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Scenario of how HD DVD wins format war quickly!

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Old 04-05-2007, 12:12 PM   #151
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Originally Posted by bruceames View Post
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.
OK, this in my opinion is a better explanation of your business model. I think the problem that you are going to run into is that the DVD market is far larger than the HD-DVD market. I believe you will find that most customers will not be willing to pay $5 extra for functionality that they cannot use, and may never use. It was even a tough sell when marketed to HD-DVD buyers only ($35 combo vs $30 HD-DVD only) and they were far more likely to perceive value in a $5 premium than SD-DVD buyers would. Correct me if I am wrong, but I believe HD-DVD supporters were arguing that the combos were depressing sales of HD-DVD movies and as a result causing HD-DVD to lag behind BR in total disk sales. If $5 for a combo disk was attractive to consumers then it should not have depressed the HD-DVD market.

As for your description of Unotis model, offering more features can increase sales of a release, and adding HD-DVD would be a new feature, however you still run into the problem that most SD-DVD users cannot use an HD-DVD disk, so they would not value it that strongly. Also, the biggest factor in disk sales is the quality of the movie, and additional features can only increase sales so much. Currently studios get at least a $10 premium on HD-DVD sales, so giving that up would require a large increase in number of buyers to offset those lost costs. Even Unotis admits that at least in the short term, studios would lose money with his business model.
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Old 04-05-2007, 12:14 PM   #152
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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.
Let's just agree to disagree.

To alot of people your case where Blu-Ray is the most logical one to win, is easily challenged with many solid reasons and facts.

You refuse to even acknowledge it could be true, so be it.

That you refuse to even consider this scenerio as having any chance is allright by me.

They've said that something could never happen many times in the past and low and behold it happened.

This thead was a possible scenerio, and in alot of people's opinion a good one, just not yours.

I'm not against Blu-Ray just I want it to ready to do what they have promised at a decent price, it's not there yet.

Perhaps, it might get there before it falls by the wayside for them having waited to perfect it until they were ready to do so.

Face it, it was a good idea but not remotely ready to introduce yet, They jumped the gun!

And one more thing, I've bought several of the "Combo DVDs" this week for an average price of $21.00 and they were not Universal DVDs, so you're belief it won't/can't happen is totally incorrect, it can happen and it was a studio that offered them!

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Old 04-05-2007, 12:23 PM   #153
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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.
The decline of SD DVD sales predates the HD format war. If I remember right, Shrek was the first indication that DVD sales were decreasing. I doubt the format war is hurting SD DVD sales much, since players on both sides will continue to play DVDs. I can see a person that is about to purchase a HD player delaying their SD-DVD purchases, but for those that plan to be on the side lines for an extended period of time due to the format war will most likely decide that they don't want to forgo home movie watching for the several years that this format war will play itself out.

I do agree that Toshiba reducing royalties could help the HD-DVD side, but I am not sure of how much an impact that would have. How much are the royalties now? If they are low already, then you can't reduce them that much more. I am also not sure if Toshiba alone can make that decision, as I thought the technology was owned by the DVD Consortium.
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Old 04-05-2007, 12:36 PM   #154
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The decline of SD DVD sales predates the HD format war.

I do agree that Toshiba reducing royalties could help the HD-DVD side, but I am not sure of how much an impact that would have. How much are the royalties now? If they are low already, then you can't reduce them that much more. I am also not sure if Toshiba alone can make that decision, as I thought the technology was owned by the DVD Consortium.
It was my hope in the scenerio that Toshiba could go the members of the Consortium and convince them to help win the format war through dropping the prices on Combo DVDs and that by doing so in the long run they would benefit by having the only format in the future and could more then make up for the temporary lower profits on the combo DVDs.

After all they all know profits on SD DVDs are falling because the market knows they will become obsolete in the near future but, this way they could keep sale numbers high and stop the hesitation felt by the buying public by making all new DVD purchases protected from becoming obsolete.

Again, a WIN, WIN SITUTATION for the Toshiba and the Consortium!

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Old 04-05-2007, 12:42 PM   #155
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SDDVD sales are also low because of DVD copy programs. Just like CD sales are low because of the various places they can be bought or downloaded. We'll see what happens in the next couple of years in terms of the format war, but based on past history with technology, the recorders/burners will eventually dig a hole in the profits of these companies. Which company is in a better position to wisthand this.
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Old 04-05-2007, 01:08 PM   #156
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OK, this in my opinion is a better explanation of your business model. I think the problem that you are going to run into is that the DVD market is far larger than the HD-DVD market. I believe you will find that most customers will not be willing to pay $5 extra for functionality that they cannot use, and may never use. It was even a tough sell when marketed to HD-DVD buyers only ($35 combo vs $30 HD-DVD only) and they were far more likely to perceive value in a $5 premium than SD-DVD buyers would. Correct me if I am wrong, but I believe HD-DVD supporters were arguing that the combos were depressing sales of HD-DVD movies and as a result causing HD-DVD to lag behind BR in total disk sales. If $5 for a combo disk was attractive to consumers then it should not have depressed the HD-DVD market.

