Year-end Dvd Hardware Price Cuts Likely
Video Week
Mon, Jul 21 1997
DVD hardware manufacturers are leaning toward 4th-quarter price cuts for entry-level DVD players in effort to jump-start sales of new technology in mass market, major retailer told analysts in Salomon Bros. DVD conference call. "The manufacturers are telling us that they do expect to have some price reductions toward the end of the year, possibly nothing before the 4th quarter," said John Keating, executive of Cal.-based Good Guys chain. He told analysts cuts were likely in Nov. or Dec., in time for holiday selling. "That reduction would certainly allow us to hit more of a mass market customer base." Good Guys has sold 5,000 players since Feb., along with 24,000 pieces of software, Keating said: "We have seen significant sales of the high-end models. We are not seeing too much of a dramatic shift toward the lower end yet, so we still are selling a lot of product to early adopters." Keating said chain carries 10 models from 5 manufacturers. Top seller has been Sony DVP-S7000 ($999), followed by Toshiba SD3006 ($649), Panasonic DVD A300 ($749), Toshiba SD 2006 entry-level product ($499), Pioneer DVL-700 combination laserdisc-DVD player ($999). "We have experienced significant product shortages, especially from Sony and Pioneer, on the two $999 retail pieces," he said. "We could have sold many, many more of those if supplies had been sufficient." He said Panasonic and Toshiba had some minor availability problems. Hardware margins have averaged 24 points, Keating said. "DVD is also fueling add-on sales of other components," he said, citing growth in surround sound receivers, speakers, direct-view TVs 30" and up, projection TVs. He said chain hadn't seen significant drop in VCR sales, "but certainly by next year VCR sales will start to be affected as DVD takes off and grows in sales velocity." Earlier, Salomon analyst David Childe said retailers were predicting $100 cuts, reducing entry-level products to $399. He offered optimistic estimates of worldwide sales, saying they would be closer to high end of his earlier estimate of 400,000-2 million for calendar year. Aside from Warner Home Video's decision to roll out software nationally, Childe cited largely anecdotal evidence to support his optimism, such as ringing endorsement by film reviewers Siskel & Ebert, support of adult video industry, retailers' reporting initial software-to-hardware ratios of 5:1-8:1.
(Copyright 1997 by Warren Publishing, Inc.)
infoseek.com |
