Los Angeles (CA) – In an unusual announcement made public this morning through Reuters, Sony Pictures – the parent company of Columbia Pictures, Screen Gems Pictures, MGM, and United Artists – stated it has worked out a premium tier pricing scheme for its premiere release of Blu-ray Disc-based movie titles. The new pricing scheme should enable US retail “first window” movie prices averaging $35.
Video Business Online broke the story this morning that the president of Sony Pictures Home Entertainment, Benjamin Feingold, stated that new release movie titles would sell to resellers for $23.45, with catalog titles – older movies, generally including classics, that boutiques keep on hand – will sell for $17.95. VBO noted that, at current retail markup rates – which are lower than they have been historically – classic movies on BD should sell for prices averaging $30 – a 20% premium over standard definition DVD prices.
Today’s news is the first indication from content providers of the recorded video segment of the entertainment economy, at least for 2007 and 2008. Producers of HD DVD titles, such as Warner, Universal, and Paramount, have yet to announce their projected wholesale prices, though they certainly cannot afford to sell for much higher than the “line in the sand” the BD camp leader has drawn this morning.
From here, the question becomes, will the consumer notice a 20% benefit in owning a Blu-ray title versus owning a DVD? Besides the obvious resolution and performance improvements, one area in which consumers expect both high-def formats to distinguish themselves, involves functionality. Consumers have been promised a richer interactive experience from high-def discs. But sources tell TG Daily that, besides one improvement demonstrated last month at CES in Las Vegas – being able to overlay the disc’s main menu along one edge of the screen while the movie is still playing – the first wave of both BD and HD DVD titles will most likely not include the high degree of functionality initially promised.
The reason is because the standards underlying both technologies – Blu-ray Java, and the iHD interactive layer for HD DVD – require APIs for interfacing with disc player hardware, that have yet to be finalized, and may conceivably not be written in firmware even as the first players are introduced into the market. HD DVD manufacturers already indicated last month that the first wave of their high-def equipment may not be full-featured.
This creates the possibility of a future situation which Sony Pictures’ Feingold has not spoken to: a future wave of “special edition” or “enhanced” high-def movie titles which include the full functionality that consumers were promised, at a slightly higher price, at least during the period while older, lower-functionality high-def titles are being phased out. This morning’s VDO story did not explore that possibility, though it did take into account that Sony Pictures has already started a bundling program, where DVD and UMD cuts of the same movie (the latter for PlayStation Portable) are boxed together for a discount. The publication speculated that Sony Pictures and other content producers may follow this model in creating a bundling tier which packages the DVD and BD cut of a movie. If so, this demonstrates content providers’ flexibility with their high-def marketing schemes.
In one of the more telling quotes from the VBO article, Sony Pictures’ Feingold indicated that the company’s marketing push may initially favor electronics retailers over movie rental stores and boutiques. “Our intent is to create a critical mass of movies and displays at retail that will showcase the escalating availability and abundance of both [Blu-ray Disc] software and hardware in the marketplace,” Feingold said. “There’s no point in putting software into outlets that don’t carry the hardware in the beginning.”
Feingold’s comments have a familiar historical ring to them In the mid-1980s, Apple Computer was reluctant to see Macintosh software pushed in stores that refused to carry Mac computers. As a result, the burgeoning wave of software superstores that sprouted in the West and Southwest US during that period, catered to the MS-DOS and Windows customer almost exclusively. So when those stores had enough capital on hand to begin carrying hardware full-time, they turned their backs on Apple the same way Apple did for them. It was one of that company’s “junior mistakes,” and is a key reason why the key retail channel for Macs today is Apple’s own stores. While a circuit of exclusive retail “Sony Stores” seems unlikely, one wonders whether Sony can afford to alienate an entire retail category, especially when a competitive format lurks just a few microns behind.