Retailers support both high-def formats
HIGH-DEF GUIDE: Stores believe adoption stymied by war
By Susanne Ault -- Video Business, 5/21/2007
MAY 21 | High-definition DVD software is gaining ground at retail, despite the format war, which retailers believe is limiting the potential of both HD DVD and Blu-ray Disc.
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Nevertheless, Virgin in late April decided to expand its merchandising of HD DVD and Blu-ray titles to all 13 of its stores. Similarly, entertainment specialist Trans World Entertainment is currently expanding the formats from 350 to all 1,000 of its F.Y.E. and Suncoast stores.
A couple of months ago, regional New England entertainment chain Newbury Comics increased its HD DVD and Blu-ray presence from 18 stores to its full 27 outlets.
Borders since early 2007 has been selling titles in about 30 to 50 of its about 500 U.S. stores.
Consumer electronics specialists, including Best Buy and Circuit City, were early carriers of both high-def hardware and software, while hardware-geared Tweeter offers high-def software titles online, in order to complement sales of Blu-ray and HD DVD players in-store.
Circuit City became a backer of both formats fairly recently, when it added Toshiba products, including HD DVD players, for the first time in January.
War slows adoption
Yet retailers also are expressing dismay over the format dilemma, in the belief that having two choices slows consumer adoption.
"We’re still very much neutral on the whole thing," says Best Buy spokesman Brian Lucas. "Our primary position is that until the format war ends, customers are going to stay confused and pretty much stay on the sidelines."
For high-definition players to become a viable product, they need to represent 50% of the total DVD player market, believes David Workman, director of the Progressive Retailers Assn., an electronics buying group.
In 2007, 23 million standard-definition DVD player units will ship into retail, says Workman. But with high-def, "we’ve sold very few free-standing units," he says. "We are only penetrating by virtue of a gaming platform. We are still in the early adopter phase."
Sony has sold 3 million units of the Blu-ray-enabled PlayStation 3 worldwide through March, with Blu-ray set-top players adding a small fraction of that number. In April, Toshiba trumpeted selling 100,000 units of its stand-alone HD DVD players since launch a year earlier.
The large PS3 installation base, relative to HD DVD players, has contributed to a recent surge in Blu-ray over HD DVD title sales. For some weeks, stores have carried a heftier copy-depth on certain Blu-ray releases, which has shifted merchandising in that format’s favor.
"When Happy Feet [Warner Home Video] came out in both high-def formats, we put out about 30% more Blu-ray copies than HD DVD copies," Virgin’s Saunt says.
Price matters
However, with Toshiba slicing prices on its HD DVD players to a new $399 low and the likely rollout of even cheaper Chinese-manufactured players, retailers have not claimed Blu-ray as a clear victor.
"Blu-ray has the advantage, but HD DVD has sold enough to where it will be around for a few years," says Shannon Nutt, editorial director at online seller DVDEmpire.com.
Regardless of the format war, DVDEmpire.com and other retailers are reporting success stories with high-def.
DVDEmpire.com sold more Blu-ray copies of Sony Pictures Home Entertainment’s Casino Royale than standard-definition copies of the film, but with the average title, high-def copies sell less than half what its standard-def copies sell.
The site has quickly rallied around its extensive high-def selection to become an early consumer destination for HD DVD and Blu-ray. Earlier this year, it bowed an HD Wars chart, which regularly updates the sales progress of the two formats. DVD Empire remains one of the few retailers officially tracking the war.
"We usually see a lag in [site traffic] come March or April, but we haven’t seen that lag," says Mike Barry, the company’s director of business development. "HD Wars is drawing people in. Our coverage in high-definition is appreciated."
Retailers are working to improve high-def merchandising to boost sales despite the format war.
Trans World president and chief operating officer Jim Litwak believes the upcoming slate of blockbuster summer theatricals warrants splashier high-def displays.
"Over the course of next month, you’ll see it presented in a stronger way," Litwak says. "There is going to be a lot of great titles that come out in the second half of the year," he says, in expectation of the third films in the Spider-Man, Shrek and Pirates of the Caribbean franchises.
Virgin will be rolling out its first major presentations of HD DVD and Blu-ray by running titles on Xbox 360 HD DVD drives and PS3s, respectively.
"You’ll see us demo-ing the product," says Saunt. "We’ll be showing it on the hardware we sell. When people see what it can all do, it should spur people to buy."
Though the two formats are expected to continue battling through the year, retailers are staying optimistic.
"Certainly it would be nice to have one format," says Litwak. "It would help adoption go faster. But look, the consumer deals with a lot of formats on the game side, and they’ve been able to navigate that pretty easily."
