HTF Members: Please help marketing student with HD DVD questions (1 Viewer)

[Ronald Epstein]

I received the following email from a marketing
student. I felt that perhaps the HTF membership
might be very helpful in providing some answers.

Please post your thoughts on this matter. If possible,
keep to the facts while minimizing debate.

Susan will be reading this thread. Thank You.



Hello.

I am a marketing student at San Francisco State.

My research group was recently presented with a project to review a new product and discuss marketing strageties and problems that arise from that said product. I was wondering if you have any research information on:

* DVD consumers and their willingness/unwillingness to purchase the new HD formats (Is the average consumer aware of the technology of HD or even concerned about the quality of SD DVDs?)

* The effects on the DVD market (Is the eventual takeover by HD DVDs likely?)

* The market statistics (How stable is the DVD market? Is there enough demand in the market for HD DVDs?)

* What problems retailers would face with presenting the new
product(s). (Will having all these different formats only work to confuse? [widescreen, fullscreeen, HD DVD, Blu-ray]


I have also been wondering how this new technology is affecting other markets, namely the theater industry. As technology gets better in consumers' homes, are they still likely to visit movie theaters for their entertainment?

_Any_ information is appreciated, even if it a reference suggestion. Thanks in advance for your time and help.

 

[Ronald Epstein]

> * DVD consumers and their willingness/unwillingness to purchase the
> new HD formats (Is the average consumer aware of the technology of
> HD or even concerned about the quality of SD DVDs?)


I think the average consumer may be well
aware of HD televisions and the picture
improvement it provides, but most likely
unaware that a new high-definition DVD
format is a few months from being launched.

I think the average consumer is very happy
with the quality of standard DVD and probably,
at this point, unwilling to upgrade. Realize,
upgrading to HD DVD is a rather expensive
option for most people. Only the die-hard
enthusiast would consider such this early
in the game.


>* The effects
> on the DVD market (Is the eventual takeover by HD DVDs likely?)


Initially, I don't think HD-DVD will be a
threat to standard DVD. As I pointed out
above, most consumers love the quality DVD
provides and are not ready to shell out the
money involved in upgrading their equipment.

It's also hard to say if a takeover of
HD-DVD is likely. The best answer may be
not "if" but "when." It could take several
years before people decide to upgrade their
equipment. It could also, at worst, end up
being a niche format.

Though compact discs have been outdone by
SACD and DVD AUDIO, the public still hasn't
readily embraced either format because they
feel that standard CDs are "good enough."
This could happen with HD-DVD.


> * The market statistics (How stable is the DVD market? Is there
> enough demand in the market for HD DVDs?)


The DVD market seems very stable, but studios
have run out of titles to release and they are
itching for a new format that brings new life
to their catalog.

At this point, beyond the die-hard video
enthusiats that reside on forums like ours,
I don't see a huge demand for a high-definition
DVD format.


> * What problems retailers would face with presenting the new
> product(s). (Will having all these different formats only work to
> confuse? [widescreen, fullscreeen, HD DVD, Blu-ray]


This is the most important question.

The problem is that you have two companies,
HD-DVD and Blu-Ray, with split studio support
vying to win a format war that might not be
winnable. This has already caused concern from
retailers who not only see the confusion two
formats are going to create, but the fear that
one of them may not make it. No retailer wants
to sell consumers equipment that that may not
survive a format war.


> I have also been wondering how this new technology is affecting
> other markets, namely the theater industry. As technology gets
> better in consumers' homes, are they still likely to visit movie
> theaters for their entertainment?


I think the movie theater attendance has been
declining since the popularity of home theater.
But the decline in audience can also be attributed
to high ticket and concession prices as well as
the poor quality of films as of late.

 

[CraigF]

Ron. I think you have the pulse of the DVD-buying public. Not that the average member of that probably comes here, but projecting my own hesitation on those who are even less "invested", I would have to pretty much echo your sentiments.

