Blu-ray prices fall, as spending rises
PHYSICAL: Retailers applaud lower tags, hope for more
By Susanne Ault -- Video Business, 8/28/2009
AUG. 28 | PHYSICAL: Blu-ray Disc pricing has fallen more than 10% for new releases and a full one-third on catalog titles since 2008, according to year-to-year U.S. Rentrak data, but many retailers are rooting for tags to fall even further.
The average new release retail price on high-definition discs dropped 12% to $23.47 between July 2008 and July 2009. Catalog pricing over that same frame has slipped by a more dramatic 33% to $17.23. Rentrak results encompass single-disc theatrical Blu-ray titles.
Retailers are embracing this pricing direction as a way to jolt Blu-ray sales. Store managers have long complained that the premium placed on Blu-ray titles versus their standard-definition DVD counterparts curb shoppers’ willingness to buy the high-def versions.
NPD Group research also supports this downward trend. Encompassing single- and multi-disc sets, July average pricing on Blu-ray titles older than six months was $19.99. That compares to peak pricing of $27.72 in May. New release July pricing was $23.62, from a peak tag of $28.02 in February.
“Studios are making these moves to drive some additional sales with Blu-ray,” said David T. Barker, VP of e-commerce marketing at DeepDiscount.com parent Infinity Resources. “I definitely think that cost is still a factor, because getting a dollar from a customer isn’t easy.”
Although the difference between high-def and standard DVD has slimmed significantly, retailers say consumers remain reluctant to trade up to steeper-priced Blu-ray versions, especially on catalog. At the same time that Blu-ray pricing is dipping, standard DVD tags have arguably nosedived, note retailers. Formerly occasional $4 to $5 DVD promotions are now a weekly deal at the major chains.
Steve Torr, director of software purchasing and rental services at InMotion Entertainment, added, “I’m of the opinion that Blu-ray pricing needs to go down faster. Catalog is doing nothing right now. It’s tough. I think a Blu-ray title should be $2 to $3 more than a DVD. The film buffs get it, but the everyday consumer just isn’t seeing the value in Blu-ray yet.”
InMotion is currently getting some traction with a $17.99 Lionsgate catalog promotion. But Torr believes the retailer would get the biggest boost by being able to tag A-list Blu-ray catalog, such as Warner Home Video’s The Dark Knight, at $14.99. Many retailers, including Amazon.com and Walmart, have it marked at about $20.
One retailer only sees its catalog titles sell when they are promoted at their heaviest, typically within the $12.99 and $14.99 range.
“With the economy not being that strong right now, do you really need to see something like Jerry Maguire on Blu-ray? And if you do, do you want to see it for $25, or do you buy it [on DVD] in a bin at Walmart for $5?” said a retail source. “Between $12.99 and $14.99, that’s where we start seeing movement. The rest of the stuff isn’t really doing much.”
The source thinks studio Blu-ray strategies mirror too closely their plans when launching DVD, when pricing initially slid to lower levels gradually. Bolder moves need to be made to make people find Blu-ray attractive against other standard DVD options.
“The studios are implementing the same philosophies as they did with DVD, but the business is evolving,” said the source. “DVD pricing is dropping significantly as well. The $4 and $5 DVD is becoming more of a standard.”
Retailers might be pleading for more discounting, but studios seem satisfied with the results of their pricing programs, which include point-of-sale rebates and lower entry price points. Year-to-date, spending on theatrical Blu-ray catalog is up 72% from the same 2008 period, according to sources.
“There is an overall industry attitude to pull the gap together between standard-def and Blu-ray catalog,” said one studio source. “Generally, everyone is aware of that, and everyone is trying to make it a little bit easier on the consumer. We want Blu-ray growth.”
Today’s average new release and catalog Blu-ray tags are nearing levels that consumers asked for in an NPD survey conducted earlier this year. Respondents said they most wanted to pay $19.62 for a new release, $16.93 for a new-to-Blu-ray catalog movie and $16.16 for a Blu-ray movie out on shelves for at least six months.
However, Russ Crupnick, VP of industry analysis at NPD, wonders whether studios and retailers can ever land upon a perfect Blu-ray price.
“Price may be a moving target,” said Crupnick, “where, as more mainstream people enter the market, their willingness to buy at certain price levels will be different than early adopter willingness.”
