BD player sales down due to lack of supply

[SGRSBSKIER]

http://www.contentagenda.com/article...dustryid=45175

TECHNOLOGY; Blu-ray sales picture is fuzzy; Sony won the format war, but the challenge is getting the players into consumers' hands.


Alex Pham, Dawn C. Chmielewski, Times Staff Writer -- Los Angeles Times , May 1, 2008 Thursday Home Edition


Blu-ray won the high-definition format war, but now it's battling for consumers.

Sales of Blu-ray players dropped 40% in February from January, rebounding a scant 2% in March, according to a report released Wednesday by NPD Group.

The research firm blamed the decline on lack of consumer interest. But manufacturers say the abrupt end to the format war uncorked a demand they couldn't meet.

Most companies had expected demand for high-definition players to be modest while Blu-ray, which primarily is backed by Sony Corp., battled a competing technology called HD DVD, championed by Toshiba Corp. and Microsoft Corp., said Andy Parsons, a spokesman for the Blu-ray Disc Assn.

But when Toshiba abruptly threw in the towel Feb. 19, "many manufacturers were caught unprepared for the rather sudden end of the format wars," Parsons said. "We suddenly had high demand and a supply constraint, and we're just now beginning to recover. Many players are still on back order."

Parsons noted that his own company, Pioneer, had sold out of its high-end Blu-ray player, which retails for about $1,000.

Hollywood studios are betting on high-definition discs to drive revenue growth as DVD sales begin to slow. Their hope is that consumers, lured by the promise of crisper pictures on their big-screen high-definition televisions, will adopt the technology and perhaps even replace their DVD collections.

Dorinda Marticorena, senior vice president of marketing for Warner Home Video, said hardware sales for the first quarter were up fifteenfold from a year ago.

Retailers are "out of stock and back orders can be as much as 45 days, depending on the manufacturer," Marticorena said. "That's a key part of the issue here. There is still very much strong consumer interest, but they just can't get their hands on players."

A spokeswoman for the nation's largest retailer, Wal-Mart Stores Inc., confirmed that the supply of Blu-ray players was tight in its stores because of industrywide supply constraints. She said this might explain NPD's sales numbers, "more than interest." She promised customers "a new assortment of choices" -- with new prices -- in the coming weeks.

Buyers might not have been able to lay their hands on a player, but that hasn't stopped them from buying Blu-ray movies. First-quarter sales of the high-definition discs were up fivefold compared with the year-earlier period, according to a consortium of manufacturers and studios called DEG: the Digital Entertainment Group.

NPD analyst Ross Rubin has a different explanation for the drop in Blu-ray player sales.

"When Blu-ray was fighting HD DVD, that was a battle of passion," Rubin said. "Now Blu-ray is fighting a battle of apathy in which most consumers are either unaware of Blu-ray or have yet to be convinced that it's a better format" than standard DVDs.

Rubin said NPD surveyed consumers late last year, and "an overwhelming number of them said they weren't investing in a new next-generation player because their old DVD player worked well." He added that consumers also felt that "next-generation players were too expensive. It's clear from retail sales that those consumer sentiments are still holding true."

A limited number of titles on the Blu-ray format, in addition to the cost, might also be hampering sales, analysts said.

According to the Blu-ray Disc Assn., there are only about 520 movies on Blu-ray, which typically retail for $29 to $39. The Blu-ray version of "Juno," for example, sells for $27.95 on Amazon.com while the standard DVD goes for $15.99.

The NPD figures, however, don't reflect sales of Sony's PlayStation 3 game console, which has a built-in Blu-ray player. Sony said it had sold more than 10 million PS3s worldwide since the console's launch in November 2006.

Marticorena said gamers were increasingly using their PS3s to watch movies. Warner's surveys indicate the device is used as a movie player about a quarter of the time, she said.

Some analysts caution against reading too much into the NPD figures, pointing out that the first quarter usually is not a crucial selling period for consumer electronics.

"It's too early to tell," said Kurt Scherf, an analyst with technology research firm Parks Associates. "I expect that it will be third and fourth quarter during the holiday season when [there is] aggressive promotion and bundling of players with HDTVs that those numbers will come up."

--

alex.pham@latimes.com

dawn.chmielewski@latimes.com

This makes sense, 250k were sold all of last year and more than 118k (probably closer to 150k) were sold in Q1 2008, that shows a huge increase in demand and with supply constraints more could have been sold.

[hifiguymi]

75 views and no replies?

OK I'll say it.

Told you so.

[NovaKane]

The bolded text is extremely salient in explaining why sales are down. Good job, Skier.

I've noticed that Crutchfield has been out of stock on several Blu-ray players for the last month.

Even Robert Zohn, of Value Electronics, recently posted on AVS that the supply of Panasonic BD30s isn't meeting his demand. He only received one tenth of an order he placed not too long ago.

Bottom line, the article reflects figures that may be flawed due to the supply and demand problem confirmed by Wal-Mart and others. Let's see what happens when this sorts itself out.

