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Tuesday, August 14, 2007
Sales Gap Closing Between HD DVD and Blu Ray

Some consumer electronics retailers see the sales gap closing between set-top HD DVD players and Blu-ray Disc players as the two formats have come closer in price.

At Ultimate Electronics and Abt Electronics, Toshiba?s second-generation players are still the best-selling individual models, but collectively, Blu-ray players have been outselling HD DVD Toshiba models in recent weeks.

At Ultimate, the shift began in June when Sony rolled out Blu-ray?s cheapest set-top player to date, the $499 BDP-S300. Ultimate also carries second-generation Samsung and Pioneer Blu-ray models.

?It?s a slight lead, not a huge margin, but we expected this to happen as [Ultimate] is selling three HD DVD players, versus five Blu-ray players. There is a depth point of view now,? said Matt Duda, Ultimate director of merchandising for video. ?But there is no single Blu-ray player overtaking Toshiba?s models.?

At the end of May, Toshiba offered a round of promotional price cuts on its players, spurring enough sales to make the changes permanent since July. Its entry player is $299; mid-line, $399; and top-line, $799.

Toshiba will release its third-generation HD DVD players in September and October with all three players at less than $500. The new line includes the entry-level HD-A3, priced at $299, the HD-A30 at $399 and the HD-A35 at $499. The new players will include improved 1080p support and a new CE-Link for connecting with other devices.

?Unit sales of Toshiba?s HD DVD players grew 200% in Q2 versus Q1, indicating that price continues to be an important factor in consumers? purchases,? said Jodi Sally, VP of marketing at Toshiba America Consumer Products, without providing exact sell-through data.

According to NPD Group, HD DVD set-tops dominated the market in the second quarter, with a 61% market share, compared to 36% for Blu-ray.

However, retailers are taking notice of a summer shift in the high-def market.

?With all of the introductions of Blu-ray product, we have seen more sales in BD than in HD DVD, because there are so many options now out for consumers,? said John Abt, VP at Illinois bricks-and-mortar and national online dealer Abt Electronics.

Blu-ray sales might even be performing better, if not for currently limited supplies of some of the format?s relatively inexpensive offerings.

Ultimate, for instance, is still waiting on its first shipment of Panasonic?s latest $599 second-generation model, which started streeting to retailers in June-July. San Antonio?s Bjorn?s cannot meet customer demand of Sony?s $499 BDP-S300.

When Bjorn?s had adequate supply of Sony?s player in June, ?we were seeing a 50/50 split in unit sales,? president Bjorn Dybdahl said. ?That was primarily all three Toshiba players versus Sony?s $499 players. If the Blu-ray group wants to put a death knell on HD DVD, then they need to get it everywhere very quickly.?

Sony and Panasonic executives say that are working to remedy the supply situation but insist they are happy with second-generation sales results.

Panasonic is just getting its newest model out to some retailers this month, said Gene Kelsey, VP of entertainment group at Panasonic Consumer Electronics.

Aside from the format war, retailers are enjoying an overall lift in high-definition player sales.

In June, Bjorn?s sold more high-def players than standard-def DVD players. Ultimate reports that high-def unit sales currently make up around 40% of the overall DVD player category.

?Regular DVD players still account for the majority of our business, but next-generation is slowly gaining momentum,? Ultimate?s Duda said. ?We started noticing the slow gain around April, with the first price move by Toshiba. [With the entire high-def category,] we are seeing higher sell-through this current quarter than we did in fourth quarter last year.?

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