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Old 06-18-07, 01:04 PM   #13
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Default Re: Blockbuster to withdrawn HD-DVD and expand Blu-ray

The MS response:

Originally Posted by Amir
Would be happy to comment . Let’s start with pointing out the specifics that are in front of us:

1. All the tools we had to bring HD DVD to our customers yesterday, we have today and tomorrow. BB has and will continue to offer HD DVD to its customers in the 250 stores and online. Nothing has changed in this. Nothing. Note that the great pains they took in their press sub-heading to confirm their commitment to HD DVD:

“Company will continue to offer HD DVD titles online and in select number of stores“

They would not go out of their way to confirm their intention in such a clear way to support HD DVD if they did not believe in viability of HD DVD.

2. Yes, they are expanding their offering to other stores. One would think though, that the core stores that carry both formats, were picked because they were closer to where potential customers are (e.g. higher income, higher probability of owning HDTVs, larger metropolitan areas, etc.). As such, the fact that those stores continue to carry HD DVD is very substantial aspect of this story.

3. Please read BB’s own press release – they clearly state that they cannot and are not stating a “winner.” And that they are very open to changing their distribution strategy in the future. Given the fact that they already carry HD DVD in such a broad basis already, making adjustments to that plan comes easily.

4. Both formats right now are niche products. As such, expansion to large set of stores is not that significant in itself. The key to expanding the market is to make the players more affordable. I can have 1000 Ferrari showrooms, but that doesn’t mean people will go and buy them in droves . The key is to bring the cost of that Ferrari to the level of a Honda and then you have it available in all the stores. Until then, the cart is being put before the horse. But still, I applaud BB for wanting to make HD more mainstream. And as soon as they do, we will be ready with HD DVD .

Please note that I am not saying this is not a positive development for BDA. It is. They have had a long drought wrt to getting more companies on board while we have been making progress in reverse (e.g. Circuit City carrying HD DVDs). But as you can imagine, by now we are used to press releases from companies in support of their format. Yet, BD remains a niche product as does ours frankly. The cost of products is simply too high, and the value too limited to consumer in relation to it, leading to small sales (and rentals). As such, our focus remains as I stated: getting the cost down, and making it more affordable for people to own the sockets which will eventually drive rental business. We have that advantage on the replication, and better interactivity to differentiate our product from DVD, but the playback devices still have room to come down in price to gain wider adoption….

Note that Blockbuster also supported DIVX (Digital Video Express) over DVD, the Circuit City disc-based PPV format competing with DVD that failed in the end - despite a year of exclusive support in Circuit City stores plus FOX and Walt Disney's excluisve support.
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