightly higher price) to make the new standard?

DonnyDC · 07-02-2009, 09:47 PM

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Originally Posted by Lee Stewart

Not higher or lower?

Huh?

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Ah - when in doubt - attack the poster instead of the post.

You want to address the analysists predictions or not? THAT was the post.

When in doubt of what?
I cant help you with what predictions you choose to believe in or not.

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There is only one thing that BD can fail at - capturing the majority of the homes in the USA - as a viewed format - you know - people renting or buying BD's.

Majority of HDTV homes.

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07-02-2009, 01:46 PM	#61
DonnyDC High Definition is the definition of life. Join Date: Aug 2008 Posts: 2,198	My Best Buy movie section is pretty much 30% BD. If thats how much space they have for a format with less than 10% of the market imagine how much space DVD will have years from now.

07-02-2009, 02:54 PM	#67
DonnyDC High Definition is the definition of life. Join Date: Aug 2008 Posts: 2,198	The fundamental idea behind a DVD hitting bargain bin prices and HDDVD hitting $5 prices is pretty much the same. Thats what the market is willing to pay for them. As BD reaches a larger, more thrifty demographic the studios will price movies with longer shelf times accordingly. The same way they did with dvd. We've established that manufacturing costs arent stopping them so theres no reason they couldnt. In contrast LD never got more than 5% and always had the demographic willing to pay more, it was never sold at large retail chains, and I believe each disc cost about $10 to manufacture.