W/Mrt Finalizes 2 MILLION HD-DVD Order

[Groundbeef]

Wal-Mart has just penned an agreement with a Chinese manufacturer for 2 MILLION HD-DVD players priced to the street at $299.

It looks like it will be staged deployment, as the last batch of players are to hit by close of 2008. If Wally World can sell 2 million HD-DVD players, this will extend the war a bit longer.

$299 is nearly $300 less than the least expensive Blu-Ray players.

Heres the link:

http://www.engadgethd.com/2007/04/20/the-wal-mart-299-hd-dvd-player-on-the-way/

[kexodusc]

I'm all for cheap electronics dumped to put pressure on other companies. But $299? I've seen the HD-A2 from Toshiba priced at $350. Some people claim it's gone lower. Gonna have to do a lot better than $299 to offset the whole cheap/no-name brand thing. I'm guessing Walmart low balls this even more to create some incentive to buy a crappy piece of electronics.
Cool...this is where it gets interesting. Now we're likely to see some meaningful price movement from Toshiba, Samsung and the likes in both HD-DVD and Blu Ray players, likely in Q3/Q4 in time for Christmas. Yaaaaaayyy.
I'll predict here that Zenith launches the first $300 BluRay player.

[L.J.]

At this rate, prices should be down really low by the end of the year. Gotta wonder how much that Samsung universal player is gonna go for.

[Groundbeef]

So much for Mfgs keeping the price up to preserve their margins. Just another race to the bottom, not so bad for us consumers, but it just means they are going to screw us somewhere else.

[recoveryone]

well you still have the price of the HD/Blu Ray DVD's. Now if Wal Mart can sale those below $20 maybe they will tip the market one way or another. At $299, that will attract many avarage people when they see CC/BB charging $400/500 for theirs and if the price of the disk come down under $20 it will make some heads turn. I 'll still hold out for a good dual format player still:

HD/Blu ray
SACD/DVD-A
Standard DVD compatible
Mp3 compatible
VCD compatilbe

Did I miss anything?
My current one does it all except for the HD/Blu-ray, think they help a brother out?

[L.J.]

Target has been selling new release BR for $24.99. This is not bad considering 2 disc special editions DVD can go for $22.99.

[ericl]

I got the HD-A2 + 4 HD-DVD movies at circuit city for $360 out the door a few weeks ago..

i agree though the pressure is good, no matter how much Sony whines about it.

[L.J.]

What....no review! :ciappa:

[emorphien]

And in other news, even if it were $150 I still wouldn't go to WalMart to buy it.

[Feanor]

Wal-Mart has just penned an agreement with a Chinese manufacturer for 2 MILLION HD-DVD players priced to the street at $299.
...

... to have $300 HD/BR's if you're stuck with a 27" CRT?? :(

[Groundbeef]

I think that its more of a perception thing. If Blu-Ray was in Wal-Mart, more people would be exposed to it. With HD-DVD going to Wal-Mart, they are going to have more exposure.

Whether you personally will shop there is irrelevent. Most of us on this board are NOT going to Wal-Mart for our A/V needs. But plenty of folks are doing just that.
And while the product may not suit the higher end folks, a $900 plasma will fit the bill for plenty of folks.

The early adoptors (read: US on this board) usually snap up the new stuff pretty quick. But it is a good sign for a product line when Wal-Mart or Target, picks up a new line. They don't usually go out on a limb without some serious research, and the knowledge that at least they should be able to profit from the venture.

So at least for HD-DVD this will introduce millions of consumers to a product the may have heard of, but thought it would be out of their reach. And to them, the $299 price tag will look mighty tempting compared to the $600 Blu-Ray.

[nightflier]

They don't usually go out on a limb without some serious research, and the knowledge that at least they should be able to profit from the venture.

I think that's really the key. Wallfart wouldn't be doing this unless they knew that they could make a quick buck off of HD-DVD, which means that they may know something about the future of the format that we don't. That Warmart is selecting HD-DVD over BluRay here is significant. Maybe the BR folks weren't able aren't able to demonstrate the same profit margins (I'd hate to be the ones that tried to negociate that sales pitch). Or maybe the Chinese aren't able to produce the players at a price point that Crapmart is able to make enough money on.

