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Warner blames recession for Blu-ray Disc deal necessity

Upon Warner’s startling announcement just before the opening of CES that it would be releasing high-definition movies exclusively on Blu-ray Disc, many were questioning why a previously format neutral company would voluntarily shun the HD DVD market.

Warner made it clear that the deal with Blu-ray Disc did not involve exchanges of large sums of money, so then the motive must be something else.

Speaking to Reuters, a top executive said that Warner’s decision to “go Blu” was fuelled by fears of a deteriorating U.S. economy, falling DVD sales and even rising gas prices.

"We've typically been recession proof," Warner Bros Entertainment Group President Kevin Tsujihara said. "But the thing that we saw in the fourth quarter...was gas prices beginning to affect sales. And since we're considered an impulse purchase, it's beginning to impact us."

Tsujihara added that Warner’s decision to support Blu-ray Disc was to help end the customer and retailer confusion over high-definition home video formats before economic conditions worsened.

While Toshiba still maintains that it’s not over for HD DVD just yet, Warner’s decision has already sent shockwaves throughout the video industry.

Paramount, which signed an exclusive deal with HD DVD last summer, is believed to be re-examining its position with high-definition movies and may publish on Blu-ray Disc again soon, despite statements regarding its current strategy.

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gas price?
By nace186 on 1/10/2008 5:06:04 PM , Rating: 5
How does gas price affect their decision?




RE: gas price?
By daBKLYNdoorman on 1/10/08, Rating: 0
RE: gas price?
By Mitch101 on 1/10/2008 5:18:06 PM , Rating: 5
As gas prices rise consumers have less money to spend. With less money to spend they cant afford higher priced Blu-Ray players and thus buy HD-DVD players instead because of the cheaper price tag. OMG Wait did we back Blu-Ray? Darn I did it again just like I did when I voted in Florida. God were stupid.

I would imagine the rising gas prices would effect movie sales because consumers would have less money to spend. But what do I know.


RE: gas price?
By TMV192 on 1/10/2008 5:49:57 PM , Rating: 4
they should also blame the rising milk prices


RE: gas price?
By 16nm on 1/10/2008 6:09:40 PM , Rating: 5
LOL. Yes, the high cost of ice cream in particular is really biting into my HD-DVD fund.

I must say that dropping HD-DVD because of gas prices does not make any sense at all. If this were true, they would have dropped all the high definition disc formats all together since DVD is cheaper. I mean come on, if people were so strapped for cash, they would settle for DVD. No, there's more to the story than what Warner is telling us...


RE: gas price?
By JAB on 1/10/2008 7:13:06 PM , Rating: 2
You dont just pay for the high gas yourself but everyone in the supply chain will raise there cost to reflect the increased cost of doing business and they will pass it along.

It doesn't matter why though there certanly does seem like a softening of the economy and the entertainment money is often the first place to tighten the belt.


RE: gas price?
By jtemplin on 1/10/2008 7:37:05 PM , Rating: 2
All the people who don't understand how disparate economic forces or more broadly--societal forces, can effect other seemingly unrelated outcomes...read Freakonomics!


RE: gas price?
By 16nm on 1/10/2008 7:39:42 PM , Rating: 5
So why didn't they drop BLu-ray and support HD-DVD?? That's the question and there is more to it than Warner is letting on to.


RE: gas price?
By Darkskypoet on 1/10/2008 9:48:07 PM , Rating: 3
Essentially, Warner has other reasons for thinking Blueray will win... Or, perhaps there is something we aren't being told... However, the main reason is to get a winner in the HiDef battle before the softening hits too badly... Otherwise, with declining disposable income... (yes related to fuel prices and ice cream, and food stuffs (ethanol)) the 'oh better wait to see who wins argument gets stronger and stronger as there is declining money to gain utility with.

So for whatever reason they want Blueray to win, they want a winner, and the uncertainty to end so the HiDef market doesn't grind to a Halt in the US as the economy softens.

Seeing the the US is under this cloud, that may harm all of NAFTA countries, which means Japan and Europe become key markets for High Def. If Blue ray acceptance rates are much higher in Japan and EC, then I'd go Blue ray, and end it now to have a better position in the NAFTA market with that uncertainty removed.


RE: gas price?
By deeznuts on 1/11/2008 12:32:30 AM , Rating: 5
Ummm, because they were selling twice as many BD disks than HD DVD?

Did you guys read the article? You're wondering how gas prices and economic deterioration affected their decision?

quote:
Tsujihara said the company needed to quickly erase consumer and retailer confusion over dueling DVD formats before economic conditions deteriorated.
That's why with a lot of people standing by until the war is over, well Warner felt they had to expedite the end of the war before economic conditions got worse.


RE: gas price?
By 16nm on 1/11/2008 3:43:44 PM , Rating: 2
quote:
Ummm, because they were selling twice as many BD disks than HD DVD?


That's obviously the reason! But why didn't they come out and say that? What's all this baloney about gas prices and the possibility of a recession have to do with it? It seems very odd to me.


RE: gas price?
By RedStar on 1/12/2008 9:45:19 AM , Rating: 2
and how many more DVD's are they selling than both Blue ray and HD dvd combined?

lol :)


RE: gas price?
By deeznuts on 1/11/2008 12:32:30 AM , Rating: 2
Ummm, because they were selling twice as many BD disks than HD DVD?

Did you guys read the article? You're wondering how gas prices and economic deterioration affected their decision?

quote:
Tsujihara said the company needed to quickly erase consumer and retailer confusion over dueling DVD formats before economic conditions deteriorated.
That's why with a lot of people standing by until the war is over, well Warner felt they had to expedite the end of the war before economic conditions got worse.


RE: gas price?
By Master Kenobi (blog) on 1/11/2008 8:21:18 AM , Rating: 1
This is hardly going to expedite the end of the war. I don't buy that excuse.


RE: gas price?
By mars777 on 1/11/2008 9:10:30 AM , Rating: 1
IMHO you're not competent to say that, as is nobody here.
If Warner did not try we would be waiting forever or we had to buy combo players...

I hope they manage to end this sh*t...

I Hope they all go to one side, no matter which one, but BD is currently the more obvious one!


RE: gas price?
By Spuke on 1/11/2008 11:19:22 AM , Rating: 5
quote:
IMHO you're not competent to say that, as is nobody here.
Anyone can give their opinion here. That's why this place exists. If he's not competent to speak on this subject then neither are you.


RE: gas price?
By Razgriz20 on 1/11/2008 3:19:37 PM , Rating: 2
quote:
This is hardly going to expedite the end of the war. I don't buy that excuse.


Yeah keep telling youself that...


RE: gas price?
By Hawkido on 1/11/2008 3:33:06 PM , Rating: 2
quote:
So why didn't they drop BLu-ray and support HD-DVD??


Because as Warner stated earlier the sales delta made BR more attractive even with it's far higher price (It was still outselling on discs, which is the only thing movie studios care about... players don't mean crappo to them), with the lessening economy, dropping one of the formats would be the best business decision. If they feel HDDVD is failing and dropping one of the HD formats is a good business descision, then going BR only is a good decision.

Wish in one hand and crap in the other... See which one fills up faster.

Plus if they lean one way that will hasten the format decision and lessen production costs.


RE: gas price?