Wal-Mart Drives Price Wars To DVDs

[Geoffcin]

Wal-Mart is not satisfied challenging rivals like Amazon (NASDAQ:AMZN) and Target in the e-book and toy businesses. Its program to take the lion’s share of the modest number of consumers likely to come out during the end-of-recession shopping season has been extended to DVDs.

Full story;

http://247wallst.com/2009/11/06/wal-...-wars-to-dvds/

[pixelthis]

Great for the consumer, even tho its akin to a bunch of bald men arguing over a comb.
Why? DVD is dead.
Dont get me wrong, it will be a commodity item for a few more years, but a tech
illiterate on a morning talk show(local radio) asked, "who buys DVDs anymore?
WHO NEEDS DVD when you can just hit the "on demand" button?
HER WORDS.
There might still be a few collectors out there who are still in the DVD format,
but for any serious collector of movies, etc, BLU is the way to go.
DVD is right now in the mass market, but as downloading bocomes more
popular, along with cable, its market will shrink.
In this same conversation There was a mention that more and more marginal video
stores are going belly up as more and more turn to net or cable options.
Video stores ignored laser, mostly, but they couldnt ignore DVD.
Can't ignore the increasingly large pipe going into consumers homes,
but they cant do anything about it.
These price cuts will put DVD prices closer to reality( takes two bucks to make one)
and will increase sales, but its really too little too late.
The first time I saw a DVD (on a 480i set through SVHS) I was amazed.
NOW, even through a HDMI cable and "upconverted" it looks rather plain
(it is 480i after all) and next to BLU its a joke as far as collecting goes.
If purchase of Blu players this Christmas doesnt kill it (as far as serious HT) then
the next one will.

[Geoffcin]

Great for the consumer, even tho its akin to a bunch of bald men arguing over a comb.
Why? DVD is dead.
Dont get me wrong, it will be a commodity item for a few more years, but a tech
illiterate on a morning talk show(local radio) asked, "who buys DVDs anymore?
WHO NEEDS DVD when you can just hit the "on demand" button?
HER WORDS.
There might still be a few collectors out there who are still in the DVD format,
but for any serious collector of movies, etc, BLU is the way to go.
DVD is right now in the mass market, but as downloading bocomes more
popular, along with cable, its market will shrink.
In this same conversation There was a mention that more and more marginal video
stores are going belly up as more and more turn to net or cable options.
Video stores ignored laser, mostly, but they couldnt ignore DVD.
Can't ignore the increasingly large pipe going into consumers homes,
but they cant do anything about it.
These price cuts will put DVD prices closer to reality( takes two bucks to make one)
and will increase sales, but its really too little too late.
The first time I saw a DVD (on a 480i set through SVHS) I was amazed.
NOW, even through a HDMI cable and "upconverted" it looks rather plain
(it is 480i after all) and next to BLU its a joke as far as collecting goes.
If purchase of Blu players this Christmas doesnt kill it (as far as serious HT) then
the next one will.

I'll argue that your both right AND wrong. DVD is old tech for sure, but BlueRay is also soon to be supplanted by online download tech. With cheap hard drives exceeding 1Tb soon to be ubiquitous, and fast downloading topping 1mb/s, downloading movies in full HD will soon (within 5 years) be the way a lot people get their movies.

Even now in my house the kids all use the HD-DVR or HBO on demand for movies, and my big project now is building a Multi-media computer with a massive storage so I can archive all my movies/cds/HD-dvd's, and assorted vids and pics. The one box multi-media convergence is the wave of the future.

[Woochifer]

I'll argue that your both right AND wrong. DVD is old tech for sure, but BlueRay is also soon to be supplanted by online download tech. With cheap hard drives exceeding 1Tb soon to be ubiquitous, and fast downloading topping 1mb/s, downloading movies in full HD will soon (within 5 years) be the way a lot people get their movies.

