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[Kolgar]

So I guess it is nice for HD DVD Wal Mart wants to control their market from now on, but it isn't guaranteed to sell as other HD products at Wal Mart are not flying off the shelf.

Interesting, I didn't know Wally World was the #2 electronics retailer.

While I agree that even Wal-Mart's sphere of influence has limits, word is that these inexpensive Chinese players will be sold through other retail and online stores as well, albeit under different branding.

Heck, maybe even Best Buy will have them.

 

[Mrbob]

This is definitely a tricky situation.

If the HD DVD deal with Wal Mart takes off, HD DVD is pretty much guaranteed to have a bigger chunk of the HD movie market, if not a controlling interest as Wal Mart still is a 800 pound gorilla. However, at the same time, if HD DVD does 'win' through Wal Mart then Toshiba will never get a return on their investment. Wal Mart will bleed them dry like they do with all manufacturers when they get the edge on them.

I'm not anti Wal Mart, but I've seen enough of what they do in the business industry that I do not want them to be the last retailer standing. If HD DVD does get some higher penetration through Wal Mart's deal, it will be extremely interesting to see what studios do. One of the main focus points of going HD movie route was that studios felt they were giving away DVDs too cheaply. I don't see them switching sides just to see their margins go to the same which is offered currently on DVD. Because this is what will happen if Wal Mart takes control. Yeah there can be the argument a lower price benefits the consumer, but this only goes so far. If it isn't cost effective for the studio to make said product, they won't do it. Which means we go back to DVD until digital distribution hits, blah.

 

[Maxwell House]

Wal-Mart Names HD DVD the Winner
Rob Enderle

By: Rob Enderle
April 23rd, 2007
Page 1 of 1

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There is one retailer that has the power to call the winner of the protracted Blu-Ray vs. HD DVD fight and that vendor is Wal-Mart. Over the weekend they apparently leaked plans to bring in a massive number of low cost (possibly sub $200) HD DVD players for Christmas.

The manufacturing side of this has apparently been in the works for a few years but this is the first time we have had projected prices for the result.

Why Wal-Mart, Why Now?

Wal-Mart uses DVDs to build store traffic. They tend to subsidize the price for the movies they feature to get folks into the stores and once there, these folks tend to buy other things. DVDs have been so effective for the company they threw their body at movie downloads initially and delayed the related services by several years. However, they have now realized that this kind of thing is coming regardless and have brought out their own movie download service to compete. But that doesn’t address the store traffic benefit that will be evaporating as people move away from DVDs for standard definition downloadable movies.

Wal-Mart sees the new high definition formats as a way to bring in store traffic again but they realized that won’t happen unless the players are affordable and there is only one standard. They recognized their own power in being king maker previously and are now using that power to drive the format that works best for them. They could care less about the technology as this is all about making money and they (like every other retailer in this space) know that two formats won’t allow the market to move outside of the fringes and the dual-mode players are simply way too expensive.

So they need one standard and a lot of players in market before their DVD customers wander off to download land and stops coming to Wal-Mart for movies.

Why HD-DVD and not Blu-Ray?

For Wal-Mart the only real metric is cost. Wal-mart doesn’t really make money off of the movies and do not sell high-end home theater equipment. They are known for aggressive prices and, as mentioned above, they subsidize their DVD sales. They needed something that could sell for under $200 soon and they needed the lowest cost of the new formats. This is where HD DVD shines, not only had Toshiba agreed to license to low cost manufacturers early on, but HD DVDs are pressed on the same lines that regular DVDs are, they require no major equipment change out and the blanks, when compared to Blu-Ray are less expensive as well.

This made the decision simple, Blu-Ray was just too expensive to make this work and any technical advantages were insignificant against Wal-Mart’s need for the lowest cost offering. For them it is about price and that is where HD DVD clearly has the sustainable advantage.

What does this Mean?

It means that any studio wanting Wal-Mart’s support after year end had better be selling HD DVD movies. Wal-Mart won’t be promoting Blu-Ray and, after year end, will increasingly focus their marketing on getting people to buy into HD DVD players and the related HD DVD movie from them.

In short, the Blu-Ray aligned studios will now have to either support both formats or risk losing much of Wal-Mart's business and given how material this business is to them, you have to think that an anti-Wall-Mart decision would have a material impact on their bonuses and career longevity. It certainly puts Columbia Pictures, which is owned by Sony, in a particularly uncomfortable position.

