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Fresh Content Could Command Higher Prices in Blu-ray, Study Finds

Apr 17, 2008  •  Post A Comment

A few billion dollars is a lot to leave on the table.
That’s what studios and retailers may be doing by not boosting prices of day-and-date Blu-ray DVDs and video-on-demand titles, according to a study released this week. The sellers could raise prices to reflect pent-up demand, the study said.
Such distributors may have an opportunity to bag an additional $5 billion annually over the next two years by factoring in consumers’ thirst for first-date Blu-ray titles, consulting firm Oliver Wyman said in a statement.
By charging about $8 for the Blu-ray titles, or double the typical $4 price of standard DVD or video-on-demand films, retailers may help drive U.S. home entertainment spending up 10% to about $55 billion a year, the firm said, citing a survey of 2,000 U.S. consumers. Sales will be driven by both the higher price and an increase in buyers.
The victory of Sony’s Blu-ray format over Toshiba’s competing HD DVD in February is being touted by movie studios and industry analysts alike as a savior to a DVD market that suffered declining sales last year.
Some studios have estimated that the Blu-ray victory will push this year’s high-definition disc sales and rentals to $1 billion from about $300 million last year. That $700 million jump represents about 3% of the $24 billion spent on DVD rentals and purchases last year. The Wyman study signals an even more aggressive jump by forecasting a 6% increase in packaged media revenues due to more Blu-ray demand.
“This research reveals a clear opportunity for the industry to introduce new offerings that tap unmet consumer demand, while fitting well with existing movie distribution channels,” said Mark Teitell, a partner at Oliver Wyman, in a statement.
Studios and retailers may generate additional sales by charging as much as $2 for embedding electronic copies in DVDs. Studios such as Lionsgate, Warner Home Video and 20th Century Fox Home Entertainment have already started experimenting with the inclusion of digital copies that can be downloaded to portable players.

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