High-def to get limited launch

Sony, Warner movies headed only to stores with players

By Jennifer Netherby -- Video Business, 2/10/2006

FEB. 10 | With only a small number of high-definition players expected to reach the market at launch, Warner Home Video and Sony Pictures Home Entertainment are planning to limit the release of HD DVD and Blu-ray discs, respectively, to those retailers also selling players.

Sony president Ben Feingold said the strategy is meant to create a strong presence for Blu-ray at retail when it launches this summer.

Meanwhile, a Warner spokeswoman said the company is still waiting for initial HD DVD player shipment numbers before finalizing plans. However, she said Warner is more likely to initially release discs through retailers selling players.

"It is our intention initially to match up hardware and software as closely as possible," said Warner’s senior VP of market management Steve Nickerson. "There have not been exclusive relationships made."

Said Feingold, “There’s no point in putting software into outlets that don’t carry the hardware in the beginning.”

The release plan is similar to how DVD was launched. Discs were released to certain retailers in eight markets, however, video retailers soon found ways to stock the format before it was widely released.

It’s unclear how long of a window electronics and other retailers will get on disc releases before they are widely distributed. The first HD DVDs are set for release March 28, however, many retailers say they expect the format launch could be delayed.

Universal Studios Home Entertainment and Paramount Home Entertainment also have committed to releasing films on HD DVD in March, but neither studio has said it will limit which retailers carry the discs. Paramount is still in talks with key retailers about its initial shipment plans, a spokeswoman said. Universal hasn’t set release plans yet, a spokeswoman said.

Best Buy and Amazon.com will be among the first retailers carrying players and discs, according to studio sources. A spokeswoman with high-end electronics chain Tweeter said the stores will carry a limited inventory of both high-def players and movies at launch.

Major rental chains Netflix and Movie Gallery also have said in recent weeks that they plan to support both high-def formats, but it’s still unclear if they will get the product at launch from all studios if they aren’t selling players.

A Netflix spokesman said the online rentailer expects to carry both formats at launch.

Movie Gallery plans to have high-def lounges in its stores to show off the new format and encourage customers to make the switch. A spokesman said the company plans to carry both formats “as soon as they are available” but wasn’t clear if that would be at launch.

Blockbuster is still working with studios on its plans for carrying the formats. “It will be a limited launch, and we are talking to the studios to see how we can participate in the offering,” a spokesman said.

With little more than a month before the launch of HD DVD, mass confusion seems to be the order of the day among retailers and distributors.

Major distributors say they have yet to get details on the first releases previously announced for March.

Ted Engen, president of Video Buyers Group, said at the Consumer Electronics Show last month that HD DVD studios were aggressively pushing rental retailers to carry the releases but have yet to present formal programs and release plans. However, Engen isn’t bothered that rental retailers are unlikely to get product at launch.

“They can have it for the first 90 days, because it’ll take at least that much for people to know the thing’s out there,” he said.

Some retailers are hesitant to stock high-def titles at launch, preferring to wait and see how initial sales go. At least one regional grocer and one national movie/music chain are holding off on orders.

“Part of the reason is that hardware will be limited,” one regional chain buyer said. “There could be one or two players per store in the beginning. What are you going to do with that?”

On the other hand, Virgin Megastores and Massachusetts-indie chain Newbury Comics both say they plan to stock both formats as soon as they become available.

Distributor Baker & Taylor expects some of its customers to carry discs at launch but feels constrained that it can’t push the format to all customers.

“We would like to see it launching wider and deeper from hardware and software perspective,” said Frank Wolbert, senior VP of the wholesaler’s entertainment group. “Once customers see movies played back on high-def, there will be overwhelming demand for it. It will outstrip where we’re at” with high-def product supply.

Additional reporting by Cindy Spielvogel, Susanne Ault and Paul Sweeting