Even now in my house the kids all use the HD-DVR or HBO on demand for movies, and my big project now is building a Multi-media computer with a massive storage so I can archive all my movies/cds/HD-dvd's, and assorted vids and pics. The one box multi-media convergence is the wave of the future.

Problem is that most consumers are not that tech savvy. Most TV viewing is still done through TVs, most TVs are not networked, and there is no clamoring on the part of consumers to bring network connections into their TVs. The convergence predictions have been ongoing for years, but they remain elusive.

Physical media is going through a sales decline primarily because most of the in-demand catalog titles have already come out in DVD, and the market is now driven almost entirely by new releases. In the early years of the DVD format, the market could rely on both new releases and catalog sales. The DVD is simply a mature format. Blu-ray won't change that equation much because the catalog demand on Blu-ray titles will not be nearly as strong (most movies aren't worth purchasing twice).

The download/streaming model will grow, but I see it paralleling a decline in other rental and PPV options. That's a very different market from the sell-through market. Home video is a purchase-driven market, and the download model has many issues to overcome before it can truly take over the market.

Technological solutions that seem like old hat to you or me might be untenably complex or just not worth the trouble to other consumers. Considering that 40% of U.S. households don't even have basic broadband internet (and broadband adoption has remained flat over the last couple of years), there's still a long way to go before convergence goes beyond niche status.

[Geoffcin]

Problem is that most consumers are not that tech savvy. Most TV viewing is still done through TVs, most TVs are not networked, and there is no clamoring on the part of consumers to bring network connections into their TVs. The convergence predictions have been ongoing for years, but they remain elusive.

Physical media is going through a sales decline primarily because most of the in-demand catalog titles have already come out in DVD, and the market is now driven almost entirely by new releases. In the early years of the DVD format, the market could rely on both new releases and catalog sales. The DVD is simply a mature format. Blu-ray won't change that equation much because the catalog demand on Blu-ray titles will not be nearly as strong (most movies aren't worth purchasing twice).

The download/streaming model will grow, but I see it paralleling a decline in other rental and PPV options. That's a very different market from the sell-through market. Home video is a purchase-driven market, and the download model has many issues to overcome before it can truly take over the market.

Technological solutions that seem like old hat to you or me might be untenably complex or just not worth the trouble to other consumers. Considering that 40% of U.S. households don't even have basic broadband internet (and broadband adoption has remained flat over the last couple of years), there's still a long way to go before convergence goes beyond niche status.

Hi Wooch,

Many good points, some incontrovertibly. Let me see if I can give you my view.

Yes I agree, most consumers are not tech savvy. And for sure, most home viewing is done through TV's not hooked up to the internet. However, the NetFlix business model is perhaps the best business model to come out in the recorded movie distribution business. The people at Netflix have seen that what people really want is access to movies with as little hassle as possible. Their forward projection is that within 5 years up to 50% of their business will come from people downloading directly from them. I don't know if that means that downloading will take over the market in 5 years, but these guys seem to know how to button their pants. My money is on what they've predicted. Sure people will still be buying DVD's, some even VHS, but the market will eventually turn to digital storage sooner or later.

A few years ago there was some great commercials on TV. I forget the name of the company, but the message; "Everything ever recorded anywhere" and available at your fingertip whenever you want it, is very powerful. That's the promise of digital downloading. I really think we're right at the beginning of this new era.

[atomicAdam]

A few years ago there was some great commercials on TV. I forget the name of the company, but the message; "Everything ever recorded anywhere" and available at your fingertip whenever you want it, is very powerful. That's the promise of digital downloading. I really think we're right at the beginning of this new era.

I'm not sure. At least, not sure about it in the US. We haven't done that great a job on updating the main veins for all the HD content. I know with flash and other software we are learning how to get good streaming images into people's homes with stereo sound. But to get true HD image on large TVs and surround sound is another story. I don't know if the american telecom infrastructure can support it. At least not for every household.

That and....

Nothing says 'home theater system' like buffering........