So, if this move by Wal-Mart is true , and it appears to be (but we won’t know for sure for a few months yet), the format war is likely over and Wal-Mart has declared the winner.

http://news.digitaltrends.com/talkback184.html

 

[ChrisJames]

That's an interesting article and all, but the problem is that it's written by the guy who proclaimed HD DVD the winner last fall (and he was supposedly paid off to say that). He's probably just saying HD DVD's the winner to save his own ass.

Anyways, this is obviously a huge victory for HD DVD, but I don't see Blu Ray going anywhere. I just hope we aren't relegated to digital distribution in the near future. Physical Media FTW.

edit: but his points about wal-mart and cost being the biggest factor do make a lot of sense. If Wal-mart is really looking to bring HD movies to the front, then HD DVD is the obvious choice because of the cheap players coming this fall.

 

[Beer Monkey]

If Wal-Mart is really locking out BD, Blu-Ray just got PWNED.

This after I put all my chips on Blu-Ray.

Oh well, I only own $100 or so worth of BD movies anyway. For the time being, I'm back to rent-only and 'wait and see'. I've already wavered too much. I won't run out and buy an HD-DVD player yet, though.

 

[Mrbob]

Everyone wants to make a proclamation so they can look back and say, "I was right!" Of course we won't hear anything from Mr Rob if this Wal Mart deal doesn't pan out like they expect, and this article will get swept under the rug.

If Wal Mart does blacklist all Blu Ray players sans PS3, this would be really bad though.

Of course, proclaiming HD DVD the winner because of this Wal Mart deal is foolish, since their sales in hi def equipment aren't that hot in the first place.

 

[Mrbob]

Business week posted an interesting report about Wal Mart in 'crisis' too, which you can find here:

http://www.businessweek.com/magazine/content/07_18/b4032001.htm

The company isn't growing like it once used too, and in fact main competitors like Target and Best Buy are growing at a much faster clip.

There is no way of measuring how much business Wal-Mart is losing to competitors with more benign reputations. According to a recent survey conducted by Wal-Mart itself, though, 14% of Americans living within range of one of its stores—which takes in 90% of the population—are so skeptical of the company as to qualify as "conscientious objectors."

More affluent shoppers also walk Wal-Mart's aisles in great numbers, but they tend to buy sparingly, loading up on toothpaste, detergent, and other "consumables" priced barely above cost while shunning higher-margin items such as clothes and furniture. To the selective middle-income shopper, quality, style, service, and even store aesthetics increasingly matter as much as price alone. "Here's the big thought Wal-Mart missed: Price is not enough anymore," says Todd S. Slater, an analyst at Lazard Capital Markets

 

[onegoodlogan]

Of course, proclaiming HD DVD the winner because of this Wal Mart deal is foolish, since their sales in hi def equipment aren't that hot in the first place.

I think the point is that when the unwashed masses do start buying up HD movies in spades "the Wal-Mart" is going to be their first stop. The amount of high-def equipment that's selling at the moment is irrelevant.

 

[Omar Ismail]

Of course, proclaiming HD DVD the winner because of this Wal Mart deal is foolish, since their sales in hi def equipment aren't that hot in the first place.

The sales in equipment may be only 2nd, but what about their sales of DVD movies? That's where all the money is made anyway. This whole Wal-Mart thing is pretty huge, so huge in fact that it's difficult to believe until it's actually out there and real beyond Internet rumour.

 

[Mrbob]

I think the point is that when the unwashed masses do start buying up HD movies in spades "the Wal-Mart" is going to be their first stop. The amount of high-def equipment that's selling at the moment is irrelevant.

No. Actually it is Best Buy and their numbers are growing higher than Wal Mart.

The sales in equipment may be only 2nd, but what about their sales of DVD movies? That's where all the money is made anyway. This whole Wal-Mart thing is pretty huge, so huge in fact that it's difficult to believe until it's actually out there and real beyond Internet rumour.

Best Buy is the number one retailer for DVD movies. All movies actually.

 

[onegoodlogan]

Right now, yes.
You missed my point.

 

[Mrbob]

Right now, yes.
You missed my point.

Actually I didn't. The amount of hi def equipment selling is relevant because Wal Mart is the one making the HD DVD push.

I'm still personally unconvinced the 'unwashed masses' will pick HD DVD over DVD at Wal Mart. We'll see what happens though.

