Blu-ray Price Dropping.

[Woochifer]

Old dude?? Why you young chicken eatin whippersnapper!

Yah, like I'm one to talk! We'll both be getting fitted for walkers around the same time!

Actually this is not a liscense to manufacture, its an order by BB and Walmart and will be their house brand player. The BDA wants to cover all price points, and have something for everyone. The Walmarts and BB cover the lower end, and the major players take the mid and high end. This is to keep the majors from having to use their names attached to a budget player.

These will not be bottom feeders. These chinese manufacturers have worked with Sigma designs, Pioneer, and Sony to create players with less parts, less complexity of design, and more standard type chipsets. The will probably only support DTHD, DD+, and PCM(so far no word on Dts MA lossless) will be profile 1.1, and will eschew things like the ethernet port, and the complex laser assembly currently being used. The bluray drive will be smaller as well the laser assembly, so the whole player will be alot smaller.

That sort of makes sense for the short-term, but given how rapidly the price points on Blu-ray have dropped, I wonder how long this type of Chinese strategy can remain profitable. It can work if BB and Wal-Mart contract with an outsource manufacturer for a one-off production run, but then that truly would be not all that different from how bottomfeeding off-brands like Apex Digital operated. The need for these types of cheap Chinese players exists only as long as the brand-name manufacturers keep their price points above about $200. Once the price point dips below $200, then I think demand for these types of generic players goes away.

And these types of manufacturing short-cuts that you're talking about, how long before the Sonys and Panasonics of the BDA begin to adopt those practices for their own players?

Granted, you are correct. However there is a big motivation by everyone for bluray to succeed. If downloading becomes the norm, the retailers are shut out of that business in both hardware and software. Retailers like BB and Walmart do not want to be shut out of one of their most lucrative business. So they are well motivated to sell bluray. The manufacturers and the studio need bluray to succeed because there really is no effective business model for digital sell through. Both the studios and the manufactuers see this as a way of going back to profitability, something they have not seen in years. The manufacturers want it to succeed because they will be shut out as well if downloads take off. Based on the minutes of the last meeting of the BDA, it seems everyone stands to gain if bluray becomes widely accepted, and they are very enthused about the format in general.

Right now, they are definitely motivated to promote Blu-ray. I only wonder how long they'll wait for Blu-ray to reach critical mass. In terms of shelf space, BB has expanded their Blu-ray sections quite a bit since the format went online. The question though is what would happen to those Blu-ray sections if the format's adoption rate begins to stall and plateau somewhere around the 20% mark. At that point, then they would need to revisit whether that floor space for Blu-ray would be better served going to other product lines. So long as there's steady growth, then I can see retailers staying on board.

They see this a bit differently. When the DVD came to market, VHS sales were already starting to slow down a bit. This is currently happening with DVD, as all of the studio are running out of library titles to release to the format. They are currently relying on television programs on DVD to keep sales from dropping dramatically.

One difference is that VHS was primarily driven by rentals, and the accompanying two-tiered pricing structure that saw the majority of new releases priced around $80 to $100, and then later lowered to around $20 for retail sell-through. The DVD completely turned the home video business model upside down when the studios saw that they could make a lot more money by selling large quantities of new releases directly to consumers, rather than relying on inflated margins paid on copies purchased by video rental stores.

Blu-ray definitely allows the studios to mine their libraries for another round of double-dipping, but I don't see anywhere near the same buildup of video collections with Blu-ray that we saw with the DVD. The studios might be able to maintain higher margins with Blu-ray releases by simply keeping the list prices $5-$10 higher than the DVD version, like we see now. But, that kind of two-tiered pricing would also slow down Blu-ray adoption.

I do see them releasing DVD's without all of the extra material in a bare bones style while heavily promoting blurays extras and interactive features. If you can produce a player that hits the sweet spot ($200) along with a very effective marketing campaign, you chance for sucess goes up dramatically. You will see bundling of players and HDTV by the majors, and players at many different price points.

Putting the better features into the Blu-ray version would make sense for trying to get consumers to choose that version over the DVD version. But, getting consumers to pay a higher list price might be a harder sell.

I'm already seeing a lot of player/HDTV bundles out there. Makes a lot of sense for manufacturers to promote the hell out of this approach, since it encourages adoption of Blu-ray, but doesn't accelerate the already steep price declines for standalone players.

I read about an analyst report today that projects Blu-ray player prices down to $300 by Christmas and $200 by the end of next year. I don't see how Blu-ray can hold up those hardware price points -- I actually think that Blu-ray player prices will be closer to $200 than $300 this Christmas, and won't be that much higher than DVD players by the end of next year. Where things will really start to take off is in the higher end market, where Blu-ray players from the likes of Denon are only now beginning to come out.

I think when Paramount, Universal start releasing titles, there is going to be a huge jump in disc sales. Especially for Universal who has not released a thing in bluray. When all of the studio stop releasing titles to HD DVD, and this whole thing is officially over, I think there is going to be a real push for the format. This is just my opinion. We will see how this plays out. But I think everyone is going to see what bluray is really capable of in the coming months. I think there is going to be a steady increase in interest in bluray, but it will not be quick or a short term gain. The studio and manufacturers are going to have to work their collective a$$e$ off to make this happen. That was the general mood at the BDA meeting a week ago. Nobody thinks this is a slam dunk, and nobody is ready to take their foot off the accelerator.

In a way, the studios have to make the big push. Most of the sought-after titles have already come out on DVD, and I doubt that downloads will make the studios' libraries any more valuable. Blu-ray is probably the most lucrative opportunity left for the studios to try squeezing new revenue out of their backcatalog. I hope that Blu-ray can make a compelling enough case to keep the studios and retailers on board, while consumers struggle to figure this whole thing out.