[Woochifer]

Yes I agree, most consumers are not tech savvy. And for sure, most home viewing is done through TV's not hooked up to the internet. However, the NetFlix business model is perhaps the best business model to come out in the recorded movie distribution business. The people at Netflix have seen that what people really want is access to movies with as little hassle as possible. Their forward projection is that within 5 years up to 50% of their business will come from people downloading directly from them. I don't know if that means that downloading will take over the market in 5 years, but these guys seem to know how to button their pants. My money is on what they've predicted. Sure people will still be buying DVD's, some even VHS, but the market will eventually turn to digital storage sooner or later.

The hiccup in that Netflx scenario though is that the studios are not going to put their new releases onto any streaming service. The new release window is where most of the demand goes, and where most of the revenues come from. The titles that Netflix makes available for streaming only consist of movies that have already gone through their peak demand period and already been available on disc, PPV, and cable/satellite.

Their forward projection is that 50% of their transactions will come from their streaming service, but it does not necessarily bump up their revenue and simply supplants their current disc shipment model. This all-you-can-eat approach will create havoc on video stores, because video stores generate a lot of their revenue from customers browsing the shelves after finding that all copies of their first choice new release movie already got rented out. But, I don't see this cutting into the new release window where most disc sales and rentals come from.

Keep in mind that Netflix customers don't expect to get new releases on the week that they come out, so it's already a different customer profile from the ones who line up at Best Buy for midnight release parties. (Big blockbuster DVD/BD titles will often generate about half of their sales during the first week of release)

A few years ago there was some great commercials on TV. I forget the name of the company, but the message; "Everything ever recorded anywhere" and available at your fingertip whenever you want it, is very powerful. That's the promise of digital downloading. I really think we're right at the beginning of this new era.

It remains to be seen how that promise is implemented. You've already seen music subscription download models fail to gain much traction in the market. Problem with those services is that a user's entire music library depends on continuing to subscribe to the service (or the provider staying in business). Just look at what happened when Microsoft pulled the plug on their MSN Music service -- thousands of subscriber music collections already resident on their devices simply went silent.

On the movie side, Netflix has the best chance of catching on for on-demand viewing because of the large variety of devices that have signed on to access the service. Problem is that, aside from the unavailability of new releases, it still depends on consumers bringing a network connection into their living room (forget about watching it on a computer, IMO that type of viewing will remain way in the minority). And that's just not happening.

Also, there's no assurance of what the content availability will be from one service to another. Movies that you can access thru Netflix right now might not necessarily remain there. For example, Hulu is bankrolled by three of the major studios, and they can easily pull their content from Netflix's streaming service in favor of making those titles exclusive to Hulu, particularly if Hulu goes to a subscription model.

The brave new digital world is something longed for by techies, but it faces a lot of market hurdles in the meantime. From what I've seen so far, the killer app needed to make that final push is not here yet.

[pixelthis]

I'll argue that your both right AND wrong. DVD is old tech for sure, but BlueRay is also soon to be supplanted by online download tech. With cheap hard drives exceeding 1Tb soon to be ubiquitous, and fast downloading topping 1mb/s, downloading movies in full HD will soon (within 5 years) be the way a lot people get their movies.

Even now in my house the kids all use the HD-DVR or HBO on demand for movies, and my big project now is building a Multi-media computer with a massive storage so I can archive all my movies/cds/HD-dvd's, and assorted vids and pics. The one box multi-media convergence is the wave of the future.

You and I are in agreement about downloads.
BUT one of the reasons I championed Blu is as a collectors format.
There will always be those who want a hard copy, and not a home brew.
I was hoping BLU would get established enough to fill this role.
AND MY 1TB hd WAS CHEAPER THAN DIRT, btw

[Geoffcin]

You and I are in agreement about downloads.
BUT one of the reasons I championed Blu is as a collectors format.
There will always be those who want a hard copy, and not a home brew.
I was hoping BLU would get established enough to fill this role.
AND MY 1TB hd WAS CHEAPER THAN DIRT, btw

My guess is that you'll be able to have it both ways.

