Studios vary pricing for Blu-ray releases
By Susanne Ault -- Video Business, 4/25/2008
APRIL 25 | Blu-ray Disc won the format war. Now one of the next challenges for studios, wholesalers and retailers is how to best price the product to quicken consumer adoption and preserve profits. Retailers report some shoppers balk at paying $5 to $10 more for Blu-ray than DVD. It’s an even harder sell with catalog, say store managers, as Blu-ray releases can be more than double the cost of their standard DVD counterparts, which might have been repriced several times.
The last thing retailers want, however, is studios sending Blu-ray prices into free-fall. Partly due to stiff retail competition, standard DVD value has slid to the point where stores are lucky to break even on new release sales.
Blu-ray pricing is all over the place. Sony Pictures Home Entertainment marked Walk Hard: The Dewey Cox Story at $43.95, $14 more than its standard two-disc special edition, while 20th Century Fox Home Entertainment listed Juno at $39.98, just $5 more than its high-end standard DVD. On standard DVD, new release pricing is more predictable—generally $28.99 to $29.99 for single-disc configurations and roughly $5 more for special editions.
“I don’t think studios have found the right price that works best yet on Blu-ray,” said Don Rood, director of business development at wholesaler VPD. “But I don’t think they will until the demand is there for the format. More consumers will need to adopt before studios can see what really is working. We just don’t want to see a race to the bottom.”
Earlier this year, Lionsgate became the first studio to permanently reprice a handful of Blu-ray catalog titles, according to retailers. Initially released at $29.99 SRP in 2006, Devil’s Rejects, Stir of Echoes, Total Recall and Terminator 2 are among titles that are now listed at $19.99. Titles are then getting turned around to customers for several dollars less, such as the $12.95 tag for the batch on Amazon.com.
Certain stores, such as Newbury Comics, applauded Lionsgate’s move for boosting the titles’ sales. In March 2007, Newbury sold six copies of Terminator 2 across its 27 outlets. After the price drop in March, the retailer sold 20 copies.
“This is a nice entry price, and Lionsgate is more of a catalog-centric label, so this is good stuff,” Newbury buyer Ian Leshin said. “It’s a common occurrence with Blu-ray catalog, where you can see something like Evil Dead 2 for $29.98 and the same title in standard-definition for $10 at our store. When consumers see that gap, they will consider a lot longer how much they need to have the high-def product. It would make me think twice if I can get the other version for a third of the price.”
VPD’s Rood agrees, explaining, “Lionsgate helps us introduce customers to the format and get them behind it.”
Studios have offered a few titles that have closed that Blu-ray and standard-def gap. Warner Home Video tagged I Am Legend at $35.99, just $1 more than the special edition DVD, and Walt Disney Studios Home Entertainment’s Hannah Montana & Miley Cyrus: Best of Both Worlds 3D Concert, is $34.99 on standard DVD and $35.99 on Blu-ray. Lionsgate’s third season of Weeds is $39.98 standard, $39.97 Blu-ray; and its first season of Mad Men is $49.98 standard, $49.99 Blu-ray.
Studios were not willing to comment on their Blu-ray pricing. But some sources acknowledge aggressively pricing titles to motivate purchasing.
“We want to have a good value proposition,” said one studio executive.
Other retailers hope Blu-ray pricing maintains its premium over standard DVD, in order to get additional profit out of the high-def format. Some retailers, including DeepDiscount.com, wish studios would throw out more short-term promotions, such as buy one, get one free deals, to drive customers into stores.
“I am in favor of temporary deals, because that’s more of a call to action than if you just drop the price” permanently, said David T. Barker, VP of e-commerce marketing at DeepDiscount parent Infinity Resources. “If you tell customers you can get it at this low price and you only have two weeks to do it, then they will take advantage of the deal. I don’t think the solution is to drop the price across the board.”
Going forward on Blu-ray, Barker hopes studios and retailers can balance their own revenue needs with dangling the right carrot for customer purchasing.
“You want to get more people involved, especially on the Blu-ray catalog side, where some of the stuff is a challenge,” he said. “You have to be really creative to get people to buy again on Blu-ray. They’ve already converted these titles from VHS to DVD. But I think we have to be careful not to race to the bottom very quickly.”
