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Scenario of how HD DVD wins format war quickly!

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Old 04-04-2007, 05:48 PM   #136
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Originally Posted by unotis View Post
3. Studios: Win, they end the format war, consolidate the format to HD DVD, cut costs by producing only one version of all new releases, increase market share and eventually have the entire market when the consumer has adopted one HD format, they then can reap the profits of the World wide combined DVD format and cease production of SD and combo DVDs from then on.

All they have to do is forgo some minor profits for a short time inorder to gain HUGE profits when they've won!

WIN, WIN, WIN SCENARIO!
Unotis, you are just using the same arguments that I have already addressed throughout this thread. Let me try again and see if I can get through to you:

"they end the format war" - You have already stated that wasn't the goal of offering the dual format disks. If you have changed your mind, then Universal could more easily end the format war by choosing to support BR.

"increase market share " - If you mean by killing BR and selling to owners of BR players (who then decide to buy HD-DVD), yes that would increase market share, but you said that wasn't the point. Without killing BR, a studio cannot increase market share in existing formats except by releasing a larger number of high quality movies that people want to buy - which has nothing to do with price of the movie or whether a combo disk is used. Short term efforts to boost that market share will not have long lasting effects, so accepting less profit now will not increase the market share long term.

So have you changed your mind and decided that you do mean that Universal should support combo disks to kill the BR competition?
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Old 04-04-2007, 05:52 PM   #137
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And I was not talking about them winning and having the entire HD market, I was referring to them having the entire DVD market after the transition.
Btw, this is where you said that you weren't saying that Universal should support combo disks to kill BR.
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Old 04-04-2007, 08:01 PM   #138
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Yeah- I know that natural forces will help the studios decide which direction to go in. I wasn't really looking at it from a market standpoint- just a Strawberry standpoint. And let me tell you- Strawberry hates 'em.

Also- (and this obviously doesn't apply to Universal, since they're a one-format studio) I hate to say it, but I'd be just as interested to know the effects that combos are having on dual-format releases. In my case- when a release hits both formats, and the HD DVD version costs more because of this combo business, (The Departed, Happy Feet, The Fountain, etc.) I'm buying Blu-Ray and saving myself the money in instances where I otherwise might not. I know that BR version of The Departed outsold the HD DVD version almost 2:1 after release- I'd be curious to know if those numbers would have been different if the prices had been the same...
Yeah, I have a tendency to view things too much from a "what's-good-for-HD DVD" standpoint.

Who knows what effect the combos are having on sales. Intuitively one would think the sales would be higher, but I'm sure there are some sales to those who don't have HD players yet, but have intentions to buy an HD DVD player in the near future. If the combo could be sold at only a $3-$5 upcharge over the DVD version, then more non-HD owners would be tempted to buy combos I think. Price points are obviously crucial and they will be fiddled with for maximum effect (end profits).
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Old 04-04-2007, 09:11 PM   #139
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Combo disc's are a band aid. As stated earlier in this post, 90% of households currently enjoy DVD. Very few enjoy HD DVD or BD. Why would the consumer purchase a combo disc if they have no player for HD DVD or BD? So the B&M's can save shelf space? Me thinks not. If the consumer is happily engaged with a BD or HD DVD player you can bet your lickey that the consumer will purchase the BD or HD DVD movie of choice. Take it home and enjoy. The combo supporters point of issue is that they would like to view their HD DVD or BD disc in another room with a standard DVD. This be a weak argument. First off, if it's a new release, Joe Consumer is going to watch it the way it was meant to be (HD DVD or BD). Second - if the movie is interesting enough to watch again, Joe Consumer will watch it the way it was meant to be viewed. As HD DVD or BD become more saturated in the market - me see's a majority of homes having 2 HD players - which also negates the need for combo discs. A combo disc IMO is simply HD DVD grasping at air. The easiest way to solidify the market and put an end to the skirmish would be for Universal to go BD. Rather simple but highly unlikely. Hence, the saga continues!!!!
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Old 04-04-2007, 09:27 PM   #140
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Combo disc's are a band aid. As stated earlier in this post, 90% of households currently enjoy DVD. Very few enjoy HD DVD or BD.....

.....As HD DVD or BD become more saturated in the market - me see's a majority of homes having 2 HD players - which also negates the need for combo discs.
So what about the period between the two you mention above? All of a sudden we jump from "very few own HD DVD or BD" to "majority of homes having 2 HD players"? there will be at least 5-7 years between now and then, my friend, in a world of transition where the combo will be most effective.
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Old 04-04-2007, 10:06 PM   #141
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I agree Bruce. I have 5 TVs and only 2 are HDTVs. I have 11 DVD players (including a dual screen portable for the family car, but only 3 HD players (including the PS3).

I do not know how many times my wife wants to watch a movie together in the bedroom but we cannot because it is a HD DVD that is not a combo or BD that cannot ever be a combo. It really bothers her, but since I just recently bought that 2nd HD DVD player I can at least put it in our bedroom to watch HD DVDs after tax season.