Say you download a movie in HD from an online provider, with sophisticated copywrite protection you should be able to burn an archival BR for your collection. However, if you already have a multimedia server I can't see any reason why you would want to have a hard copy collection besides archiving.

[pixelthis]

My guess is that you'll be able to have it both ways.

Say you download a movie in HD from an online provider, with sophisticated copywrite protection you should be able to burn an archival BR for your collection. However, if you already have a multimedia server I can't see any reason why you would want to have a hard copy collection besides archiving.

Thats reason enough.
I have the first mp3 I EVER DOWNLOADED, took half an hour (5 MB).
Over the next year or so I collected a ton of TV, movies, music videos, etc...
lost all of it when my power supply went bad and fried my computer.
Besides, a movie with all the frills is something I have collected for years.
Ever worth anything? NAH.
Except to me.

[Woochifer]

Surprised that Smokey didn't jump on this story first

I read that Amazon and Target have chosen to match Walmart's price cuts for these same titles. The caveat here is that these deep discounts only apply to online orders. Walmart's trying to steer more traffic to their website, which has lagged behind competitors. That's why they've been doing these loss leader markdowns on books, music, and now DVDs.

That's also why I don't see this as a long-term deal. The wholesale cost for a new release DVD is about $18 per copy, and that cost does not change just because e-tailers choose to sell these titles for $10 each. Add the free shipping that these websites are offering for those titles, and they are losing upwards of ~$10 for every discounted item that they sell.

In the meantime, this is potentially a great deal for the studios because the discounting would presumably boost sales and they pocket the wholesale cost no matter how much or how little Walmart/Target/Amazon sell those titles for. It would also potentially cut into Blu-ray sales because you're looking at price difference of more than $10 and up to $15 on the date of release, rather than the more typical $4 to $8 difference.

For big blockbuster titles, Blu-ray copies have been generating close to 30% of the unit sales. Having the DVD versions for movies like Star Trek and Harry Potter selling for $10 would potentially dissuade some consumers from going for the Blu-ray.

[Smokey]

Surprised that Smokey didn't jump on this story first

No mention of Bargain Bin

The irony is that the link mentioned...”It is part of Wal-Mart’s strategy to get people in the “door” and then sell them other items.”

How is that a strategy since the prices are online only-with Free shipping to your home

With cheap hard drives exceeding 1Tb soon to be ubiquitous, and fast downloading topping 1mb/s, downloading movies in full HD will soon (within 5 years) be the way a lot people get their movies.

Not even close

I have 1.5 mb/s connection, and talkes me 3 hours to download a full CD (700 Mb). For a movies (5 Gb), it will take 23 hours. I let you do the calculation for downloading full HD movies (25 Gb).

As you can see we still have quite a long ways to go before downloading becomes a viable alternative for watching an uncompressed video.

[Woochifer]

No mention of Bargain Bin

The irony is that the link mentioned...”It is part of Wal-Mart’s strategy to get people in the “door” and then sell them other items.”

How is that a strategy since the prices are online only-with Free shipping to your home

I guess AP's editors were out to lunch when this piece went out.

This is all about Walmart trying to grab more online market share, where they've been lagging. Makes sense to try this stunt over the holiday shopping season, because people who go to Amazon or Target are more likely to buy more than one item during a site visit.

The Blu-ray bargain bins will be a reality before you know it. (Will that be the time you make the jump to HDTV?) A lot of older catalog titles are already selling for $10 to $15 at Frys or even Best Buy.

[pixelthis]

No mention of Bargain Bin

The irony is that the link mentioned...”It is part of Wal-Mart’s strategy to get people in the “door” and then sell them other items.”

