Wal-Mart chooses HD DVD

Written by Tim Smalley

April 26, 2007 | 07:17

Tags: #betamax #blu #cheap #dvd #hd #license #licensing #player #ray #vhs #walmart

Companies: #blu-ray #china #jvc #sony #toshiba #wal-mart

If there's one retailer that could decide the high-definition format war, it has to be Wal-Mart.

Over the past couple of days, the retailer's plans for massive shipments of at least two million very affordable HD DVD players from China leaked onto the web. Wal-Mart is planning to bring these low-cost players to its stores in time for the Christmas 2007 rush.

In the past, DVDs and CDs have been a massive traffic builder for the company, as it heavily subsidised featured movies to get customers into its stores. Once these consumers were in the stores, most stayed to buy other things. However, back in November the retailer announced plans to launch a downloadable movie service for standard definition content.

Thus, it needs something to replace its major traffic driver before consumers stop coming to Wal-Mart for movies -- that something is, of course, high-definition movies. However, Wal-Mart can't start to use cheap high-definition media as a major attraction until it has to choose one format and fed its customers with a very affordable player to play these new movies on.

The leak indicates that Toshiba -- the company behind the HD DVD format -- has started licensing its technology to Chinese manufacturers for low-cost production. Indeed, the player that Wal-Mart is planning to sell, which is reportedly produced by Fuh Yuan, will cost well under $300 USD and may even be as low as $200 USD if speculation is to be believed.

Blu-ray players are simply just too expensive to make and the cheapest offering costs at least 50 percent more than the current cheapest HD DVD player. Because Wal-Mart is driven by aggressive pricing, Blu-ray just won't work in its business model unless Sony decides to license its technology to the Chinese at an affordable price.

So, despite Sony taking the early lead in the HD Format War, HD DVD looks set to be the long term winner. If you think back to the war between VHS and BetaMax, it was decided when JVC decided to widely license VHS at an affordable rate, enabling Far Eastern manufacturers to build budget players.

If this rumour turns out to be true, could history repeat itself again? Let us know your thoughts in the forums.
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