Originally Posted by Jarod M
A price premium was supposed to help. Sell fewer units, but make up for it with higher prices.
There is an effective price premium between an individual titles DVD and Blu-ray versions of around $5 now. Yes, Blu-ray versions are not as high as DVD versions were on release in many cases, but they are still more than the same titles DVD versions on the shelf.
That doesn't appear to be working out either. The studios largely gave up on high pricing in favor of mainstream pricing, so now they are stuck with a format that doesn't sell near as much as DVD and doesn't appear to be much, if any better off for pricing margin than DVD was at this time in its life cycle.
It kinda is irrelevant if Blu-ray pricing is on average less than DVD pricing , even if its true, which I have my doubts, as Blu-ray is in the same market as DVD and is bound to a degree by consumer price expectations and also competitive market factors like $1 per night Redbox rentals and Netflix subscriptions. In fact, I'll did up the info from the current DVDreleaseReport to look at the DVD to Blu-ray pricing trending.
I do agree that retailers and studios may have hoped to get a higher pricing premium for day and date Blu-ray and catalog releases, and they kept that up in 2007 and 2008 and even early 2009 for a while, but retailers have now transitioned to a more mainstream pricing model as Blu-ray has gained more household penetration and has built upon its annual 4Q holiday season sales success for the last couple years.
In fact, people seem to want Blu-ray versions of movies to be cheaper than they originally paid for the DVD versions, because they just don't have as much incentive to buy the Blu-ray version after already buying the movie on DVD.
Yes that is the case. Consumer expectations have been reset to current new release pricing levels and comparison to what the titles DVD version might be bought for today. But thats an unrealistic expectation that consumers would want to double dip and re purchase a catalog title they already own at the new release day and date pricing the DVD title originally commanded when it was a new brand spanking new DVD day and date release. Maybe their was some faint hope in the past on the part of some optimistic scenarios by some at the studios and at retail, but that position was shared by few people, if any from the industry and exactly no analysts thought that was going to be the case.
But that does not need to happen for Blu-ray catalog sales to be successful.
At one low end the costs for re releasing the studios titles per period on high definition Blu-ray in aggregate needs to cover the costs, and that is certainly the case. Its even better than that that only a few thousand - ten thousand units basically cover a basic Blu-ray catalog release and virtually all studio Blu-ray re releases cover that spread.
At another level the Blu-ray version needs to sustain a higher price point than the DVD version and sell faster than the legacy DVD sku to encourage retailers to replace the DVD sku on the shelves or to stock more Blu-ray. That premium and sales Blu-ray unit marketshare trend title to title is clearly there but as DVD is still selling well the urgency to replace the DVD inventory at retail has diminished. As long as money is to be made on selling DVD the retailers are in no hurry to abandon it and Blu-ray will slowly gain more retail floor space over time.
At the highest consideration the sum of all Blu-ray catalog sales revenue and unit wise will grow over time to replace a lot of the DVD routine catalog sales. But keep in mind a lot of that DVD sales per week and DVD base revenues is on very low margin low profit low price point discounted DVD sales so higher margin higher priced not so heavily discounted Blu-ray sales bring more profit per unit and the reported revenue figures have embedded in them higher studio and retail profits on the Blu-ray side than an equal amount of DVD revenue and a given Blu-ray unit sale generates more profit per sku as well. Its a different mix for a new release and catalog titles in the revenue per unit allocated for retailers and studios, but across the board a given Blu-ray sale per unit is more profitable than a given DVD point of sale unit transaction.