Wal-Mart Not Taking Sides in DVD Battle (Touch Points)

Retail observers monitoring the ongoing high-definition DVD format battle between Toshiba-backed HD-DVD and Sony’s Blu-Ray are still waiting on Wal-Mart Stores Inc. to take a side.

They will have to wait a little longer.

With the holiday shopping season fast approaching and electronics once again expected to help carry sales growth in an economy rife with concerns, high-def DVD purveyors may go another Christmas without seeing the technology create demand among consumers.

Coming down in the middle is Wal-Mart’s plan for now, according to spokesperson Melissa O’Brien.

“We’re in a different situation than other retailers,” O’Brien said. “They have far less stores. Because of distribution and our customer base of 127 million customers a week we will continue to sell both and let customers make the decision – not us – on what will win the market.”

Because of Wal-Mart’s lower-income customer base, many have assumed the Bentonville retailer would favor Toshiba’s less-pricey player and reports in April of an order for 2 million units appeared to back that up.

With its size and position as the No. 1 seller of DVDs in America, observers feel Wal-Mart’s decision could ultimately tip the format battle.

O’Brien said Wal-Mart is well aware of that influence and for that reason won’t be making any exclusive deals until the picture is much clearer.

“That’s why we’re not [taking sides],” O’Brien said. “We know our responsibility and will let the consumer decide. We’ll wait and see how it shakes out.”

Retailers Lower Player Prices

Target announced in August it would carry the Blu-Ray player exclusively in its stores while continuing to stock movie titles in both Blu-Ray and HD-DVD. It also offers the Toshiba player through its Web site.

Costco carries both player formats and helped lower the prices this summer to $249 for the Toshiba player and $449 for the Blu-Ray. Some Toshiba players on Best Buy’s Web site go for as low as $179.

Target’s initial announced price for the Blu-Ray player was $499 (its Web site offers the Toshiba player for $299) and analysts expect that price to come down as well for the holidays.

Wal-Mart has offered both players through walmart.com, though on Oct. 31 only the Blu-Ray players were available, but O’Brien said that was only a reflection of the constantly changing product mix and not an indicator of anything more.

Wal-Mart has lowered its price on the Sony Blu-Ray player to $469 and offers a near-equal mix of titles on its Web site with 271 on HD-DVD and 290 on Blu-Ray.

Sony’s Columbia Pictures, Disney and 20th Century Fox have exclusive Blu-Ray deals and the format has been an early winner in sales, but Toshiba locked up Paramount and DreamWorks in late summer and gained hot titles like “Transformers” in the process.

Time-Warner is the only major studio still releasing titles in both formats.

Consumer awareness of the HD format is not yet where manufacturers would like it to be and even with reduced prices are still at a relatively high price point compared to the $20 standard players seen last Christmas.

Those looking for a low-price HD alternative could consider the “upconvert” DVD players, which range in price from $45 for basic models to $180 for those with recording capability. The players convert a standard DVD into an HD, 1080i resolution picture.

Black Friday Pushed Up

Wal-Mart’s aggressive price cuts in the back-to-school shopping season helped boost its same-store sales growth in August and September to combat the trying times for its customers battered by rising energy costs.

The softening economy has many retailers looking for ways to max out their holiday sales and some analysts have suggested there could be more consumers shopping for deals later than “Black Friday,” the day after Thanksgiving.

Wal-Mart has jump-started the shopping season by announcing it would begin offering its holiday deals on Nov. 2, three weeks before the traditional kickoff, on what it said will be some of the “most sought-after” gifts of the season.

A survey of chief marketing officers by BDO Seidman LLP, an accounting and consulting firm based in New York City, showed 73 percent believe there will be greater discounts and promotions this year versus 2006.

The marketing officers are predicting same-store sales growth of around 5 percent for the holidays, which is close to the 5.6 percent increase for all of 2007 predicted by a BDO survey of CFOs released in September.