HD DVD launched a couple of months ago to modest fanfare: eight titles and a couple of US$500 players. The movies were priced at US$34.95 each—more expensive than a DVD and about the same price as rival Blu-ray discs (although some sites are running promotional pricing for the Blu-ray launch). Universal Home Studios, which is responsible for many of the first set of HD DVD titles, has decided to cut prices on all movies in that format to US$29.95. DVD/HD DVD hybrid discs will be US$34.95.
The price cuts will take effect beginning August 8, when there should be a significantly higher number of HD DVD titles out. Naturally, the US$29.95 is a manufacturer suggested retail price, meaning that savvy shoppers should be able to find them cheaper than that.
Could HD DVD backers be worried about slow uptake already? It’s possible. Sony Blu-ray movies are selling for US$17.95 or US$23.45 wholesale. That leaves a lot of headroom for retailers to price them as they wish—Best Buy is selling preorders of "50 First Dates" on Blu-ray for US$29.99 while Amazon has it for US$19.99. Dropping HD DVD movie prices to US$29.99 will make them more competitive with Blu-ray on price.
It’s tempting to paint the move to cut prices as one of the opening volleys of an inevitable format war. After all, both Blu-ray and HD DVD are new and expensive technologies vying for the hearts and wallets of consumers. HD DVD has the hardware price advantage in spades, as you will have to pay twice the money for a Blu-ray player vs. an HD DVD player. If that amounted to the difference between US$150 for one and US$300 for another, that might not matter too much. In this case, we’re talking about a US$500 spread between the two, an amount that will make those who aren’t committed to living on the bleeding edge of technology think twice.
On the other hand, Blu-ray (which will begin shipping next week) has an edge on HD DVD: the PlayStation 3. Say what you will about the price or lack of HDMI support in the low-end model, the fact is that there are a lot of PlayStation fans out there that are going to buy the console regardless of price. As Sony has chosen to in effect include a US$200 Blu-ray player with each next-generation console, it will get Blu-ray into homes where it might not otherwise go.
Ultimately, it’s going to be a long time before a winner is declared. Price-sensitive shoppers are going to sit on the sidelines until the cost of the players starts to drop, and movie pricing will make little or no difference. DVD sales have dropped sharply in the past couple of years as movie fans have filled up their home libraries and realized that services like Netflix allow them to sate their DVD-watching jones for a relatively low monthly price. If HD DVD and Blu-ray movie rentals are widespread, few movie fans are going to rush to replace their DVD libraries with next-generation discs after dropping US$500-1,000 on a replacement for their DVD player.
When the dust clears, the winner will probably be the one that breaks through the magic US$299 barrier first—as long as there is a wide selection of movies available. That time (and price) looks to be a long way off, so calling a winner with only a handful of precincts reporting just isn’t possible.