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Are Consumers Being Trained Away From High-Def?

18 Jan, 2005 By: Holly J. Wagner

The start of this year has been filled with predictions — some optimistic, some gloomy and others downright contradictory.

Among the projections are that rental will stop sliding and stabilize, albeit below its peak levels. But while making that prediction, the chains are also hedging with expansion in used discs and games.

A lot of people are counting on high-def to revitalize a format that is already vital, just at lower prices than some folks may have expected. When Warren Lieberfarb dreams, do visions of $1 discs dance in his head?

Wal-Mart was probably the first to fulfill that vision, but now that 99-cent stores and Big Lots are on the bandwagon, even Wal-Mart dropped its price on those discs to 88 cents. It's tough to be the low-price leader (all you indies insert “boo-hooty-hoo-hoo” here).

Between the new price of PD content discs and the PVT price of ‘A' titles, I can't help wondering if we are training consumers away from what it will take to make high-def a success. Looming format war aside, consumers are going to have to see something pretty special to pay more for DVD than they are used to paying now.

That's a proposition with a lot of potential outcomes. For one thing, a lot of people can't afford the fancy TVs they will need to appreciate high-def DVD. And retailers could blow it if they are doing demos of the new discs on ordinary TVs. Not everyone is in a hurry to dash out and replace the household DVD player. Some still haven't upgraded from VHS, even though the content improvement on DVD is evident literally to a blind man.

Folks who do buy the spiffy new players might be more interested in renting, at least for a while. Will Netflix, Blockbuster Online and others have to offer premium high-def subscriptions (cable does), or will sub prices stay the same as for standard DVD?

If high-def prices are even what standard DVD prices were at the beginning, that's nearly double the street-date price most consumers can get at discounters on new releases today. If the price stays higher, that just might chase some folks back to rental. But more likely, I think, Wal-Mart will demand a price its customers will pay, bringing prices down as soon as possible. Assuming high-def catches on, that could make all the discs on shelves out there nearly worthless within a year or two.

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