Except for the minor matter of $$$: I'm not sure that's even relevant. I have noticed that people are willing to spend money to buy lower quality presentations of media that are more convenient. IOW quality is not the mitigating factor in their choice, speaking of the mass market the studios probably desire.

 

[TheBat]

I also agree with ron's review of the situation. I think that early adapters are the one that would have bought into the new HD-DVD except for the lack of the HDMI. Some consumers have to buy a new set before they can a HD-DVD player before it can work at the proper rate of HD. I actually have a dvd player with progressive scan, I am very content with what I have. I do have a tv set with the HDMI. I am happy with what I have.
Some believe that HD-DVD will become the new laser disc situatuion. DVD has taken off faster then VHS.
We all know how long VHS lasted, and now its pretty much worthless.

JACOB

 

[Ronald Epstein]

I should also add...

As co-owner of the this popular website dedicated
to Home Theater and DVD, you may be surprised to
learn that I'm not jumping into high definition DVD
anytime soon.

The reasons are simple...

First, I am not going to invest in any format
that is not going to give me full high-definition
resolution because my HD television lacks HDMI
input. To even get my foot in the door for the
next high-definition format, I am going to have
to shell out more than $2K for a brand new
television. This will undoubtably be the case
for many people who bought high definition sets
over the past few years that lack HDMI input.

Secondly, we have a format war here folks. Why
would I want to invest in two High-Definition
players in order to be able to purchase the
titles I want being released from ALL the studios?
Additionally, we all know that based on past
history, the first batch of HD releases will be
fairly bare-boned and will be outdone with better
re-releases by the time the majority of the public
begins purchasing these players.

Pure greed by the manufacturers has greatly
hindered a successful rollout of the next
generation of high definition DVD.

Don't forget the POLL we ran here a few months
ago where the majority of the membership stated
they would abstain from jumping into HD DVD in
2006. If the die-hard enthusiasts like us are
hesitant to invest our money in this new format,
imagine what the average consumer is going to be
thinking.

 

[MarcoBiscotti]

Ron, this is one aspect I don't forsee and with good reason.



First of all, the studios are relying on folks like us (who are more knowledgable and discerning than the average consumer), to support the new formats.

In order to do so, they would have to give considerate advantage over existing product due to the costs involved in upgrading, as well the involvement that they hopefully understand we've all invested as collectors in standard-definition DVD these past 7 years.

With all the content readily available and effectively packaged, in addition to the vast storage space improvement that both HD/BD offer - there really would be no reason not to at least attempt to offer the most comprehensive and highest quality productions in orer to launch their formats.

Nobody is going to want to spend thousands of dollars to downgrade their many expansive multi-disc special collector's editions, for single barebone transfers with improved visuals.

How many people protested major releases like Jaws and The Frighteners just because they didn't carry over the full extras from their laserdisc counterparts?

Remember that it is these rigid and demanding consumers (of which I admit am one), that the studios need to put their focus towards in adapting their next-gen formats!

Unlike the jump from VHS (and laserdisc to a lesser extent as it existed in a niche market) to DVD, we are simply "improving" an existing technology.

Granted it's a significant "improvement", but not on the same scale as analogue to digital video!

The studios already seem to have more or less a grasp of their product. They understand how to sell DVD's.

They have a back catalogue of TENS OF THOUSANDS of movies which we all hope will eventually be upgraded and transitioned into a higher-resolution format.

These releases are all conveniently compiled with extra features, commentaries and so on.

So there would really be no reason at this point, to suddenly reissue these at a steeper cost, but drop all the attractive features which would cost no more to include in HD/BD since they have already been produced and exist.

This to me, would seem counterproductive to somebody trying to sell a new product to a collector market who have proven obsessive about the quality and expectations of what they've purchased in past.

I can speak for myself and a handful of others in stating that I will NEVER support any HD/BD release that doesn not recognize this and offer the best available product at the time.