And maybe it's not the players that Sprawlmart is looking to make money on. Maybe they are banking on the disks or the TVs that they can throw into the sale. Maybe Thrallmart will force their overworked and under-paid sales associates (all those people that got fired from CC?) to push the suggestive sales routes. "Well, m'am, if you're going to buy one of these players, then you'll need these overpriced, slave-labor produced, average-quality Monster-brand cables to go along with it.... and with such a nice player, you wouldn't want to risk plugging it into a regular power strip, now would you?"

Anyhow, if there's one thing Appalmart seems to know how to do is to squeeze blood out of money. If they think they can make money with this, then its clear they did not see the same profit margins with BR. Regardless of one's opinion of Barfmart, they are telling the world that HD-DVD has some life in it, despite the obvious lead that BR now enjoys.

Wooch, are you reading this?

[Woochifer]

I think that's really the key. Wallfart wouldn't be doing this unless they knew that they could make a quick buck off of HD-DVD, which means that they may know something about the future of the format that we don't. That Warmart is selecting HD-DVD over BluRay here is significant. Maybe the BR folks weren't able aren't able to demonstrate the same profit margins (I'd hate to be the ones that tried to negociate that sales pitch). Or maybe the Chinese aren't able to produce the players at a price point that Crapmart is able to make enough money on.

And maybe it's not the players that Sprawlmart is looking to make money on. Maybe they are banking on the disks or the TVs that they can throw into the sale. Maybe Thrallmart will force their overworked and under-paid sales associates (all those people that got fired from CC?) to push the suggestive sales routes. "Well, m'am, if you're going to buy one of these players, then you'll need these overpriced, slave-labor produced, average-quality Monster-brand cables to go along with it.... and with such a nice player, you wouldn't want to risk plugging it into a regular power strip, now would you?"

Anyhow, if there's one thing Appalmart seems to know how to do is to squeeze blood out of money. If they think they can make money with this, then its clear they did not see the same profit margins with BR. Regardless of one's opinion of Barfmart, they are telling the world that HD-DVD has some life in it, despite the obvious lead that BR now enjoys.

Wooch, are you reading this?


Been reading up on the threads, but not had much time to respond. (Our pending new arrival has taken priority with my spare time :6:)

Anyway, the name of the game with WalMart ever since Sam Walton's successors took the reigns has been all about generating volume, cutting costs, and pushing the supplier prices through the floor no matter how their suppliers accomplish the unit price reductions. Basically, it's a deal with the devil for a manufacturing partner -- they get into WalMart's distribution channels, knowing full well that continuing that relationship will require constant cost cutting (with every successive order, WalMart will always try to push the cost down even further, regardless of the means that suppliers have to resort to in order to keep lowering the price points).

Once upon a time, WalMart had a policy of seeking out American suppliers. Obviously, those quaint days are long gone, as WalMart's nothing more than an outpost for cheap imports nowadays.

In this case, Toshiba has been busy signing up these Chinese outsource manufacturers as HD-DVD licensees, which is a 180 degree turnaround from why the HD-DVD and Blu-ray formats were created in the first place, so the WalMart announcement is no surprise. Some of the analyst reports I read opine that Toshiba's turnabout embrace of these low end outsource suppliers is more of a desperation move than anything. If HD-DVD had been able to maintain its early lead over Blu-ray, I seriously doubt that Toshiba would be going to the off-brand strategy this early.

WalMart would not have been able to do this with Blu-ray simply because Blu-ray licensees do not include these Chinese outsource fabricators. What surprises me is that WalMart chose to come in at the $300 price point, which Kex points out is not that far below the street price for Toshiba's entry level players.

For WalMart, it's not about the margin since most of their products are sold at razor thin margins, it's about the volume. As an example, WalMart has been pressuring the studios to lower DVD price points by jettisoning the bonus discs and sticking with cheap movie-only editions.

