Netflix: Higher prices for high-def a possibility - High-Def Digest Forums
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Old 02-07-2008, 06:43 AM
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Default Netflix: Higher prices for high-def a possibility

CFO McCarthy says format war could drive up costs

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FEB. 6 | Netflix hasn’t ruled out raising prices on high-definition rentals if a resolution to the format war between Sony’s Blu-ray Disc and the Toshiba-led HD DVD drives costs up, according to chief financial officer Barry McCarthy.

Blu-ray market share has risen since last month when Warner Bros. said it would release its high-def movies exclusively in Blu-ray starting this June.

“If a winner emerges and we experience some margin compression if a large number of subscribers rent in high-def, we’ll weight the options of increasing prices,” McCarthy said.

Speaking at the Thomas Weisel Partners Technology, Telecom & Internet Conference in San Francisco this morning, McCarthy said Internet downloading won’t threaten DVDs as the primary home-entertainment delivery method until prices drop and the content is accessible through multiple devices.
Someone want to help me out here? I've been told 10,000 times by the BD crowd, "as volume goes up, prices come down".

Haven't the PS3 armchair economists have been saying all along that prices will come down after the the war is over?

Now prices may go up??? It appears that the BDA is going to want their money back.
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Old 02-07-2008, 06:51 AM
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And you're comparing this to the fear of increase in player and title prices? I don't see how that is even reasonable to compare.

Netflix is saying (according to the article) that they'd jack up rental prices if more people start renting high-def discs. If you wanna take the greed of one movie rental store and do a generalizing take on things to come for retail prices on hardware and software, then be my guest.

It's not comparable to the fear of retail prices for BD software and hardware rising after the death of HD-DVD. A fear which holds little to no ground in reality.
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Old 02-07-2008, 06:56 AM
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Originally Posted by galleren View Post
Netflix is saying (according to the article) that they'd jack up rental prices if more people start renting high-def discs. If you wanna take the greed of one movie rental store and do a generalizing take on things to come for retail prices on hardware and software, then be my guest.
It's not greed. He is saying that if margins are compressed (i.e. if they make less and less per title) then they will raise prices.

And it's not "one movies rental store". It is the largest (and most viable) movie rental store.
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Old 02-07-2008, 06:57 AM
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The same would have happened if HD DVD had won.
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Old 02-07-2008, 07:01 AM
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Originally Posted by Johan78se View Post
The same would have happened if HD DVD had won.
How do you know this?
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Old 02-07-2008, 07:03 AM
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If Netflix raises prices for BD rental - then BD is niche.
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Old 02-07-2008, 07:26 AM
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Originally Posted by galleren View Post
And you're comparing this to the fear of increase in player and title prices? I don't see how that is even reasonable to compare.

Netflix is saying (according to the article) that they'd jack up rental prices if more people start renting high-def discs. If you wanna take the greed of one movie rental store and do a generalizing take on things to come for retail prices on hardware and software, then be my guest.

It's not comparable to the fear of retail prices for BD software and hardware rising after the death of HD-DVD. A fear which holds little to no ground in reality.
These fears are NOT unfounded.

Amazon has ALREADY raised the prices on some 19.99 catalog BD's by about a buck.

This is a fact.
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Old 02-07-2008, 07:44 AM
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Quote:
Originally Posted by mikemorel View Post
CFO McCarthy says format war could drive up costs

Someone want to help me out here? I've been told 10,000 times by the BD crowd, "as volume goes up, prices come down".

Haven't the PS3 armchair economists have been saying all along that prices will come down after the the war is over?

Now prices may go up??? It appears that the BDA is going to want their money back.
Psst. The article was talking about Netflix who currently does not charge any extra to rent Blu-ray or HD DVDs than their current subscription costs based on DVD prices. I think we all know that HDM costs more than DVD, and as more people adopt HDM Netflix will become decreasingly able to cover the price difference.

That said, I'm curious what effect hardcoated BD's is having on Netflix's lifespan for rental discs. I would imagine that at least some of the price difference would be recovered by the simple fact that Netflix doesn't have to replace scratched BD's nearly as often as they do DVD or HD DVD.
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Old 02-07-2008, 07:48 AM
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Sounds like they're saying now that blu-ray has won they think they'll be getting a lot more renters wanting blu discs to play in their new machines. Since both blu ray discs and hd dvd discs cost more than standard dvds it will cost netflix more to stock the tons of blu discs they'll have to buy to meet demand. This would happen if hd dvd won also since they cost the same as blu discs.
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Old 02-07-2008, 07:52 AM
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Originally Posted by Thulium View Post

That said, I'm curious what effect hardcoated BD's is having on Netflix's lifespan for rental discs. I would imagine that at least some of the price difference would be recovered by the simple fact that Netflix doesn't have to replace scratched BD's nearly as often as they do DVD or HD DVD.
Yeah, so far any dirty blu discs I've gotten from netflix are back to pristine looking after a quick wipe. I haven't had any discs that won't play or skip yet. I'm sure that will be helpful over time to both netflix and the renter since they won't have to send replacement discs and spend extra money on shipping.
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