As for your description of Unotis model, offering more features can increase sales of a release, and adding HD-DVD would be a new feature, however you still run into the problem that most SD-DVD users cannot use an HD-DVD disk, so they would not value it that strongly. Also, the biggest factor in disk sales is the quality of the movie, and additional features can only increase sales so much. Currently studios get at least a $10 premium on HD-DVD sales, so giving that up would require a large increase in number of buyers to offset those lost costs. Even Unotis admits that at least in the short term, studios would lose money with his business model.
I really don't know if combo prices are depressing HD DVD sales. Maybe a little, but I believe that some sales are to non-HD owners who are attracted to the future-proof disc concept, which would help make up for the HD owners who spurn it do to price or just buy the BD version instead.

For me the question is: how much more would the average consumer be willing to pay for a combo, over and above A) a regular DVD (in the case of a non-HD owner) and B) an HD DVD-only version? Also, how will that value change over time?

I estimate the combo's life span at 3-5 years, with its optimal effectiveness (and perceived value) starting at about 1 year from now and lasting about 2 years. There are too few HD players now for the average consumer to be thinking about combos (just the future-minded and those thinking about jumping in will consider them now), but as HD gains penetration and recognition and as more HDTVs get sold, THEN the combo will be more valuable. At that stage when dual format players are the rule rather than the exeption, then the combo will have outlived its usefulness.
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Old 04-06-2007, 11:52 AM   #157
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Well, someone who I trust and also does reviews for Universal Studios movies said that they are doing away with the price premium on the combo discs. Lets see when this price reduction shows up on store shelves.

So it appears that Universal IS listening to the HD DVD owners.
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Old 04-06-2007, 12:13 PM   #158
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Well, someone who I trust and also does reviews for Universal Studios movies said that they are doing away with the price premium on the combo discs. Lets see when this price reduction shows up on store shelves.

So it appears that Universal IS listening to the HD DVD owners.

Sounds like they are doing away with the Combo altogether:

http://www.engadgethd.com/2007/04/03...ybrid-hd-dvds/
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Old 04-06-2007, 12:31 PM   #159
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New releases are still going to be combos from what I heard. They seem to be just getting rid of combos on the catalog titles.
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Old 04-06-2007, 12:31 PM   #160
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Sounds like they are doing away with the Combo altogether:

http://www.engadgethd.com/2007/04/03...ybrid-hd-dvds/
I had thought they were ditching the combos for catalog titles for the time being, but would be doing combos on all the day and date stuff.
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Old 04-06-2007, 12:32 PM   #161
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And, PFC beats me to the punch...

by less than a minute!

Way to go, quickdraw!
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Old 04-06-2007, 01:20 PM   #162
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Sounds like they are doing away with the Combo altogether:

http://www.engadgethd.com/2007/04/03...ybrid-hd-dvds/
Just wishful thinking by the combo-haters.
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Old 04-06-2007, 02:36 PM   #163
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Well, someone who I trust and also does reviews for Universal Studios movies said that they are doing away with the price premium on the combo discs. Lets see when this price reduction shows up on store shelves.

So it appears that Universal IS listening to the HD DVD owners.
That is interesting. I could see Universal for a couple of releases price the combo disk at the same price as a normal HD-DVD just to get some data on how customers react. It is one thing to have estimates on what you will make at certain price points. It is another thing to have actual data. If Universal continues this long term, then part of my argument against combo disks will be lost. I do have one question though. When Universal releases a combo disk, do they also release a HD-DVD version only? It may be difficult to tell if they are pricing combo disks at the same price as HD-DVD only, or just reducing prices for HD-DVD movies in general. At some point, I expect HD-DVD movies to have the same price as DVD movies, as that is the sweet spot for selling to consumers.
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Old 04-06-2007, 03:01 PM   #164
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I think Universal is still retaining the $5.00 combo upcharge since there is no link to any confirmation and that Amazon still lists the combo new releases at $40 MSRP. Hopefully they are considering do so in the near future though, which would be great if they did.
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Old 04-06-2007, 03:45 PM   #165
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The source at HTS is David Bruce. He talks to people at Universal and he does reviews for them. I definately trust his info and we will have to wait to see when it happens. The sooner the better I always say.
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