In 1997 when DVD was relatively new and still in a somewhat experimental phase, this was a completely different scenario. The production and marketing strategies were all something foreign to everyone. They couldn't look to laserdisc as a standard because it was anything but. Laserdisc was the exception, it was designed and supported exclusively by a niche market and never carried into the commercial mainstream.

Now the standards are crystal clear.

Give us the best quality films, with the best quality extras and we will buy them.

My one worry in this whole format war is not about BluRay or HD-DVD itself, but how the studios approach this all from a software standpoint.

I see that Warner Bros. is issuing a bunch of new and exciting collector's box sets in the coming year and offering select titles in HD and BD... Great!

When I read that I was certain I was sold.

Until I read details indicating that a single disc here and there were being issued in HD at random. This is exactly the sort of thing that would scare any consumer away from HD!

Knowing that the studios are approaching this from a collectors end, how can they expect anyone to run out and buy a new Bette Davis film in High-Definition when an entire box set of brand new Davis films with loving remasters and beautifuly designed artwork, special features, etc. are being issued the exact same day?!?!?

It's one thing to offer the option of supporting either in the SAME CONTEXTS on S-DVD / HD-DVD formats. I would opt for the better image quality and resolution myself, but I can't be expected to buy 5 copies of every movie released!

So, despite my fascination of Mrs. Davis in high-definition, I will be picking up the standard DVD release of this title in the box set along with the remaining films.

It's THESE sort of scenarios that worry me to no end.

The HD masters already exist for the most part. The studios have been working on them for 5 years now.

I have no intention of buying Back To The Future Part. 1 on HD-DVD... but if a brand-spanking new box set were released which mirrored that oif which I already own, than I wouyld jump all over it!

For me, HD/BD needs to serve as the DEFINITIVE representation of whatever film on home video. That doesn't mean 16 hours of needless extra features. It just means that whatever High-Def release I purchase, should be THE release to own. I should have no need for my existing S-DVD copy of said title. I have no intention of stocking my shelves with 3 different home video formats. If I do decide to jump on the bandwagon and support HD/BD - I will do so only with the intention to slowly phase out and transition entirely to said format and replace all existing format.

I will NEVER purchase HD as an "addition" to my library.

It's far too expensive and space consuming and frankly, quite pointless imo.

Whether or not these new formats take on commercially and go mainstream or become the next laserdisc niche (which could create equal advantage in that the studios would have to cater to such a market which might see interesting releases we'd otherwise not), I expect to purchase with the intention that these shiny new discs will ultimately take over my collection and be able to replace all previous versions.

Why not make a sticky poll on the forums Ron - I think this could be a great indicator to the studios that check in ehre since they are apparently relying on us to support HD...

How many of you forum members would purchase, I don't know - Disney's Aladdin , if it were to be released in HD/BD minus all the extra features?

I can speculate on the results of that poll already, and I'm betting very few...

Because as anxious as we'd all be to see the great improvement in image resolution, the current Platinum Edition look fantastic and is as close to the Ultimate Edition of this title on home video that we are going to see.

HD should always be seen as an "upgrade" to the current DVD edition. I hope that the studios will keep that in mind when deciding the specs for upcoming titles.


Also, I do think that perhaps featuring some polls and stickying them on the main forum page would be really beneficial.

You could include various questions regarding technical disc specs, transfers, aspect ratios, special features, etc to serve as a guideline for the studios to understand exactly what THIS vast collective of consumers and enthusiasts would like and expect to see with HD-DVD/BluRay.

I think it would be a good idea.... and I guess I went way off-topic with all of this and rambeled on so I'll end my rant here.

 

[FrancisP]

I would divide the population into 3 groups. Early adoptors,
Walmart customer and Target customers. Each has their own characteristics. Walmart shoppers are people who are very price-conscious and tend to shop discount stores. Earlya dopters tend to want the highest quality presentation possible. Target shoppers take a number of factors into consideration such as price and product quality. They are more upscale than Walmart customers but are not upscale.

