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Battle for the High Def Home

30 Oct, 2005 By: Kurt Indvik

The evolution toward a high definition home entertainment environment is inevitable. Congress seems poised to set a hard deadline for mandated HD broadcast by the end of 2008 and will even underwrite, to an extent, HD conversion kits for those who haven't been able to afford an HDTV by that time. In between now and then the packaged media industry will be in a struggle with digital delivery services for the support of the consumer. How much market share packaged media can maintain depends a lot on how the industry as a whole, supplier and retailer, work together in the next 12 to 24 months.

Retailers seem a bit relieved that the momentum appears to be swinging toward one of two competing next generation high definition discs, as Blu-ray Disc continues to garner greater support from Hollywood studios.

While the end game is played out between Blu-ray and HD DVD, retailers interviewed by senior reporter Erik Gruenwedel for an article in this week's Home Media Retailing are looking ahead to the challenges that are going to be faced in the consumer marketplace.

The greatest, of course, will be educating the consumer on the value of high definition discs, and maintaining the new format as a premium product over current DVD technology. That will engender curiosity and a high-perceived value for the platform, helping retailers and suppliers to maintain decent margins in the transition even as DVD margins continue to fall.

No doubt, retailers say, the transition from standard DVD to high definition disc will not be nearly as dramatic as the transition from VHS to DVD. Industry watchers expecting high definition to energize a declining (but still growing) DVD market will likely have to wait a few years still. (Although rental might enjoy an early boost as early adopters and the curious sample new high def releases and rent hardware.) The key will be consumer and retailer education.

That means suppliers working with retailers to set up demo areas and other in-store efforts, along with coordinated marketing campaigns. To make an early point about its viability HD DVD earlier this month worked with San Antonio-based consumer electronics retailer Bjorn's to give an all-day demo of HD DVD technology.

With the increased interactivity of today's media environment, retailers are hoping suppliers don't eschew tried-and-true customer contact at the retail level for more high tech direct-marketing efforts that might be glamorous examples of high definition's capabilities but fail to truly answer consumer concerns about backwards compatibility to their existing home entertainment hardware and software, among other issues.

Consumers will be increasingly bombarded over the next several years with high definition technology marketing from every conceivable front in the consumer electronics, PC and Internet/telco/cable/wireless carrier industries. Hollywood may be lining up behind a single high def disc format, but in the end its content will follow the most profitable stream(s). How much of a share packaged media has in that scenario will be determined over the next several years.

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