MOst of us here are not your "typical" movie watchers and even having ONE HD player is uncommon. Having multiple HD players in multiple rooms with HDTVs is rare and the combos provide flexibility until HD DVD players replace all SD DVD players. That will take YEARS and flexibility is important to fill that gap.
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Old 04-05-2007, 09:49 AM   #142
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Yes, I can see how combo discs can be attractive to a lot of HD-DVD consumers, and I can also see how some the current DVD owners would see value in them because they plan to upgrade to HD-DVD in the future. But as I have discussed before, the studios prefer if you buy 2 copies of their movie, so they are not that motivated to offer a combo disk giving one copy for free. My guess is that the combo disk will eventually be phased out as they won't want to pay for shelf space for DVD, HD-DVD, and combo.
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Old 04-05-2007, 10:06 AM   #143
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But as I have discussed before, the studios prefer if you buy 2 copies of their movie, so they are not that motivated to offer a combo disk giving one copy for free. .
That's where you're missing the point. For example (using average street prices of the first year of sales). Assuming that total sales are equal:

Combo $20 250,000 units-- cost to make: $5 net: $3,750,000
SD DVD $15 150,000 units-- cost to make: $3 net: $1,800,000
HD DVD $20 100,000 units-- cost to make: $4 net: $1,600,000

Total net combo: $3.75 million
Total net SD DVD + HD DVD $3.4 million

Where net = street price minus manufacture cost

Last edited by bruceames; 04-05-2007 at 10:13 AM..
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Old 04-05-2007, 10:24 AM   #144
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That's where you're missing the point. For example (using average street prices of the first year of sales). Assuming that total sales are equal:

Combo $20 250,000 units-- cost to make: $5 net: $3,750,000
SD DVD $15 150,000 units-- cost to make: $3 net: $1,800,000
HD DVD $20 100,000 units-- cost to make: $4 net: $1,600,000

Total net combo: $3.75 million
Total net SD DVD + HD DVD $3.4 million

Where net = street price minus manufacture cost
My understanding is that MSRP for the movies is like the following:

DVD- $20
HD-DVD - $30
Combo - $35

But let's go with your example, apparently you are assuming that they are offering only the combo and have phased out the DVD and HD-DVD only versions, so customers must buy the combo disk if they want the movie (150k SD-DVD, 100k HD-DVD = 250k combo sales). The problem is that the 150k sales of SD-DVD assumes a price point of $15. You have now raised the combo price to $20, so that higher price point will cause some of that 150k not to buy the movie. When it comes to the HD-DVD only buyers, if the combo and HD-DVD versions were the same price then yes it would be fair to say that all HD-DVD buyers would buy the combo. The problem for studios is that they would make more money not offering the combo, and getting some of the HD-DVD buyers to double-dip and buy both DVD and HD-DVD versions -and that doesn't even consider the extra manufacturing costs that you listed. The only way studios will offer the combo is if they can price it higher than the HD-DVD only version.
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Old 04-05-2007, 10:58 AM   #145
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Originally Posted by fryet View Post
My understanding is that MSRP for the movies is like the following:

DVD- $20
HD-DVD - $30
Combo - $35

But let's go with your example, apparently you are assuming that they are offering only the combo and have phased out the DVD and HD-DVD only versions, so customers must buy the combo disk if they want the movie (150k SD-DVD, 100k HD-DVD = 250k combo sales). The problem is that the 150k sales of SD-DVD assumes a price point of $15. You have now raised the combo price to $20, so that higher price point will cause some of that 150k not to buy the movie. When it comes to the HD-DVD only buyers, if the combo and HD-DVD versions were the same price then yes it would be fair to say that all HD-DVD buyers would buy the combo. The problem for studios is that they would make more money not offering the combo, and getting some of the HD-DVD buyers to double-dip and buy both DVD and HD-DVD versions -and that doesn't even consider the extra manufacturing costs that you listed. The only way studios will offer the combo is if they can price it higher than the HD-DVD only version.
Again, the whole point of the thread was "the scenerio of how HD DVD wins format war quickly"!

If the studios wanted to help one of the formats (in this case HD DVD) they could do that by forgoing a little profit per disc so they could price combo DVDs low enough to be the same as SD DVDs. They could then save money and increase profits in the near future by having at that time to produce, market and ship only one format for the entire multi-billion dollar DVD market world wide.