Actually Hollywood is swimming in films that have yet to be released. Warner controls around 6,100 titles and have released 1,200 on dvd and 2,100 on vhs. Conservatively speaking there are probably 10,000 titles that in Hollywood that have never been released.

What Hollywood is out of are films that market themselves. For example, to market Star Wars all you have to do is announce the release date and it sells itself.

The studios act like once you are over 30 you vanish from the face of the earth. In actuality, people over 30 tend to have more disposable income than those under 30.

Companies like Anchor Bay, Image, and Criterion put out the type of films that studios still have locked in their vaults. They can range from excellent foreign film to bad b-flicks. Yet these companies are profitable because they can market these types of films.

I think that Ron is right. The studios are hoping that people will rush out and buy HD DVDs of the movies they own.
If HD DVDs are to be successful then average Joe will have to rush out and shell out $59.99 or more to replace the Star Wars dvd that he paid $49.99. Also will older titles look that much better on HD DVD than they would on SD? I
would be looking at replacing nearly 300 SD and the price tag looks staggering.

 

[WillardK]

It doesn't often get factored in on boards like this where the focus is naturally on what's appropriate for home theaters, but the future wave is not limited to data discs. Other methods of delivery along with portability will be greater competition for HD discs than they ever were for SD. Additionally, the novelty props will go to delivery and portability... not as much for PQ and the disc. I doubt anyone questions the eventual increased availability and affordability of HD, but there are other things that most consumers will find more exciting... and have more immediate use for.

added:
I might mention that as a dvd enthusiast who has collected maybe 300 or so discs, I have seen listed so far not a single to-be-released HD title that I am interested in.

 

[Christopher Lee]

Here is a thought that I haven't seen mentioned as of yet: now that consumers are becoming used to watching films and television programs on devices that have very small screens, such as cell phones and portable video game devices, why would they be inspired by a new format that really only lends itself to home theater?

Personally, I'd rather eat a box of nails over trying to watch a film on my cell phone, but I'm also not interested in upgrading to a new DVD format, as the expense and the effort just seems silly at this point.

As far as going to the theater to see a new film, I feel that the experience has diminished significantly in recent times. Although I absolutely love seeing a great film on the big screen in the magical environment of the darkened theater, I haven't been able to do that lately without a ridiculous amount of distraction from the audience (cell phones ringing, people talking, children carrying on, etc.). Adding that to the ever rising costs of admission and concessions makes the overall experience more trouble than it's worth. It is much more enjoyable to rent or purchase a DVD to bring home and watch via my home theater in a controlled environment and without a six dollar glass of root beer! Yes, I do miss the theater screen, but not the the negative aspects that come with it.

Anyways, my intention was to ask what the small cell phone and video game device screen trend would mean for the potential sales of a new DVD format, but now that I've thought about it a bit on both sides of the spectrum (cell phone screen to home theater screen), this format seems destined for the life of laser disc. Of course, I have yet to actually see anything on the new format, but it's hard for me to believe that the difference to current DVD would be that stunning even if I were to see the new software via the very best hardware. Perhaps I'll change my mind once I've had that experience, but it seems that this type of pessimistic attitude is practically widespread across the board. Let's face it: DVD is great. I've always been picky about picture quality and the viewing experience, but I am very rarely disappointed with what I've been able to get from DVD.

 

[Robert Harris]

One of the more interesting factors that may come into play as HD is brought to market will be whether the copyright holders go the dual (sided) disc route, allowing backward and forward compatability with DVDs which hold both RD and HD.

What this means is that with a single inventory at the sales level, all needs could be satisfied until the changeover finally comes, which could be years away.

If a potential buyer can purchase a DVD which will play on their current system, and which will also play on their HD system once they move up, we have a situation which removes some of the multiple dip sting from current purchases.

