Toshiba is going deep with a 30-second advertisement during Sunday’s Super Bowl that, according to Home Media Magazine, represents the biggest advertising buy for any high-definition disc vendor to date.
Mark Knox, an advisor to the Toshiba HD DVD division of Toshiba America, admits this won’t turn the tide in the format war. But it could help change perceptions.
“That’s the nature of the Super Bowl” he told InternetNews.com. “It’s not that that money you spend can be attributable to a certain unit volume, but that investment does have a big impact on the retailer and knowledgeable buyer.”
But, according to Gartner analyst Hiroyuki Shimizu, the pricey ad is likely too little and far too late.
To say the HD DVD format is a decided underdog to Blu-ray in the hearts and minds of consumers and, more important, Hollywood studios who generate all this high-definition content, is putting it mildly.
On January 15, Toshiba slashed prices of its HD DVD players in half in response to Warner Bros.’ decision to only support Blu-ray after originally supporting both high-definition formats. Warner Bros. defection leaves HD DVD with just two studios supporting the format: Universal Studios and Paramount Pictures.
Sony-backed Blu-ray, meanwhile, counts 20th Century Fox, Sony Pictures, Walt Disney Co. and, now, Warner Bros. among its fans.
The pricey 30-second spot during television’s marquee programming event will reportedly feature Toshiba’s HD-A3, A30 and A35 units, which are now selling for between $149.99 (for the A3) and $299.99 (for the high-end A35).
Gartner’s Shimizu on Monday essentially called the game, writing “Toshiba’s price-cutting might prolong HD DVD’s life a little, but the limited line-up of film titles will inflict damage on the format.”
“Gartner expects that, by the end of 2008, Blu-ray will be winning the format in the consumer market, and the war will be over,” he said, adding that the two studios still tenuously in HD DVD’s camp account for only 30 percent of movies made in HD format.
It didn’t help Toshiba a bit that rumors began circulating on the Internet that retailing giant Circuit City had relegated its HD DVD players to the clearance shelf, an indication that it would probably not be restocking the players at any of its 668 stores.
Some Circuit City managers allegedly told people from some home-theater product and enthusiast Web sites that the chain was discontinuing sales of HD DVD players.
Well, there appears to be a failure to communicate between those managers and the home office.
Jackie Foreman, a spokesperson for Circuit City, rather emphatically denied this. “It was a pricing error but it was corrected and will continue to make both formats available to Circuit City customers,” she told InternetNews.com.
At least initially, it appears Toshiba’s price-cutting move is having an impact.
According to weekly sales from market researcher NPD, HD DVD sales took off immediately following the price cut.
Before the Warner Bros. announcement, hardware sales between the two formats was fairly evenly divided. But in the week immediately following Warner’s defection, sales were totally lopsided, with Blu-ray garnering 92 percent of sales to HD DVD’s eight percent, according to NPD.
Stephen Baker, vice president of NPD, cautioned that one week of data is not an indicator of anything except perhaps a weekly anomaly. He also predicted the Toshiba price cut might help push things in the opposite direction.
That appeared to be the case last week when retailers sold 8,639 HD DVD units compared to 16,496 Blu-ray units, a solid 2-to-1 edge for Blu-ray but a far cry from the 9-to-1 ratio it enjoyed in the week following Warner Bros. exit and ahead of Toshiba’s price cut.
However, Toshiba’s price cut meant a lot less revenue. NPD also reported that the Blu-ray hardware sales totaled $6 million for the week while HD DVD sales checked in at only $1.1 million.
At the very least, it’s a steal for consumers. Toshiba’s high-end HD-A35 offering has gotten a string of good reviews from some home theater equipment reviewers and is considered an excellent standard definition DVD player—especially now that it’s been discounted 50 percent.
Still, Knox believes HD DVD can hang in there even with only two studios providing content for the format.
“If indeed it was entirely hopeless, as many people believed in the last couple of days of the CES show, then Toshiba being an intelligent and pragmatic company would have capitulated at that point,” he said. “But the fact that they have done the opposite and come out swinging with the price cuts and some other things coming down the pike tells me it’s not over.”