I'm not sure that $300 is a low enough price point to spur sales for 2 million HD-DVD players, especially with HD-DVD's limited studio support. The margins are much higher by going with Blu-ray, but at the current price points, Blu-ray players would sell at too low a volume to be of any interest to WalMart. Going the low-ball route could also backfire for the HD-DVD format if these players prove as unreliable and underperforming as the off-brand DVD players that came into the market around late-1999 (anyone remember Apex Digital?).

Analysts have long predicted that Blu-ray player prices would go down to $400, and HD-DVD player prices would hit $300 by year's end. Some projected that the entry of low-end Chinese players into the market might push the price points down to $300 (Blu-ray) and $200 (HD-DVD). This move obviously points more to the latter scenario by year's end.

Once these players hit the store shelves, I think the rest of the industry will see whether those HD-DVD players gain any traction. If so, then the Blu-ray player prices will inevitably follow suit. The new Blu-ray players due out this summer are primarily around the $600 price point, which would put the street prices right on target to hit $400 by the end of the year. I doubt that Blu-ray prices will reach parity with HD-DVD because of the studio support (i.e., they don't have to match HD-DVD on price), and because Blu-ray licensees do not include these off-brand vendors. Obviously, an uptick in HD-DVD player sales would accelerate the price points going down.

[kexodusc]

I think the only relevance that might come out of this is if WalMart sells 2 million of these in the next year, and HD-DVD gains some kind of hardware advantage (or even matches the PS3 factor), will the BluRay exclusive studio's start to support HD-DVD? Will this even offset the PS3's propping of BluRay? I think Sony is screwing PS3 up as bad as they can but they'll still sell what, 6 million of those at least in the next year?

Most people here are in agreement that HD-DVD or BluRay won't "catch on" for another year or two in all likelihood. At that point, if BluRay titles outnumber HD-DVD titles say 60/40, there's a lot less incentive to buy the HD-DVD player at any pricepoint.
Rephrasing that, would you buy a crappy $300 player that only released 50% or less of all new releases, or spend an extra hundred or two to access 75% or more? Or just continue to not buy either format (most likely)? Until that changes, the pricepoint of the hardware might not be all that important.

However, it's industry movement like this that tests the resolve of Fox and Warner, how committed are they to BluRay exclusively? I could see that if Disney releases alot of it's big releases on a special killer WalMart HD-DDVD blow out sale with these cheapo players, those BluRay exclusive guys are going to rethink their position.

That's some chain of ifs though at this point, escpecially considering a similar price drop on BluRay hardware effectively neutralizes this movement.

[nightflier]

At that point, if BluRay titles outnumber HD-DVD titles say 60/40, there's a lot less incentive to buy the HD-DVD player at any pricepoint. Rephrasing that, would you buy a crappy $300 player that only released 50% or less of all new releases, or spend an extra hundred or two to access 75% or more? Or just continue to not buy either format (most likely)? Until that changes, the pricepoint of the hardware might not be all that important.

I think another factor is that if the price of these HD-DVD players goes down a lot further, customers will also wait, e.g. if the players keep dropping in price too fast, people wait to see where it will land and manufacturers continue to drop prices because they are not selling. Then, when selling price reaches what the stores are paying for them, they start the blow-out fire-sales to unload those overstocked units, drive people back to the stores in an effort to sell them other items, and hopefully recoup the loss.

Another factor is related to perceived value. If a unit keeps dropping in price, then people wonder if it's worth anything. They wonder if the product is completely worthless and start looking at competing technologies, in this case Blu-Ray. No one wants to own something that has no value. As an example, I took a quick gander on eBay and it looks like the Toshiba players are going for as low as $200 new and $150 used. Blu-Ray Players are going for no less than $350 new and $250 used. This discrepancy is only going to further lower HD-DVD values. As an unfortunate side effect for other manufacturers, this will also drive down prices of associated equipment such as hi-def TVs, cables, and the movies themselves.


However, it's industry movement like this that tests the resolve of Fox and Warner, how committed are they to BluRay exclusively? I could see that if Disney releases alot of it's big releases on a special killer WalMart HD-DDVD blow out sale with these cheapo players, those BluRay exclusive guys are going to rethink their position.

