HD DVD Takes Holiday Jab at Blu-ray With Sub-$100 Players

Wal-Mart (NYSE: WMT) stores across the U.S. held a special promotional HD DVD player sale this week, offering Toshiba's HD-A2 DVD player for a mere US$98.87. The sale was part of Wal-Mart's Secret In-Store Specials promotion designed to jump-start the holiday buying season.

Wal-Mart's promotional materials noted that the specially-priced unit wasn't available in all stores in all states, but a Wal-Mart in northern Idaho serving a community of less than 80,000 people sold out its 25 units in less than an hour Friday morning.

The Toshiba players have also been reportedly sold at Best Buy (NYSE: BBY) stores for less than a $100 this week, where they've come with five to seven free HD DVD movies (by mail), depending on the deals and rebates available at the time of purchase.

Big Blow in the High-Definition DVD War

The two current formats for high definition video content are HD DVD and Blu-ray, both backed by their own associations and hardware developers and content providers. Like the battle between VHS and Beta years ago, only one format will likely survive as consumers around the world enter the high definition era of entertainment.

A favorable price point of entry for a new technology is critical to the adoption of that technology, particularly in the mass consumer-driven world of DVD sales and rentals. While both HD DVD and Blu-ray players have been available for a couple of years, the prices of both types of units have typically been several hundred dollars on the low end. With high price entry points, consumers have been slow to pick a player, concerned that they make the "wrong" choice.

"Price can make a huge difference in a technology area like this. The HD DVD players at $100 are actually a good value for their DVD content and have competitive -- to regular DVD players with up-conversion -- performance," Rob Enderle, principal analyst for the Enderle Group, told TechNewsWorld.

"This effectively gives you the HD stuff for free, and when you include the free HD DVD disks this creates a huge value. I would expect these machines to sell through by Monday, causing the HD installed base to spike," Enderle noted. "So ... if the quantity is great enough, this could heavily favor HD DVD much like the initial, and as yet unmet, projections for the PS3-favored Blu-ray."

Promo Pricing Only?

The $99 price point is promotional and unlikely to become a permanent price point in the near future, J.P. Gownder, principal analyst for Forrester Research, told TechNewsWorld.

"But it's clear that Blu-ray needs a sub-$250 player -- better yet, a $175 player," Gownder said. "The Blu-ray camp can't cede this much ground on hardware prices and still expect to become the dominant standard."

Price Points for the Holidays

If these promotional prices don't last, what might happen this holiday buying season?

"Two hundred dollars is the first truly magic price break point -- the second is $100 -- where you expect sales to go vertical, [because] this is the price where a husband doesn't have to ask permission from the wife to make a purchase," Enderle noted. "So I expect, unless there is a major pricing action, for Blu-ray players to be selling around $300 to $400 and HD DVD players around $150 to $200 and drifting down but maintaining about a [double price] gap throughout the quarter."

BestBuy.com, however, is currently offering the newer model Toshiba HD-A3 DVD player for $199.99 in the shopping cart -- down from the regular $299.99 price. The least expensive Blu-ray player offered by Best Buy is a Samsung model offered at $449.