Change In Strategy?

After this year's CES, it was pretty clear the Blu-Ray had trounced rival format, HD DVD, in the competition to become the next gen' disc format. In the following weeks, the HD DVD camp basically imploded, rolled over, and picked up their tent and went home. That left Blu-Ray as the clear winner in an ending that no one could have predicted.

After years of waiting for a clear winner, have folks raced over the Best Buy to finally get their hands on pure 1080p goodness? Apparently not in droves, as in this slower economy, not too many are willing to pony up the $400 plus that it would take to get one of these babies into their home AV rack. Also, many are satisfied with their current DVD player, and for those of us with a less than 40" TV, it's probably "good enough" for now.

So, what's Sony's strategy to get us to buy an overpriced player in the 2nd quarter of this year? Typically, companies use a "razor and blades strategy" to transition us to a new format. That's how the game box companies work: buy the box at a modest fee, and then overpay ridiculously on the content (each disc). However, the time tested strategy probably wouldn't work with Blu-Ray because many of us would buy the subsidized box, just use it as a fancy DVD upscaler, and not acquire any Blu-Ray discs. So, Sony needs a different approach.

I think they're reversing the "razor and blades" gimmick. Give out the blades for free basically, and then us consumers need something to use them with. Give out the product for free? How could that be?

Well, it's not exactly free, but the Blu-Ray discs are typically around double the price at most stores to purchase. Clearly a premium product carries a premium. However, someone must be subsidizing these discs because NetFlix has the Blu-Ray discs available for rental at the same price as the DVD's. Also, this week, Blockbuster announced that they will have Blu-Ray available at their stores for the same price as the older DVD format nationally.

I think this is a good strategy. When consumers see a disc at ubiquitous Blockbuster for rental, they're going to have exposure to the format. Also, there are many of us that will want to acquire the gear as they can't stand not being able to play a format, and don't want to be left out. While I'm not rushing out to buy a Blu-Ray player, and want the price to come out of the sky and under $200 before I seriously look at purchasing anything, I think that giving away the "blades for free" should get this format into many homes- just not mine.

Jonas