High-def hardware sales jump with Black Friday discounts

By Susanne Ault -- Video Business, 11/30/2007

NOV. 30 | The Black Friday weekend brought nothing but green for high-def hardware, as retailers reported customers stocked up heavily on HD DVD and Blu-ray Disc players during the official start of the holiday shopping season.

A number of retailers, including Crutchfield, Ultimate Electronics and Bjorn’s, credited Wal-Mart and Best Buy for helping to raise awareness of the category with pre-Black Friday sales that featured $99 Toshiba HD-A2 players.

Overall, Black Friday was strong among all product types, as sales for that day and the directly following Saturday generated $16.4 billion in sales, representing a 7.2% gain from the comparable 2006 two-day frame, according to ShopperTrak RCT Corp. That sales fever stayed hot through Cyber Monday, according to ComScore, as retailer Web-only deals churned out $733 million in overall sales, marking a record amount spent online in one day.

“If nothing else, Wal-Mart making the Toshiba player $99 got a lot of airplay, and people are asking what is HD DVD?,” said Doug Bravin, chief operating offer at Bjorn’s, a San Antonio-based electronics super store. “They started to make it mainstream.”

Similarly, Blu-ray-based advertising seems to be creeping into the larger public consciousness, coinciding with this month’s $30 million ‘I Do Blu’ media blitz and campaigns around the new $399 PlayStation 3.

“If people want a Sony TV, they’ll also ask about Blu-ray, or they’re seeing the titles more at Blockbuster,” added Jim Hughes, Bjorn’s sales manager.

During this time last year, high-def players represented 15% of Bjorn’s DVD business. That flipped to 50% for Black Friday 2007.

Some of the store’s popular Black Friday items, said Bravin and Hughes, were flat-panel TV/high-def player bundles at $300 to $600 discounts. The store sold out of its supply of Toshiba’s HD-A3 model.

Overall, high-def hardware was not at the top of the average consumers’ shopping list, with Best Buy and others noting shoppers were most intent to bust doors for computers, high-def TV sets and GPS navigational devices. Likely lured by a sub-$300 laptop deal, people began lining up at a Fargo, N.D., Best Buy on Tuesday evening prior to Black Friday, which was “the earliest lineup report I’d ever received,” spokesman Brian Lucas said.

Still, retailers say high-def hardware did play a part in the frenzy. Tellingly, for the first time this year, Amazon.com included both HD DVD and Blu-ray players as part of its popular Amazon Vote feature, in which people select most-wanted deals.

At Crutchfield, the retailer sold four times as many high-def players during the Friday-Sunday weekend than it would normally during a seven-day week. That pop was larger than the jumps it experienced for other electronics categories, including digital cameras, which doubled its sales Friday-Sunday over the typical week.

Crutchfield set the Toshiba HD-A2 player at $129, representing a hefty $170 off the manufacturer’s $299 list price.

“There wasn’t a whole lot of high-def business for us last year, but it was a significant business for us this holiday weekend,” Crutchfield executive VP of merchandise Rick Souder said.

Although Bjorn’s reported equal interest for HD DVD and Blu-ray, Crutchfield’s and Ultimate Electronics experienced a much larger price-driven demand for Toshiba HD DVD players. The North American HD DVD Promotional Group touted reaching 750,000 HD DVD units sold, which works out to a 28% jump in set-top sales from its standing prior to Black Friday. 

“The Wal-Mart thing and other indicators show that people aren’t hung up on the format as much as they are about price,” said Souder. “We sold out of every [HD-A2] that we had at $129. People are willing to make that level of investment, but they didn’t seem willing to spend $399 and $499.”

Ultimate sold three times as many of Toshiba’s third-generation model, the HD-A3, than all of the Blu-ray models combined. Using its own price reductions and Toshiba’s $100-off rebate, Ultimate offered $149 HD-A3s, which regularly list for $299.

But regardless of which stand-alones were preferred, the entire high-def category made big strides at Ultimate. For Black Friday 2006, next-generation totaled 30% and standard-definition totaled 70% in unit sales within the DVD hardware category for the retailer. That evened out to 50% next-gen, 50% standard this year.

On the revenue side in 2007, 72% was next-gen and 28% came from standard-def, representing a reversal from the 2006 split of 40% next-gen and 60% standard-def.

“This tells us that people are becoming aware of next-generation and high-def content as it relates to HD DVD and Blu-ray,” said Matt Duda, director of merchandising at Ultimate. “You can credit Wal-Mart for raising that awareness certainly. And more people are seeing advertising on TV for HD DVD and Blu-ray. New releases now say they are also available in HD DVD and Blu-ray, and that gets people asking questions about them.”