It is simple:forgo a little profit now for greatly increased profit later, it happens all the time in business. Some times it's rebates, special financing, added value for no extra cost, call it what you will it is a common business practice.
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Old 04-05-2007, 11:07 AM   #146
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Originally Posted by fryet View Post
My understanding is that MSRP for the movies is like the following:

DVD- $20
HD-DVD - $30
Combo - $35

But let's go with your example, apparently you are assuming that they are offering only the combo and have phased out the DVD and HD-DVD only versions, so customers must buy the combo disk if they want the movie (150k SD-DVD, 100k HD-DVD = 250k combo sales). The problem is that the 150k sales of SD-DVD assumes a price point of $15. You have now raised the combo price to $20, so that higher price point will cause some of that 150k not to buy the movie. When it comes to the HD-DVD only buyers, if the combo and HD-DVD versions were the same price then yes it would be fair to say that all HD-DVD buyers would buy the combo. The problem for studios is that they would make more money not offering the combo, and getting some of the HD-DVD buyers to double-dip and buy both DVD and HD-DVD versions -and that doesn't even consider the extra manufacturing costs that you listed. The only way studios will offer the combo is if they can price it higher than the HD-DVD only version.
Just an FYI. SD DVD new releases have an MSRP of $29.99 and are discounted to the $20.00 street price. SOme have an MSRP of $24.99 though. Either way, other than if a special sale, new release SD DVDs are $20-25.00 street prices.
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Old 04-05-2007, 11:14 AM   #147
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Just an FYI. SD DVD new releases have an MSRP of $29.99 and are discounted to the $20.00 street price. SOme have an MSRP of $24.99 though. Either way, other than if a special sale, new release SD DVDs are $20-25.00 street prices.
I'm glad you pointed that out, even though it had been shown several times in the this and other threads.

I just got lazy and alot of times the poster doesn't even read my post completely before countering with the same exact information I had just corrected.

I get tired sometimes of trying to make my point to someone who is not even paying attention in the first place (not picking fryet or on anyone in particular).

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Old 04-05-2007, 11:24 AM   #148
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Ok unotis, apparently you have gone back to saying that the studios will suffer a loss of profit in order to ensure that one format wins. As I have stated many times before, the only single studio with the power to determine the format war is Universal, and that is if they start to support the BR side. Even if they chose to release combo disks at SD-DVD prices, that would not guarantee a HD-DVD victory, but supporting BR would ensure a BR victory. The neutral studios have no reason to want to see HD-DVD win over BR, and in fact if forced to choose, at this point would probably be more likely to side with BR over HD-DVD (since BR is currently the frontrunner).

You keep going back to "This is a thread to discuss how HD-DVD can win." While you can propose anything you like about how HD-DVD can win, don't be surprised when people like myself challenge your ideas when they are not realistic. Toshiba releasing a $200 player was a good idea, and is in the realm of possibility. All of the HD-DVD movie studios releasing combo disks at SD-DVD prices is about as likely to happen as aliens using mind control devices on Sony execs and getting them to agree to support HD-DVD. It isn't going to happen. Sony is more likely to get the aliens to go after Toshiba instead.
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Old 04-05-2007, 11:35 AM   #149
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My understanding is that MSRP for the movies is like the following:

DVD- $20
HD-DVD - $30
Combo - $35

But let's go with your example, apparently you are assuming that they are offering only the combo and have phased out the DVD and HD-DVD only versions, so customers must buy the combo disk if they want the movie (150k SD-DVD, 100k HD-DVD = 250k combo sales). The problem is that the 150k sales of SD-DVD assumes a price point of $15. You have now raised the combo price to $20, so that higher price point will cause some of that 150k not to buy the movie. When it comes to the HD-DVD only buyers, if the combo and HD-DVD versions were the same price then yes it would be fair to say that all HD-DVD buyers would buy the combo. The problem for studios is that they would make more money not offering the combo, and getting some of the HD-DVD buyers to double-dip and buy both DVD and HD-DVD versions -and that doesn't even consider the extra manufacturing costs that you listed. The only way studios will offer the combo is if they can price it higher than the HD-DVD only version.
I was using average street prices and not MSRP. Also, I was using "what if" prices and not actual. In my example, "what if" Universal and WB eliminated the $5.00 upcharge and starting to sell combos-only at HD DVD prices. I estimated sales would be the same because for every customer that walked because they wouldn't pay the $5 upcharge (from the DVD price), another customer sees the added value and buys (when he otherwise wouldn't have bought any disc).

In Unotis' model, if combos were to be sold at DVD prices, then sales of that disc would have to exceed the total sales of both sold separately in order to make more profit. "the sum of greater than the parts" theory, and I think it would work.

You believe the combo offers little or no added value and we disagree, that's all. Let's see what the average consumer will think when the time comes.
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Old 04-05-2007, 12:06 PM   #150
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Don't forget that while the two competing HD formats are out there, a lot of people are NOT buying SD DVDs because they do not want them to be obsolete when they buy into the HD players. If my memroy serves me, SD DVD sales are on the decline right now, and combos selling at SD DVD prices COULD actually increase sales since then people will feel the movies they buy now will be useful when they buy a HD player.

Another thing that Toshiba could do is lower the royalty/licencing fees on HD DVD so that would be an incentive for studios & CE companies to support the format more. Will it cost them over the life of the licensing? Sure, but not as much as if they ended up losing because Sony is making all kinds of concessions to them now themselves.
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