Re: Toshiba, MS, and Panasonic started a working commitee on DVD2 format, recreating HD-DVD experience on DVD

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So what do they do in the interim? As the transition will be gradual, if they want to increase revenue, a great way to do so is to try and drive up demand (and perhaps volume and price with it) on the existing format.

What studios have to in the "interim" is to concentrate their marketing effort over the next several years in pushing our single new high-definition optical disk format, especially as the penetration of HDTV displays grow in the marketplace. They continue to make their bread 'n' butter currently from day & date releases on DVD.

This is more logical from a business point-of-view than offer yet another standard definition format whose initial demographic would largely overlap with the HDTV owners they are attempting to target for Blu-ray adoption. Cannibalizing your own market by investing in a lower margin item that offers the same standard definition, along with higher authoring costs, additional space usage in an already constrained media, that requires new equipment of an unknown price, that requires an internet connection in people's living rooms, that will likely not tempt consumer double-dipping, and offering features that have questionable value to the mass consumer is business suicide.

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The next Sony move: Convert your blu-ray movie to your psp so you can watch it anywhere.

There is no Blu-Ray->PSP conversion, Sony(and Sony alone) is embedding PSP movies in their Blu-Ray movies. No other studios support PSP. All are going iTunes and Microsoft DRM.

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Not all high definition movies are $10 more than their standard definition counterparts - even for day and date releases.

I checked out Best Buy prices, Blu-Ray version is $12 more than DVD version.

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Studios and retailers would love nothing better than to kill off DVD ASAP

No they are not. It's their $23 billion/year golden egg.

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and have everyone buy Blu-ray media at its present cost

Blu-Ray doesn't make financial sense for studios at this point, the authoring and replication cost is 4 times as high yet the sales amount to 1% of DVD volume.

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Cannibalizing your own market by investing in a lower margin item

Well, there is no real per-margin margin difference between a DVD and a Blu-Ray release.

A title on DVD is released for $18, on Blu-Ray for $24. That's $6 difference from studio's perspective. Accounting for $2 higher Blu-Ray replication cost, the real net price difference for studios is $4. Yes, $4. Does $4 fatter margin pay for four times higher authoring cost? It doesn't.

Let's be realistic here, DVD is the industry's bread and butter format accounting for 99% of industry's home video revenue, not Blu-Ray. Anything that helps to improve DVD's sales helps the industry, hence the initiative to improve DVD.

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along with higher authoring costs

Half to one third of BD-J authoring.

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additional space usage in an already constrained media

Then move extras to second disc.

Deadmeat, one flaw (I think?) in your argument.

In the post you made above you wrote this...

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I checked out Best Buy prices, Blu-Ray version is $12 more than DVD version.

Then you wrote this...

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A title on DVD is released for $18, on Blu-Ray for $24. That's $6 difference from studio's perspective.

So is the bluray version $6 more or $12 more?

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So is the bluray version $6 more or $12 more?

Studios charge $18 for DVD and $24 for Blu-Ray at wholesale to retailers.

Then retailers decided on their own pricing. Retailers usually sell new DVD releases at cost or even below cost to draw in customers, while wanting to make a profit on Blu-Ray versions. This is how the $6 difference translates into $10~12 difference at storeshelves.

Some wholesale pricing information

iTunes : $15
DVD : $18
Blu-Ray : $24

Walmart makes a $0.87 profit on movies, so this is their pricing on I am Legend.

DVD : $18.87
Blu-Ray : $24.87

[Post edited by Deadmeat on Mar 17, 2008]

Well you can't use both to prove a point.

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Well you can't use both to prove a point.

I am trying to prove that Blu-Ray is not that profitable to studios as you make it out to be. It's just $4 more income per disc than DVD to studios, but 1/100th the sales of DVD.

DeadMeat, when you said put things on a second disk like bonus fetaures. Does'nt that mean that the movie usually falls in the 2 disk special edition, and cost more money at retail? If I had a choice in this situation I rather buy the Blu ray at $24 with everything that the 2 disk DVD special edition has and still be able to sit in my chair and not switch disks.

deadmeat i agree with almost everything you say here, and a lot of it makes a ton of sense. However, you ask why studios would cannibalize their own market with a switch to hd.
Well, hd costs will only come down once production expands. Production will only expand once studios begin producing ordering more copies to be made.
Why would they go for smaller margin over higher volume? Simple.
You can resell all the movies you have ever made on dvd, on Blu-Ray.
As for this DVD2, it makes no sense to the studios to make the switch when the upgrade doesn't satisfy the price. (Even if prices were the same, nobody would rebuy a movie they already had so they can use internet connectivity)
Here is the way things are going to work.
If you just settle yourselves out and start buyin BR and BR movies prices will come down and soon enough you will be buying 20$ BR's and such.
If you just stay on the fringe there and hate sony some more, prices will come down in a few years, because the market trend and the nouveau riche favor BR and HD.
Everyone in their 20's is talking HD. The shift is being made as we speak, BR is going to be the HD player and HDTV will become the new tv standard. That is just simply how it is. So you can buy now and stop hating on Sony, (even though a lot of companies developed the format) or you can wait until everyone has BR.
Personally I am never a late adopter. Always mid or early. I'll be damned if some ten year old owns new tech that i don't have.

I have no problems waiting. I figure I'll probably buy a bluray player on Boxing Day in December, assuming they have profile 2.0 players for a lot less than $400 on that day.

I have actually talked to a couple of friends about it and we told each other Boxing Day was the day for us unless of course the 2.0 players are still really expensive.