 

[Omar Ismail]

Best Buy is the number one retailer for DVD movies. All movies actually.

Really? You learn something new everyday.

 

[onegoodlogan]

Actually I didn't. The amount of hi def equipment selling is relevant because Wal Mart is the one making the HD DVD push.

Yes... this Christmas season. It's April, hence it's irrelevant.

Whatever, I'm not getting in a circular argument about Wal-Mart's HD sales.

 

[Mrbob]

Well it isn't too tough when every Sunday you see DVDs being practically given away at best buy when they have them for 5 bucks each or 3 for 10 bucks or something like that.

 

[MechDX]

No. Actually it is Best Buy and their numbers are growing higher than Wal Mart.



Best Buy is the number one retailer for DVD movies. All movies actually.

Sorry, no.

http://www.businessweek.com/bwdaily/dnflash/content/aug2006/db20060831_806225.htm

As the largest seller of DVDs, Wal-Mart accounts for roughly 40% of the $17 billion in DVDs that will be sold this year, a financial lifeline to big-spending studios.

As a side note, Wal MArt was the #1 seller of videogame software, controlling 25% of all sales till the Gamestop/EB takeover and are now 2nd. By like 3% or so.

 

[titiklabingapat]

Why exactly would Walmart do this? Did Sony kill their puppies or something? Is it because the PS3s are sitting on shelves? What exactly are their intentions for shunning the other format?

The only reason I could think of is that HD DVD is cheaper and Walmart knows its market is very price conscious. The cheaper, the better regardless of quality.

 

[duckroll]

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



Update: Pull back the reigns HD DVD fanboys, Akihabara now says that they've made a "huge mistake" with their translation: the original source called it "藍光 HD DVD and 藍光 means Blu-RAY." In other words, Blu-ray HD DVD. Huh? Word to the wise: since both formats use blue lasers, it's best to wait for an English press release before either camp celebrates.

STOP POSTING BAD INFORMATION IN THIS THREAD. PLEASE! They are NOT Blu-ray players, they are HD-DVD players. The Blue Laser name is a branding. Blu-ray is called Blu-ray in Chinese regions. PLEASE STOP ADDING TO THE GODDAMN MISINFORMATION.

 

[Crayon Shinchan]

$200 million on HD-DVD players?

That's what? 1 million cheap ass chinese HD-DVD players?

Woo?

Have people forgotten about the PS3s already out in the channel?

Is the HD format really something to be associated with price concious consumers this early in the game?

Moreover, are walmart shoppers going to be lusting after $200 HD-DVD players... when DVD players are $20-$40 in the same location?

The tens of thousands that both formats combined are doing at this point in time is clearly an indication of a market that is currently in its early adopter phase; it's not even begun to move into mass market awareness, much less mass market homes.

 

[quest]

Why exactly would Walmart do this? Did Sony kill their puppies or something? Is it because the PS3s are sitting on shelves? What exactly are their intentions for shunning the other format?

The only reason I could think of is that HD DVD is cheaper and Walmart knows its market is very price conscious. The cheaper, the better regardless of quality.

Exactly price price price this has been the strategy of the hd-dvd group the whole time. I will get my wish of a sub 250 dollar player this years so I can jump in with both feet.

 

[quest]

$200 million on HD-DVD players?

That's what? 1 million cheap ass chinese HD-DVD players?

Woo?

Have people forgotten about the PS3s already out in the channel?

Is the HD format really something to be associated with price concious consumers this early in the game?

Moreover, are walmart shoppers going to be lusting after $200 HD-DVD players... when DVD players are $20-$40 in the same location?

The tens of thousands that both formats combined are doing at this point in time is clearly an indication of a market that is currently in its early adopter phase; it's not even begun to move into mass market awareness, much less mass market homes.

You could say the same thing about tvs why would a walmart shopper lust over a 1000 dollar lcd tv when they can get a 200 dollar crt. If the players are 200 dollars this year what will they cost next year 100 maybe 150? The problem is not everyone who has a PS3 is not buying movies. It takes around 4.5PS3s to = 1 standalone player.

The blu-ray group should of shared with the eastern manufactures instead of being greedy and trying to charge outragous prices for standalone players. I could careless which format wins I just want cheaper players.

These player will not be exclusive to walmart others like best buy, circuit city ect will be getting a version also.