How is that a strategy since the prices are online only-with Free shipping to your home



Not even close

I have 1.5 mb/s connection, and talkes me 3 hours to download a full CD (700 Mb). For a movies (5 Gb), it will take 23 hours. I let you do the calculation for downloading full HD movies (25 Gb).

As you can see we still have quite a long ways to go before downloading becomes a viable alternative for watching an uncompressed video.

Thats why most "downloading" will be through services like ondemand.
And the preferred method for the net...streaming.
There are a lot of options for downloading music in a lossless fashion, have you actually tried it?
And I stream stuff all of the time, although not quite into it yet, with a proper buffer
have had few problrms.

[Smokey]

Thats why most "downloading" will be through services like ondemand.
And the preferred method for the net...streaming.
There are a lot of options for downloading music in a lossless fashion, have you actually tried it?

Streaming seem to be a hit and miss option as far as quality is concern. The providers are reluctant to provide bandwidth needed for quality streaming, so most are mediocre in quality.

I download most of my music from Usenet and from amount of contents available there, one really need a 10 mb/s or higher connection to keep up with dynamic nature of that outlet.

[Geoffcin]

Not even close

I have 1.5 mb/s connection, and talkes me 3 hours to download a full CD (700 Mb). For a movies (5 Gb), it will take 23 hours. I let you do the calculation for downloading full HD movies (25 Gb).

As you can see we still have quite a long ways to go before downloading becomes a viable alternative for watching an uncompressed video.

I have a 1.5mb sec connection and I can often download at near mb/s speeds. My cable company also offers higher connection speeds too, albeit at a higher fee. Now with FIOS pushing them hard, I think we're going to see higher baud rates across the board. For sure within 5 years a 1.5mb connection will be like dial up was 5 years ago.

[nightflier]

Still not shopping at Wal-mart. Mostly because I don't want to end up looking like this:

[atomicAdam]

Still not shopping at Wal-mart. Mostly because I don't want to end up looking like this:

Love that site! Does that make me an elitist?

http://www.peopleofwalmart.com/

[nightflier]

Love that site! Does that make me an elitist?

...it just shows that you can laugh at yourself....

Oh, you mean that:



wasn't you?

[atomicAdam]

...it just shows that you can laugh at yourself....

Oh, you mean that:

wasn't you?

No I look like this. In another silly outfit I must admit, but not at least not a comic book hero.

[audio amateur]

Love that site! Does that make me an elitist?

http://www.peopleofwalmart.com/

There is indeed some helarious stuff on there!

[recoveryone]

I think Walmart is gong in for the kill, even in the blu ray format. I picked up Transformers 2 for $13 and G.I. Joe for $19. Thats at normal DVD prices already and they have been marking down previous titiles listed as $25-$29 under $20.

[Invader3k]

I was just checking Walmart.com. A lot of good older titles on Blu-ray for under 10 bucks now. Just bought five really good movies for 50 bucks. Nice deal. I'd love to eventually replace a lot of my favorite DVDs with Blu-ray copies, and as prices continue to go down, that will be much more palatable.

[audio amateur]

If you have a 1.5mbps connection the real connection speed will be that divided by 8. If you want real 1.5mbps speed you need 12mbps connection. I believe these sort of speeds are currently available quite a few places

[Smokey]

If you have a 1.5mbps connection the real connection speed will be that divided by 8.

Sometimes it does feel like it. I have tested my 1.5 mb/s speed via couple of speed tester web sites, and the highest speed I get is about 900 kb/s. And that is after midnight.

These are the download figures I got from the Optimum Online website.


Download Speeds -- 15 Mbps
Watch a movie trailer 6 MB 3 sec.
Download 5 songs 25 MB 13 sec.
Download software 60MB 32 sec. .
View a video game demo 125 MB 1 min. .
Download a movie 750MB 7 min.

Man, that is fast. I have DSL and think the fastest speed available with DSL would be around 3-4 mb/s for $25 a month. But for most applications (except downloading), I find 1.5 mb/s connection pretty adequate.