Retail preps for high-def

But initial ordering appears limited

By Susanne Ault -- Video Business, 1/13/2006

JAN. 13 | Retailers are scrambling to merchandise high-definition discs following Warner Home Video’s unveiling of the industry’s first high-def releases.

As of last week, stores knew street dates for Warner’s HD DVD titles—Batman Begins and Million Dollar Baby on March 28 and Harry Potter and the Goblet of Fire on April 11—though not much else. Warner spokeswoman Pamela Godfrey said formal solicitations for the HD DVD titles, including pricing and order due dates, would be sent to retailers shortly.

HD DVD cases are likely to be the same size as standard disc boxes. The new format should be distinguished by clear, color-coded HD DVD banners, Godfrey said.

But despite lingering unknowns, retailers are starting to decide how they will display titles—for those that will order them at all, that is:

• Best Buy, Circuit City, Virgin and others plan to stock titles in both high-def formats. Some of which are ordering 5% to 10% of the copies they order of standard DVD versions.

“We did a survey of 3,000 people, and 68% of them can’t even tell you what HD [DVD] is,” Video Buyers Group president Ted Engen said. “We’re going to be a bit conservative. If we have a guy that brought in 100 copies of Batman Begins, he’ll probably take eight to 10 copies of it on HD DVD.”

• New England chain Newbury Comics won’t stock titles on either format in 2006, and even some national retailers say they might hold back title ordering until player sales are robust.

Said Newbury buyer Ian Leshin: “We don’t think there will be a wide market for this in the next three years. We’ll let big-box stores fight over what happens [with the formats].”

• Retailers’ promo budgets for HD DVD and Blu-ray will be led by studio initiatives or not at all. At the least, retailers hope for some consumer education materials on the next-generation hardware.

“Our marketing support will be guided by what we believe to be the most durable consumer solution,” Best Buy spokesman Brian Lucas said. “Best Buy … does believe one format will live and one will die.”

• Packaging details remain under discussion, but early rentailing plans call for blue rental cases for Blu-ray titles. HD DVD and Blu-ray stickers might be stamped on sell-through boxes.

“We can see consumers picking up [a copy] and not realizing what they have,” National Entertainment Buying Group president Todd Zaganiacz observed.

• With few titles officially set for spring, many retailers plan to slot HD DVD editions next to their standard DVD counterparts on shelves. Already juggling multiple DVD versions, stores are concerned about introducing yet another SKU to customers.

“New releases will be side by side as widescreen, fullscreen, Blu-ray, HD-DVD,” Hastings director of marketing Mason Goodfellow said. “It’s going to take more time to work up a buy. We already have a jumble of SKUs, [so] what’s a couple more?”

Days following Warner’s HD DVD slate announcement, Amazon.com did carve out a specific HD DVD section, highlighting coming players and titles. It’s likely the site would do the same for Blu-ray, coinciding with other retail decisions to make both formats available.

Announcements at the recent Consumer Electronics Show confirmed that studios will release high-def titles in either HD DVD or Blu-ray formats, or in both. But Warner was alone in setting street dates.

Warner’s HD DVD films are timed to the launch of Toshiba’s compatible player. Suppliers, including Sony Pictures Home Entertainment, will launch Blu-ray titles when players for the format debut, expected to be in the spring at the earliest.

Most retailers have measured hopes for early sales.

“It’s important to recognize that high-def video will initially appeal to only a small percentage of the video consumer base,” Virgin buyer Chris Anstey said. “Most people are perfectly satisfied with the image quality of standard DVDs. Although the potential for high-definition is very exciting, we shouldn’t expect huge numbers out of the gate.”