RAH

 

[Ken Horowitz]

A good source of data and info can be found in the weekly "Video Business". While the entire site will be useful, check out these two areas in particular:

Columns by Paul Sweeting, one of the few writers in the trades who actually appears to understand both the technology and the market forces. http://videobusiness.com/index.asp?layout=columnists

Year-end market data for the past few years, showing details for VHS and DVD, rental and sell-thru, comparisons to theatrical box office, and more. http://videobusiness.com/info/CA6301486.html

 

[MarketingStuden]

Hello all.

I want to thank everyone for their responses to the questions I posed to Ronald. They have all been very helpful in directing our research.

Here is my take on it as a consumer.

I am a college student, so money is always a factor. But I am also a movie lover. I currently have a collection of over 300 DVDs. I really have no intention of replacing all of these with a High Definition format (although having one disc for each of my boxed sets would be nice).

But it does get me thinking about the new DVDs I would buy. I really do believe that as this new format grows and stabilizes, they will take over the DVDs. (Just like DVD to VHS). Now most people, I think, still do own a VHS player along with a DVD player, and it will probably be the same with the HD-DVDs.

I am not saying that I will be buying the HDDVD players right away. Especially with the format war. But if these two companies do decide to get along and work together to get the best format out there, then I would definitly consider shelling out $500 for a HD player, regardless of whether or not I owned a HDTV. Owning a HDTV would just be the next step, and then I wouldn't have to worry about buying a DVD format that was on its way out.

Once again, thanks for your responses.

 

[StephenP]

The main difference between this adoption and the move from VHS is that dvds should still be able to play in the new HD machines, therefore there is no mandatory reason to replace your old dvd's. As soon as the players come down into the $350 range or so I expect to be upgrading, BUT I will not be replacing all my DVDs with new versions. I will however buy all new release films in HD.
With reguards to the back catalog of thousands of films still not available on dvd, I believe the studios realize that not many of those films would sell enough volume to make back the costs of remastering, and we probably will never see 99% of titles that aren't already out there.

 

[FrancisP]

I believe the studios don't understand how to market the older films that they have left. Look at some of the titles that companies like Image and AB have released. Beginning of the End, Black Sabbath, and Nightmare Castle are a few examples of films that have been remastered. The last time I checked these companies have been profitable.

I do agree that very few of these films will be released. For some reason studios would rather let them gather dust rather than release or license them.

 

[Reagan]

Ron, well put. That's my assessment of the situation.

-Reagan

 

[Yumbo]

Hi,

From a rental/retailer's point of view in a pirated market:

We welcome any new format with relative copy protection (uncracked codes, no burners/blanks, price hurdle), and will in line with market penetration only replace, and add HD titles.

DVD titles will only be added if cheap enough or not available in HD.

This is in response to the lack of enforcement by authorities or the STUDIOS themselves.

At this point, Blu-Ray is our choice - single sided, and scratch resistant - 2 MANDATORY aspects of the rental system. This is also dependant on PS3 being region free.

 

[dana martin]

i think the format war is actually going to hurt the launch into the next era, aside from the PS3 aspect of it i wasn't planning on jumping straight into this. and while i agree wit everyone that the first batch will probably be bare bones, that wouldn't make since. the two formats, have more than enough space to incorporate a two disc set, on to one.
The fact that most of us from the threads are discussing classic and catalog titles , is stating something of a different nature altogether. Yes i do want the RKO Weissmuller Tarzan's, but i want them on the same format as the original box set.
The only way i see this going for some time is a combination of the three, till HD looses out to BD, with SD for smaller and older titles.
But to think this is going to be a whirlwind change, someone is fooling themselves, and it's not the ones who come here on a regular basis. Ron's statements pretty much nail it on the head. cost of up grading aside, i have to much invested in disc alone to go and just swap so it is in the new format.