 

[Crayon Shinchan]

You could say the same thing about tvs why would a walmart shopper lust over a 1000 dollar lcd tv when they can get a 200 dollar crt. If the players are 200 dollars this year what will they cost next year 100 maybe 150? The problem is not everyone who has a PS3 is not buying movies. It takes around 4.5PS3s to = 1 standalone player.

The blu-ray group should of shared with the eastern manufactures instead of being greedy and trying to charge outragous prices for standalone players. I could careless which format wins I just want cheaper players.

These player will not be exclusive to walmart others like best buy, circuit city ect will be getting a version also.

And how well does $1000 HDTVs do in Walmart?

Moreover, I would be surprised if BDA didn't react to this cheap players if they prove to be an overwhelming force.

 

[quest]

And how well does $1000 HDTVs do in Walmart?

Moreover, I would be surprised if BDA didn't react to this cheap players if they prove to be an overwhelming force.

How are they going to? The hd-dvd group has been working with the eastern manufactures since around 2005. You think the other CEs like pioneer are going to sell players at a loss to help out sony? At best blu-ray players will be 2x as much as these chinese players come the holiday season. Also it is a bit to late anyways walmart has made a 100-300 million dollar decision they are going to ride it out hell or high water with that kind of investment. Also this investment by walmart will help kick in the economies of scale for hd-dvd players in general which can't be said for any stand alone blu ray player.

If this article is true the hd format war just got a lot more interesting. I guess we know why Sony wants to try and declare victory so quick because these cheap players could easily change the tide.

Also depending on when they get them I could see this being a big black friday item for walmart. Sell it at cost (149) and I could see a lot sold that day. Perfect to go with a persons black friday LCD TV.

This is great for the consumer it will force down the prices of blu ray players. Also more players in homes the more movies come out in hd.

 

[Crayon Shinchan]

How are they going to? The hd-dvd group has been working with the eastern manufactures since around 2005. You think the other CEs like pioneer are going to sell players at a loss to help out sony? At best blu-ray players will be 2x as much as these chinese players come the holiday season. Also it is a bit to late anyways walmart has made a 100-300 million dollar decision they are going to ride it out hell or high water with that kind of investment. Also this investment by walmart will help kick in the economies of scale for hd-dvd players in general which can't be said for any stand alone blu ray player.

If this article is true the hd format war just got a lot more interesting. I guess we know why Sony wants to try and declare victory so quick because these cheap players could easily change the tide.

The differences between HD-DVD and BD players aren't too large at all.

Firmware differences for the most part.

and while a 200 million dollar investment might seem like a big thing... when you look at it in perspective of how much all this will eventually be worth (and indeed, how many billions have already been spent)... this will be a drop in the hat; an interesting development, yes, but hardly the megaton of this format war.

As for low PS3 attach rates; fair enough... but when you consider the cost of the PS3; it indicates that the buyers are typically more affluent and more willing to invest into high technology. If these buyers with likely more disposable income then average aren't so willing to buy into the whole HD experience thing... how well can $200 players targetted at cheaper less tech savvy, less affluent consumers do?

 

[Crayon Shinchan]

This is great for the consumer it will force down the prices of blu ray players. Also more players in homes the more movies come out in hd.

If that's what ends up happening, that'll be great.

If not, then what we get is a fractured market place, even more so then it is now.

That'll just be general suckage.

 

[quest]

If that's what ends up happening, that'll be great.

If not, then what we get is a fractured market place, even more so then it is now.

That'll just be general suckage.

I agree it could suck but atleast with more CEs doing combo players the movies you bought won't be worthless. Even if your format loses in a few years when it is decided combo players should be sub 200 dollars.

There are times I wish sony and toshiba could of come to an agreement to avoid this war. Other times I think the war is good because it will drive prices down much much faster. I wish I had the stats but how many years did it take for DVD players to get to 199-299 range? I can not afford to get in until stand alone prices get near 250 because I need 2 to 3 players to avoid having to buy movies on dvd and hd-media. I don't want to move 1 player around the house just to watch movies on each tv.

 

[mrklaw]

who was it that was behind DivX? Wasn't that a big retailer? Huge retail power would crush normal DVD right? Nope.

 

[titiklabingapat]

who was it that was behind DivX? Wasn't that a big retailer? Huge retail power would crush normal DVD right? Nope.

Where they Walmart huge?

 

[Aaron]

who was it that was behind DivX? Wasn't that a big retailer? Huge retail power would crush normal DVD right? Nope.

