Toshiba Cuts HD DVD Prices By 50 Per Cent, But Where Are Its Sales Figures From?

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The battle for high-def supremacy was bound to get ugly. After the HD DVD camp was declared dead by media everywhere, Toshiba is now fighting back by slashing prices and issuing lofty press releases with questionable numbers.

Digital Journal, Op-Ed -- Toshiba is pulling out all the punches in an effort to get someone out there to remember there is still a format war going on. That means slashing prices, loading press releases with an abundance of ego-massaging and topping it off with questionable "facts."

To slow the momentum of the Blu-ray train, Toshiba and the HD DVD gang have reached into their back pocket and pulled out a lot of fluff.

First, the smart move: The company announced it is now launching an aggressive marketing campaign to promote players, including cutting prices by about 50 per cent. The entry-level players that run for about $300 in the U.S. are now selling for $150.

There are few details about how exactly Toshiba will market its ailing technology, but expect to see more ads for HD DVD online, in print and on television.

The battle is over the next DVD format, as both Blu-ray and HD DVD fight to become the next high-definition standard. Warner Bros. recently announced it would go Blu-ray exclusive and then the tech world was hit with word that Universal, Paramount, New Line, HBO and the porn industry could also drop their HD DVD support.

"While price is one of the consideration elements for the early adopter, it is a deal-breaker for the mainstream consumer," said Toshiba executive Yoshi Uchiyama in a statement.

According to current prices at Best Buy's online store in the U.S., Blu-ray players run from $399 and up whereas an HD DVD player will only set you back $149 and up. In Canada, the prices are not on par, as Best Buy's Canadian site shows Blu-ray players selling for $449 and up, and HD DVD players for $349 and up.

The price cut is a great way to drive interest (especially when you are only half the price of your competitor). But its marketing strategy is arguably puffed up with a lot of hot air.

Of course the company will defend its investment, but they play with numbers in a questionable manner. For example, their press release is loaded with statements like: "As Toshiba achieved the #1 sales volume in the next generation DVD category with an approximately 50% market share in 2007, HD DVD is proven to be the format of choice for consumers."

Format of choice for customers? Press releases always come with boilerplate like this, but it's almost laughable that Toshiba made this claim a week after the biggest studio in Hollywood said it was going Blu-ray exclusive because of consumer demand. How can both formats be the format of choice for consumers?

And if you look at the numbers, Toshiba doesn't clearly say where it's pulling that 50 per cent market share number from. But it sounds good, doesn't it? I suspect they are referring to recent NPD market research that shows HD DVD players represented 49.3 per cent of high-def players sold as of Dec. 22. in the U.S. Of course, that study did not include the sales of PlayStation 3 video game consoles (that include a Blu-ray player inside). And of course, if you include PS3 sales into the mix, the scales are overwhelmingly tipped in Blu-ray's favour. It's not clear who Toshiba's source is, but if it's the NPD research they clearly did not let a few facts get in the way of a good story.

On the surface, Toshiba's new strategy seems very smart: play-up the HD DVD adoption rate from customers who buy stand-alone players rather than gaming consoles, drive sales numbers higher by slashing prices, and then show big Hollywood studios they've got the support of the consumer market. It's a fine strategy if you enjoy keeping your head in the sand.

The thing the HD DVD camp needs to realize is the gaming market is part of this format war and focusing on the good while avoiding the bad does not make the picture any prettier. If Toshiba's goal is to convince industry pundits and studios they have consumer's support, they're kidding themselves if they think everyone will ignore the market share of the PlayStation 3. Any studio who does so is out of its mind.