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Sony, Toshiba: If You Can’t Beat ’em …

27 Jul, 2009 By: Stephanie Prange

Two companies bowed to market forces last week, linking with businesses that at one time were considered threats.

Toshiba, the former champion of HD DVD in the gruelling high-definition disc format war with Blu-ray, plans to start releasing Blu-ray players, according to a Japanese newspaper. For those who watched the format war, it’s like the Red Sox and the Yankees joining the same team. But Toshiba execs apparently realized selling HDTVs with a free Blu-ray player was a good business strategy.

Meanwhile, also last week, Sony Pictures Home Entertainment made a deal with kiosk rental company Redbox. One competing kiosk chief recently told me the studios consider the $1 kiosk rental business “toxic.” In fact Universal is embroiled in a lawsuit with Redbox. Still, Sony appears to have bowed to the growing business as rentals jumped a whopping 8.3% in the first half of the year due in part to kiosk rentals, according to Rentrak data from DEG: The Digital Entertainment Group. Meanwhile, consumers are buying fewer discs.


“Just like in every category, we’re seeing consumers start to trade down,” said SPHE president David Bishop. “We can either ignore that trend or choose to find ways to maximize our profitability. We chose the latter.”

I expect other studios may make the same decision.

Toshiba and Sony have decided to follow the consumer, who has chosen Blu-ray over HD DVD, loves freebies with HDTV purchases and is renting more, rather than buying discs. Consumers are more thrifty in these grim economic times, and it’s turning former enemies into allies.

On another note, while our industry can adjust to the consumer in many ways, tolerating online piracy isn’t one of them. When consumers watch a movie illegally online, they are taking money from those who created that content. It’s not fair use; it’s stealing. And it could undermine every creative process from music to books to movies. That’s why I wonder how the August issue of Wired could include an article encouraging consumers to break the law. The article, “How to Behave: New Rules for Highly Evolved Humans” enjoins consumers to “Feel Free to BitTorrent” if it’s 2 a.m., the video stores are closed, and a film isn’t available through legal means “as an act of protest.” I can’t buy many things at 2 a.m., but I’m certainly not going to break into a store and steal it in protest. Ridiculous.


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