[NovaKane]

Originally Posted by hifiguymi

75 views and no replies?

OK I'll say it.

Told you so.

This thread would have had more success in the smackdown forum, where Doom & Gloomers are having a field day spinning the very same article without mentioning the supply and demand issues.

But why would they offer a possible explanation for the numbers which would invalidate their reasoning?

[Mike171979]

LOL at the folks from Walmart and Manufactures.

My local Frys, Best Buy, Circuit City, and Sams Club all have Blu Ray players in stock.

And so does Amazon.

Since they don't want to admit the price is why Blu Ray player sales are so low, they better at least think of something better than supply.

[aaronwt]

Players are also in stock in my area.

[ack_bak]

The Panasonic BD30 is hard to come by for a decent price. Amazon has been sold out for sometime. I do think $399 for 1.0 players is too much at this stage in the game. They should be $299 or less, and 1.1 players should be $350-399 at best.

[Teh Purple Avenger8or]

Originally Posted by ack_bak

The Panasonic BD30 is hard to come by for a decent price. Amazon has been sold out for sometime. I do think $399 for 1.0 players is too much at this stage in the game. They should be $299 or less, and 1.1 players should be $350-399 at best.

This is what you wanted and this is what you won. Stop complaining and buy a $1300 1.0 BD player for the cause.

[hifiguymi]

Originally Posted by ack_bak

The Panasonic BD30 is hard to come by for a decent price. Amazon has been sold out for sometime. I do think $399 for 1.0 players is too much at this stage in the game. They should be $299 or less, and 1.1 players should be $350-399 at best.

I'm curious how you came up with those prices. Since BD is a new format what reference point do you have? I'm not being snide, I'm just curious. Since most customers in my experience don't know about Profiles and don't really care about PIP and IME, why should that play into price? There are far more important performance items (like support of lossless audio, good scaling of DVDs) that seem to matter to the customers I talk to.

[Teh Purple Avenger8or]

Originally Posted by NovaKane

The bolded text is extremely salient in explaining why sales are down. Good job, Skier.

I've noticed that Crutchfield has been out of stock on several Blu-ray players for the last month.

Even Robert Zohn, of Value Electronics, recently posted on AVS that the supply of Panasonic BD30s isn't meeting his demand. He only received one tenth of an order he placed not too long ago.

Bottom line, the article reflects figures that may be flawed due to the supply and demand problem confirmed by Wal-Mart and others. Let's see what happens when this sorts itself out.

But, we have no idea if the problem is because of low manufacturing numbers or high customer demand. The Panasonic guy made it seem like it is manufacturing volume instead of increased demand.

[NovaKane]

"We suddenly had high demand and a supply constraint," was the quote from the Pioneer guy, Andy Parsons (whom I think you're referring to as the "Panasonic guy," as there are no quotes from a Panny rep in the article).

So I take it to mean that the demand went up because HD DVD folded, and there was a constraint in the supply end of the equation, due to the sudden influx of buyers.

I'm not dismissing the speculation from the NPD rep. I'm sure it plays a factor as well. But his analysis is incomplete without the supply & demand issues playing into the equation, which was clearly addressed in the article.

[Teh Purple Avenger8or]

Originally Posted by NovaKane

"We suddenly had high demand and a supply constraint," was the quote from the Pioneer guy, Andy Parsons (whom I think you're referring to as the "Panasonic guy," as there are no quotes from a Panny rep in the article).

So I take it to mean that the demand went up because HD DVD folded, and there was a constraint in the supply end of the equation, due to the sudden influx of buyers.

I'm not dismissing the speculation from the NPD rep. I'm sure it plays a factor as well. But his analysis is incomplete without the supply & demand issues playing into the equation, which was clearly addressed in the article.

Oops!
As far as I can tell Pioneer never had any players in the chain to run out of. Supplies of their players have always been very week. We saw 3 or 4 94HDs and 2 or 3 of them had problems. The 95s were better, but we only saw 2 of those and this was well before February.

[hifiguymi]

We didn't sell many BDP-94HDs but I don't remember one of them having a problem. We did get quite a few BDP-95FDs before January and I did have one that would lock up during playback of any type of disc. That was out of a couple dozen we sold (in the store I work in out of three in the company). Once January came around, we only got a hand full for our company and that was that. I haven't seen ANY BD player since then other than the Sony BDP-S300 and that has been few and far between.

[hidefimports]

So Blu-ray players sales are down because they are selling so well, that it exceeded supply?

[ack_bak]

Originally Posted by Teh Purple Avenger8or

Oops!
As far as I can tell Pioneer never had any players in the chain to run out of. Supplies of their players have always been very week. We saw 3 or 4 94HDs and 2 or 3 of them had problems. The 95s were better, but we only saw 2 of those and this was well before February.

Andy Parsons is chairman of the BDA. He is not talking specifically about Pioneer, he is talking about Blu-Ray players as a whole.