Circuit City. Not really the same thing. The format was a clear DOA from the start.

 

[onegoodlogan]

Yeah.. buy the disc, rent the movie!
Divx never had a chance.

 

[Maxwell House]

Why exactly would Walmart do this? Did Sony kill their puppies or something? Is it because the PS3s are sitting on shelves? What exactly are their intentions for shunning the other format?

The only reason I could think of is that HD DVD is cheaper and Walmart knows its market is very price conscious. The cheaper, the better regardless of quality.

It's nothing against Sony. This is simply about price. Wal-Mart can push really inexpensive HD-DVD players (under $200) in 2007. That isn't possible with Blu-Ray. Plus, because HD-DVDs use slightly cheaper media and because current DVD manufacturing lines can be easily retrofitted to produce HD-DVDs (Blu-Ray is made on their own custom lines, bought from scratch), their is a price advantage on the actual HD-DVD titles themselves as well.

I think it is pretty obvious that HD-DVD inherently has a price advantage on Blu-Ray and will for a long time, so that is where Wal-Mart is placing their bets.

 

[Maxwell House]

$200 million on HD-DVD players?

That's what? 1 million cheap ass chinese HD-DVD players?

Woo?

Have people forgotten about the PS3s already out in the channel?

Is the HD format really something to be associated with price concious consumers this early in the game?

Moreover, are walmart shoppers going to be lusting after $200 HD-DVD players... when DVD players are $20-$40 in the same location?

The tens of thousands that both formats combined are doing at this point in time is clearly an indication of a market that is currently in its early adopter phase; it's not even begun to move into mass market awareness, much less mass market homes.

Wal-Mart sold a ridiculous number of HDTVs in 4Q06 and 1Q07. They are going to move $200 HD-DVD players with those TVs this fall. After that, they will be able to move tons of HD-DVD movies as well. All of that = MAJOR PROFITS for Wal-Mart.

 

[Maxwell House]

And how well does $1000 HDTVs do in Walmart?

Moreover, I would be surprised if BDA didn't react to this cheap players if they prove to be an overwhelming force.

Very well. They are moving so well that it is one of the main reasons Circuit City is closing so many stores.

Wal-Mart is selling HDTVs like crazy (and at costs lower than their competitors).

 

[VanMardigan]

So, if Mr. Bob is wrong and Wal-Mart IS the dvd king, then this does indeed provide an unprecedented lift for HD DVD. I have no real stake in either format other than owning an add-on I got from Ebay for $160, but this at least makes me feel like I'll get more than a year's worth of use from it. In fact, I think it's time to start buying more HD DVD movies.

 

[Ignatz Mouse]

Rob Enderle is a paid marketing agent. I don't put any stock in his analysis *or* his projectsion about what Wal*Mart is up to.

1) He's lowballing the cost of players down to $200.
2) He's assuming there won't by any BluRay presence in Wal*Mart at all.
3) He's assuming that this will win the war for HD-DVD.

Who's to say there won't be cheap BluRay players in Wal*Mart this fall as well? Not as cheap as HD-DVD, but $100 more expensive or so?

No doubt this news is good for HD-DVD, but the above article spins it so far into the positive that it has no credibility.

PS: Wal*Mart already sells BluRay *and* HD-DVD movies.

 

[VanMardigan]

Yeah, even so, I feel a lot better about my cheap add-on. No quick death in sight, I'm a lot more confident now about the format, and hopefully you blu-ray boys can cut us some slack. I was tired of listening to the "HD DVD death imminent" crap you guys have been spewing for the past few months. :lol

 

[djkimothy]

PS: Wal*Mart already sells BluRay *and* HD-DVD movies.

I think this is an important point. What will people think when they stock Cars on Blu-ray but you can't play it on those cheap players?

Spoiler

got my first blu-ray movie at walmart

 

[Crisis]

Wal Mart also sold Game Boy Video and UMD.

 

[Kolgar]

Rob Enderle is a paid marketing agent. I don't put any stock in his analysis *or* his projectsion about what Wal*Mart is up to.

1) He's lowballing the cost of players down to $200.
2) He's assuming there won't by any BluRay presence in Wal*Mart at all.
3) He's assuming that this will win the war for HD-DVD.

Who's to say there won't be cheap BluRay players in Wal*Mart this fall as well? Not as cheap as HD-DVD, but $100 more expensive or so?

