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Monday
Feb182008

Blue is the Colour…Blu-ray is the game....

We are all very used to technology companies setting the tech agenda and defining the standards that we as consumers have to buy into.

But what is new is that retailers with their direct relations with customers, market size and wide distribution are now able to be the technology king makers.

 The announcement on Friday by Wal*Mart that they will only stock and support Blu-ray DVDS and their video players is a sharp reminder that what was billed as the format battle of the decade has, I believe, been settled by a knockout blow from retailer Wal*Mart.

Both Sony and Toshiba have been trying to establish their technology as the new standard for the next generation of DVDs for the high definition world. Reminiscent of the battle between VHS and the Betamax format wars of the original video standards but this time the stakes now are higher as this format winner could, if smart, command a premium position in our digitally converging homes.

In January Blue-ray edged ahead of Toshiba’s competing HD-DVD when Warner Brothers said tit would only support Blu-ray. So did other retailers and now Wal*Mart will be taking out of their stores all HD-DVD and will throw their mighty weight and resources behind trying grow sales of Blu-ray.

I predict that Toshiba will be forced to concede defeat shortly.  Proof, if it is needed, that the role retailers are playing in defining the destinies of manufacturers and brand owners is growing rapidly and in unexpected areas. Understanding what drives retailers decisions is critical an ever-increasing number of organisations.

 Consumers have stayed away from the high definition DVD party preferring to wait it out to see which technology wins. With the high growth rates of flat panel TV’s sales, most being high definition compatible, there should be a wealth of consumers looking for high definition content once the format war is over.

But nothing is that cut and dry in the digital space. Retailers will need to move fast on high definition and work out their overall strategy. Sales of games and films will be moving more and more online especially as bandwidth grows. The revenue model is also likely to look different. Sales may move back to the rental mode, for the night or for one viewing and payment may be supported by an advertising revenue model. With viewing and playing subsidised by watching advertising content. All this could see  reducing sales in retail stores and its impact on footfall. So expect to see retailers take positions in the delivery of digital content. Some interesting alliances and opportunities are on the horizon.

In the meantime look forward  seeing brighter, sharper, greater clarity pictures in a living room near you.

David

David Roth

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