Mountain House (CA) – A weekend spent in Hollywood can greatly help to learn about trends in the Consumer Electronics industry. Of course, Blu-ray was one of the main discussion topics and if you are currently frustrated about the high prices for players and movies, you may see much lower price tags very soon.
While current retail industry trends indicate that Blu-ray player prices are on the rise, our sources told us that at least movie publishers will move swiftly to transition consumers to the new format as quickly as possible. Which makes sense, as there have been substantial investments into Blu-ray in the content industry and, of course, publishers want to see some return.
The problem right now appears to be that the installed base of Blu-ray players in the U.S. is still low – less than 10 million players. Our sources at Paramount, Universal and Sony Pictures also told us that the typically distributed “shipped” numbers of Playstation 3 units can be misleading. Publishers in fact ignore this number and pay attention to the “units sold”: While Sony claims more than 6 million PS3 were shipped into the U.S. market, only 4.37 million have been sold. The good news, of course is, that the PS3 apparently is frequently used as a Blu-ray player, but there is no denying that 4.37 million units can’t be considered a mass market for movies yet – at least if we compare it to the DVD.
Three key words in any publishing industry are “installed”, “customer” and ”base” – and this is where both HD camps have failed so far. However, as it appears, Blu-ray player may get much more interesting soon as consumers may benefit from a very unlikely source: The writer's strike.
The high-def issue of the writer’s strike is not how much additional money writers will earn, but how quickly a certain program or series can be resumed. The simple effect of the strike was that there are fewer episodes in each full season of a series and there will be fewer movies on retail shelves, which is a problem for the content industry: Less episodes means that such a typically expensive DVD/BD collection is less attractive to the consumer and less movies on retail shelves also could mean a decline in revenues.
So, how will the content industry react to this dilemma? Our sources told us that big price cuts are on the way. Apparently, DVDs are expected to settle at the $10 range, while Blu-ray discs (single discs) will be aiming for a $20 target.
A first price cut was announced by Amazon.com. This e-tailer slashed the prices of 55 movies between 40 and 55%.
Of course, content does not directly affect hardware prices, but we also learned that hardware manufacturers are now stepping in to bring retail prices of Blu-ray players down. Sony is reported to slash the price of its PS3 console as soon as the current promotion with BD movies ends at the end of this quarter. There are big hopes on the impact of the release of Polyphony’s GT5 Prologue game, which is expected to boost PS3 sales. By the way, none of our sources considered video games the key market of the Playstation 3. The movie industry views the PS3 as a Blu-ray movie player.
If you're on a market for Blu-ray, it is time to have a close look on the pricing trends. Publishers are aware that they have to actively build the format demand and they have an aggressive pricing strategy in place to make a more convincing case for Blu-ray.