No doubt this news is good for HD-DVD, but the above article spins it so far into the positive that it has no credibility.

PS: Wal*Mart already sells BluRay *and* HD-DVD movies.

You're right in that Enderle probably isn't the most objective analyst out there. However, he may not be lowballing the price of players to $200. There are rumblings that the introductory price of the players will be $299, but they'll be on sale "frequently" for $199 and that $199 may even become the regular price by end of year.

As for cheap Blu-ray players, Sony themselves have said it could be years before BD player prices fall to $399 or $299.

"If you go back to when DVDs came into play, it took about three years until they got into price points of $299 to $399. I suspect it's about the same thing here with Blu-ray. I think it's going to take up to three years to get down to those price points, possibly a little longer," Glasgow said.

http://gameplanets.blogspot.com/2007_01_01_archive.html

Obviously, the BDA will have to do something to counter HD DVD's price advantage, because it's going to have an impact on sales.

 

[Raistlin]

This is a pretty weird situation for HD-DVD IMO. If these units do in fact sell well, it will pretty much kill off all non-Chinese HD-DVD player sales – basically alienating Toshiba from all major CE’s. That in itself is a bad situaion.

Then the question becomes, at what price will Walmart sell the disks for? If they are at a fair premium over DVD, there is no guarantee they will sell. If Walmart hardballs the studios for low prices … obviously the studios will be pretty pissed since they currently feel they aren’t making enough on DVD’s. To then sell HD-DVD’s at similar margins is exactly what they want to avoid.

That scenario would either make studios less inclined to bother releasing titles … or they may end up half-assing them to reduce costs. Why spend extra time/cash, when the margins aren’t great and you don’t have the userbase to make up for it in units?



This entire scenario seems like a HUGE gamble. It could ‘win’ the war, only to end up having the format fall on its own sword.

 

[mckmas8808]

This WON'T happen the way it's post in that article. Wal-Mart will not throw money away to accept the current loser in the race.

It doesn't make sense.

 

[titiklabingapat]

They had to do something. Sony gambled with their most profitable division in years and is paying a very heavy price so far.

So long as the studios are making something off of physical media sales, all the whining and tantrums won't mean shit. Gas companies could charge more, drug companies could charge more, grocery chains could make more money. But if consumers want the cheapest possible price without losing money, they always win. In most cases anyway.

 

[gkryhewy]

This WON'T happen the way it's post in that article. Wal-Mart will not throw money away to accept the current loser in the race.

It doesn't make sense.

As other people have already posted, WalMart has become a giant by demanding lower cost deals from its suppliers and often switching suppliers as a result. For more information, take a look at the PBS/Frontline documentary 'Is Wal Mart Good for America?', which can be viewed here: http://www.pbs.org/wgbh/pages/frontline/shows/walmart/.

Based on having seen that documentary, I can totally envision a scenario where Wal Mart approached both camps with a proposed deal, and only HD-DVD was willing/able to accomodate Wal Mart's pricing demands.

This is a big WOW for me. We'll have to see how it plays out.

 

[Maxwell House]

I think this is an important point. What will people think when they stock Cars on Blu-ray but you can't play it on those cheap players?

Spoiler

got my first blu-ray movie at walmart

How likely is it that Wal-Mart will continue to carry many Blu-Ray movies once their Wal-Mart branded HD-DVD players go on sale this fall?

I think that's one of the reasons this could be huge. Many people are speculating, and rightfully so, that Wal-Mart's Blu-Ray support will get cut drastically once that happens.

 

[Maxwell House]

This is a pretty weird situation for HD-DVD IMO. If these units do in fact sell well, it will pretty much kill off all non-Chinese HD-DVD player sales – basically alienating Toshiba from all major CE’s. That in itself is a bad situaion.

Then the question becomes, at what price will Walmart sell the disks for? If they are at a fair premium over DVD, there is no guarantee they will sell. If Walmart hardballs the studios for low prices … obviously the studios will be pretty pissed since they currently feel they aren’t making enough on DVD’s. To then sell HD-DVD’s at similar margins is exactly what they want to avoid.

That scenario would either make studios less inclined to bother releasing titles … or they may end up half-assing them to reduce costs. Why spend extra time/cash, when the margins aren’t great and you don’t have the userbase to make up for it in units?



This entire scenario seems like a HUGE gamble. It could ‘win’ the war, only to end up having the format fall on its own sword.