Actually winners never re-think their position. It is why in war and in sports, winning is usually by a big margin and seldom a close finish, especially in the last few minutes. As long as the Blu-Ray camp sees its numbers winning, they will see no reason to change course. Instead, they will push even harder, which is going to make the fight for HD-DVD that much harder. Unless Microsoft pulls an October surprise on the industry, I am starting to think that HD-DVD is dying.


That's some chain of ifs though at this point, escpecially considering a similar price drop on BluRay hardware effectively neutralizes this movement.

Never happen. Blu-Ray will remain more expensive as long as they have, or they are perceived to have, the upper hand.

Now I've been on the fence about the Blu-Ray HD-DVD debate for some time (just look at my other posts), but this late in the game, I think only a major upheaval in the industry will change the tide, a miracle, if you will, and I don't mean a horse called Miracle.:).

[Woochifer]

I think the only relevance that might come out of this is if WalMart sells 2 million of these in the next year, and HD-DVD gains some kind of hardware advantage (or even matches the PS3 factor), will the BluRay exclusive studio's start to support HD-DVD? Will this even offset the PS3's propping of BluRay? I think Sony is screwing PS3 up as bad as they can but they'll still sell what, 6 million of those at least in the next year?

Most people here are in agreement that HD-DVD or BluRay won't "catch on" for another year or two in all likelihood. At that point, if BluRay titles outnumber HD-DVD titles say 60/40, there's a lot less incentive to buy the HD-DVD player at any pricepoint.
Rephrasing that, would you buy a crappy $300 player that only released 50% or less of all new releases, or spend an extra hundred or two to access 75% or more? Or just continue to not buy either format (most likely)? Until that changes, the pricepoint of the hardware might not be all that important.

However, it's industry movement like this that tests the resolve of Fox and Warner, how committed are they to BluRay exclusively? I could see that if Disney releases alot of it's big releases on a special killer WalMart HD-DDVD blow out sale with these cheapo players, those BluRay exclusive guys are going to rethink their position.

That's some chain of ifs though at this point, escpecially considering a similar price drop on BluRay hardware effectively neutralizes this movement.

Excellent points, and your questions pretty much capture the state of the market and what has to happen for anything to swing the momentum in either direction.

So long as the studio support holds up for Blu-ray, then the Blu-ray Association's manufacturing partners can afford to keep the price points higher than HD-DVD. The question is how low HD-DVD has to go before their market share starts increasing. HD-DVD is in the position of having to stimulate hardware sales somehow. Last year, HD-DVD standalone players barely outsold the standalone Blu-ray players, even though the Blu-ray player prices were generally in the $1,000 range, while Toshiba had a $500 HD-DVD player available from the outset.

The more I think about it, the more curious this move by WalMart is. The article mentions that the shipments on this order will continue through 2008, but doesn't mention when these players will start arriving at WalMart. Depending on how quickly these players get into distribution channels, by the time WalMart gets into the HD-DVD game, Toshiba's players might already hit the $300 price point and more aggressive pricing on Blu-ray players might hit the stores once the 2nd gen players roll out. $300 HD-DVD players might seem like a milestone right now, but by the end of this WalMart production run, a $300 price tag might seem extravagant.

Funai (which also markets its products under the Emerson and Sylvania labels, among others) is Blu-ray's low end manufacturing partner, and they will soon come out with a $500 Blu-ray player. The analyst articles I've read seem to project that Blu-ray player prices will settle in around $100 higher than the HD-DVD players by year's end. For the time being though, HD-DVD seems to want to maintain at least a $200 price advantage over Blu-ray. I think that's the only way that they can try to stay even on the hardware end, but if Blu-ray pushes the price points down such that they are $100 above HD-DVD, then I think they will widen their lead so long as the studio support remains intact.

[recoveryone]

I was just reading a news item on MSN about the Wal-mart effect, They were stating when wal-mart slashed prices on their Flat panels last November and continued to offer the same deal now has cause CC/comp USA/Tweeter/REX/BB to lay off staff and close some stores. Their stock value has dropped %20 for some companies and even Panasonic is questioning why wal-mart cut the price on their Plasma by $500.00. Wal-mart could very well make the decision on HD/BR, if they keep killing off the competition. They made a major dent in the grocery chains with their super stores and put KB toys and FAO on the sidelines with low priced toys. So will Wal mart be the major player in all categories of consumer goods?

