by Doug Desjardins
Retailers aren’t expected to offer deep holiday discounts this year as they did in 2008, but DVDs seem to be an exception to that rule.
Wal-Mart got things going in early November when it offered an online price of $9.99 for pre-orders on new-release DVD titles like Star Trek and Harry Potter and the Half Blood Prince, essentially cutting the standard price in half and offering free shipping. That prompted competitors like Target and Amazon.com to match those prices in a move that presages even deeper discounts for December. 
The price war is also extending into the high definition Blu-Ray format, where discs are usually priced around $30 for new releases. Wal-Mart has dropped the price on new titles like Transformers: Revenge of the Fallen and The Taking of Pelham 123 to $19.99, bringing the price point down to the standard DVD level.
“There’s something about that $20 price point in this business,” said Tom Adams, president of Adams Media Research. “DVD sales at mass market explode after falling below that $20 barrier. That seems to be the magic price point.”
Price wars aren’t always welcomed by manufacturers, since they tend to have a negative impact on overall revenues and profit margins. But the major studios are welcoming this one in a year when DVD revenues have fallen more than 13% due to the lingering recession and a maturing market. “It’s a question of whether it’s worth it for the market,” said Adams. “And they (movie studios) are all in desperate need of a strong comeback. They’re willing to lose a buck or two on a DVD.”
The DVD price cuts coincide with falling prices on Blu-Ray players. Up until this summer, even non-brand name players were priced above $200 but suppliers - tired of waiting for the market to come to them - have made a concerted push to attract new converts. In mid-November, Wal-Mart lowered the price of several players below $150, including a Magnavox player for $129. Best Buy has dropped the price of its Insignia player to $149 and Costco is selling a Philips player for $139 (with a manufacturer’s coupon for $60 off). Those prices are expected to fall below $100 when sales and promotions pick up after Thanksgiving.
As for standard DVD, the promotional price cuts on pre-orders may signal a more permanent reduction in price for 2010 as the format gradually gives way to Blu-Ray. According to the Digital Entertainment Group, Blu-Ray players and enabled devices like Playstation 3 are now in 11.7 million households and Best Buy executive vice president Mike Vitelli said he expects Blu Ray player sales to surge in 2010 and top 18 million units.
Resources
Blu Ray Popularity Quickens as Popularity of Packaged Media Continues to Drop
COUPON TIME
On Black Friday and Cyber Monday, you’re sure to find deals on Blu-Ray disks, players and more. Make sure you check out our Black Friday Deals and Cyber Monday Promotions pages for the best prices!