Wal-Mart sells DVDs at dirt cheap prices, and studios haven't had a problem with that. I am sure they plan to do the same with HD-DVDs. And really, why would studios complain if HD-DVD titles sell for 20-30% cheaper at Wal-Mart if it means they sell triple, quadruple, quintiple, etc. of what they WERE selling? HD-DVDs cost very little to manufacture. The price they are sold for is almost pure profit.

 

[mckmas8808]

As other people have already posted, WalMart has become a giant by demanding lower cost deals from its suppliers and often switching suppliers as a result. For more information, take a look at the PBS/Frontline documentary 'Is Wal Mart Good for America?', which can be viewed here: http://www.pbs.org/wgbh/pages/frontline/shows/walmart/.

Based on having seen that documentary, I can totally envision a scenario where Wal Mart approached both camps with a proposed deal, and only HD-DVD was willing/able to accomodate Wal Mart's pricing demands.

This is a big WOW for me. We'll have to see how it plays out.

Yeah but it doesn't work out for Wal-Mart if their competitors like Best Buy, Target, and CC all go with both and make double the money selling Blu-ray disc.

 

[Beer Monkey]

This WON'T happen the way it's post in that article. Wal-Mart will not throw money away to accept the current loser in the race.

You aren't looking at it the way Wal-Mart does. To them, they aren't choosing the loser. They are deciding the winner. They aren't worried about leaving niche market money on the table in the short term, they are looking down the road at the mass market.

I'm not saying that they will decide the winner, but they will think that they can. And they'll prolong the format war at a minimum.

This at least, if true, makes the future less certain.

 

[Maxwell House]

This WON'T happen the way it's post in that article. Wal-Mart will not throw money away to accept the current loser in the race.

It doesn't make sense.

I don't think Wal-Mart believes the war has even started. About a 100 million DVDs are sold PER MONTH, while Blu-Ray and HD-DVD sell about 250k and 150k per month respectively. Those sales numbers aren't significant in the least. Neither format is anywhere near real levels, so how they are faring versus each other at this point is pretty trivial. It is way too early in the game and it is way too easy for the war to change leads, FAST.

It is sort of like baseball stats at the beginning of the season. A guy could be batting .150 through the first 10 games, and then have one 4 hit game and take his BA to .220, in one day. This next gen video format war is about 5 games into a 162 game baseball season, so really, Wal-Mart can bet on either side it wants and not feel it is at a disadvantage at this point in the game. Now, if it were 80 games into the season, meaning Blu-Ray is selling 5 million+ movies a month, then yeah, it might be hard to affect the outcome of the war, sort of like it would be hard to do anything about that .150 BA after 80 games.

Wal-Mart seems to want to take a next gen format mainstream, and 2 million HD-DVD players this fall, often being priced at $199, would go a long way in making that happen.

 

[Raistlin]

Wal-Mart sells DVDs at dirt cheap prices, and studios haven't had a problem with that.

Actually, they have. That is why the new formats came out now as opposed to in a year or so when HDTV sales are higher.

I am sure they plan to do the same with HD-DVDs.

The studios are hoping to avoid that.

And really, why would studios complain if HD-DVD titles sell for 20-30% cheaper at Wal-Mart if it means they sell triple, quadruple, quintiple, etc. of what they WERE selling?

Walmart's tactics are for hardballing what they pay for items from manufacturers. And while there is fluctuations between what a studio will sell units to Walmart versus another store ... the pricing isn't in a vacuum. Think of it like Opec. If Walmart scores a low purchase price, it does drag down the purchase price for other stores too.

HD-DVDs cost very little to manufacture. The price they are sold for is almost pure profit.

It still costs more tofab than DVD ... and engineering costs are certainly more, both in real terms, and in terms of paying off all the equipment/SW/licensing they had to invest for HD-DVD production.

So basically, there is already an extra cost that has to be passed on above and beyond DVD ... and that only gets you to the same margins. The studios have been quite vocal that they want higher margins, otherwise the formats are not in their best interest.

 

[MechDX]

I think this is an important point. What will people think when they stock Cars on Blu-ray but you can't play it on those cheap players?

Spoiler

got my first blu-ray movie at walmart

How long do you think it will take for the BR exclusive studios to support HD DVD if these players sell well? All loyalties fly out the window when it comes to $$$$.

Some of you guys are seriously out of the loop at understanding how much buying power and influence Wal Mart has.