PriceSCAN Blog

Why Blu-ray sales are outstripping HD-DVD is a matter of some debate, as is of course whether this situation will persist. Right now Blu-ray is backed by half of the "big eight" studios; three others are putting out content in both formats, with Universal being the only large player solely backing HD-DVD. With the Blu-ray partisans including Fox, Disney and Sony itself, Sony claims that the lion's share of current high-def DVD hits are available exclusively in Blu-ray format.
Yet Sony CEO Howard Stringer has reportedly made remarks to the effect that the cost of Blu-ray functionality in the PS3 is such that any failure of the new model would be attributable to its price point. That price, richer than Microsoft's Xbox 360 and the very successful new Nintendo Wii, reflects the cost of including Blu-ray in the PS3. Stringer still predicts success for the new PlayStatiom, but it's worth noting that even if sales of the PS3 fall short of those of its rival, they still increase Blu-ray market presence and could enhance that standard's competitive position versus HD-DVD (see "PS3 Postmortem?"). This strategy increases in significance to the extent that Microsoft's offering of an HD-DVD add-on for the Xbox 360 aids Toshiba's standard – see "So Xbox Has A 1080p HD-DVD – Blu-ray's Still A Cooler Name (You Can Tell By The Dropped Vowel)".
Interestingly, at least in the player market, it appears some consumers are willing to pay up for Blu-ray. For both standards, as of this writing the lowest-priced players on PriceSCAN.com are also the most popular, these being the Samsung BD-P1000 Blu-ray Player and Toshiba's own HD-D1 HD-DVD Player. Last May, shortly after its introduction, the Samsung was priced at $1,000; it now goes for a little less than $450 (see graph below).

Time Period: 5/8/2006 through 3/12/2007
Each tick mark represents one week
Red = High Price, Blue = Average Price, Green = Low Price

That corresponds to the introductory price of the Toshiba late last year; this HD-DVD model may now be had for less than $280.

Time Period: 11/13/2006 through 3/12/2007
Each tick mark represents one week
Red = High Price, Blue = Average Price, Green = Low Price

If introductory-level Blu-ray players are selling at a premium to HD-DVD, it may be a reflection of greater demand driven by superior content availability in the Blu-ray format. As noted in this blog before (see "Can Wintel Make Blu-ray The Next Betamax?" and "Blue-Ray Vs. HD-DVD: Lock-In, Co-Existence, Or Irrelevance?"), this can lead to a runaway lock-in effect, where greater market penetration by a particular standard incentivizes the release and purchase of more content and hardware conforming to that standard. This can amount to a vicious circle for any rival technology, driving alternate standards into oblivion.
Sony was on the receiving end of this phenomenon when it lost the Betamax-VHS war of two decades ago. Unless Toshiba quickly persuades more studios to release content on HD-DVD and/or its current backers produce more popular fare, Sony may finally have its revenge. Perhaps that scenario could be partially catalyzed by the costly inclusion of Blu-ray in the PS3. Then, even in the face of lost videogame market share, Sony may find victory in the high-def standard war worth the sacrifice.