[Woochifer]

I was just reading a news item on MSN about the Wal-mart effect, They were stating when wal-mart slashed prices on their Flat panels last November and continued to offer the same deal now has cause CC/comp USA/Tweeter/REX/BB to lay off staff and close some stores. Their stock value has dropped %20 for some companies and even Panasonic is questioning why wal-mart cut the price on their Plasma by $500.00. Wal-mart could very well make the decision on HD/BR, if they keep killing off the competition. They made a major dent in the grocery chains with their super stores and put KB toys and FAO on the sidelines with low priced toys. So will Wal mart be the major player in all categories of consumer goods?

To some extent, they already are. They're already the #1 volume vendor in a lot of categories -- groceries, clothing, toys, DVDs, video games. They carry clout, but they're hardly the only player in those markets.

WalMart put a lot of price pressures on the other consumer electronics chains, but they were certainly not the only guilty party in that Black Friday price spiral one-upsmanship on the plasma TVs. Most of the major chains participated in that pissing match expecting that they would be able to restore some higher price points by mid-December. But, WalMart kept the price points low throughout the holiday season, and the other electronics chains' profits took a beating.

I doubt that WalMart will make or break the Blu-ray/HD-DVD format war, just as they were unable to strong arm the studios into dumping widescreen DVDs and issuing DVDs strictly as stripped down movie-only budget priced discs.

They primarily serve the mass market, and for the time being, Blu-ray and HD-DVD have barely ventured beyond the early adopter stage. WalMart observes the trends and then moves in at a later stage when their mass volume distribution can push the prices down through the floor. And with electronics, WalMart does not typically go too far below the prevailing list prices with name brands (WalMart wasn't the only chain selling that Panasonic plasma as a loss leader, and the prices on their other name brand TVs are usually on par with the other major chains).

Their price advantage usually shows up with their off-brand items, and with the $300 HD-DVD players this is not that far below where Toshiba has already pushed its price points. The off-brand DVD players were a sales success (in 2000, Apex Digital was the #2 or #3 DVD player brand) because the format was in high demand and these off-brand players way undercut the brand name models. This time around you got a format that lacks full studio support, an off-brand player that undercuts the brand name player by less than $100, a mass market that's predominantly content with the DVD format, and a format war that's got plenty of consumers sitting on the sidelines.

[PeruvianSkies]

What things would have been like if Walmart embraced SACD when it was a new format? Hmmm.

[basite]

I wonder if at $300 the electronics would be good enough to be able to show the difference between dvd and hd-dvd...

[Woochifer]

I wonder if at $300 the electronics would be good enough to be able to show the difference between dvd and hd-dvd...

You're talking about a native resolution of 480p versus 720p/1080i/1080p. Difference will be easy to pick up on any HDTV.

At that price point, I would not necessarily be concerned about picture quality versus DVD, but rather the build quality. Toshiba was supposedly taking a loss on their 1st gen players in order to seed the market (I have no idea how profitable their current HD-DVD models are), and the build quality was fairly substantial. With these WalMart players, I doubt that their outsource manufacturers are taking a loss, so it remains to be seen what corners get cut when compared to the Toshiba models.

When off-brand DVD players started flooding the market around 2000, their visual picture quality was not that far off from the name brand performance, though they generally did not fare nearly as well on other benchmark tests. But, where they really stumbled was on the build quality and reliability.

[DEVO]

And in other news, even if it were $150 I still wouldn't go to WalMart to buy it.

I agree! I don't agree w/ Walmart's standards...I would rather spend more money and get it from a quality retailer.

Is their staff trained to answer questions on the standards of HD-DVD and what the differences between BLU-RAY are? And what are the capabilities of this machine?

No, I refuse to purchase from this retailer!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[AmpItUP]

I agree; cheap may be good, but is the quality still competitive enough, or are we supposed to buy new players each month?



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