That Toshiba won’t bow a line of Blu-ray players was but one certainty that emerged from the company’s early Tuesday announcement throwing in the towel on HD DVD and ceding the format war victory to Blu-ray. But other questions had no easy answers late Tuesday, including what retailers would do with unsold stock of Toshiba HD DVD players if Toshiba elected not to buy them back.
Paul Gluckman
Paul Gluckman, Executive Senior Editor, is a 30-year Warren Communications News veteran having joined the company in May 1989 to launch its Audio Week publication. In his long career, Paul has chronicled the rise and fall of physical entertainment media like the CD, DVD and Blu-ray and the advent of ATSC 3.0 broadcast technology from its rudimentary standardization roots to its anticipated 2020 commercial launch.
NTIA neither supports nor opposes a legislative waiver of the 5 percent import duty on DTV converter boxes as they enter the U.S., a spokesman said. Larry Harris, RadioShack vice president of merchandising, urged the waiver when he testified Wednesday before the House Telecom Subcommittee on behalf of the CE Retailers Coalition (CED Feb 14 p1). Without a waiver, the duty would raise consumer prices and impede distribution, Harris said. Import duties on coupon- eligible boxes “were not anticipated” when DTV legislation was enacted and the coupon program conceived, said a recent fact sheet circulated by CEA, CERC and the Retail Industry Leaders Association. “Indeed, import duties seem to contradict the policy behind the coupons, and the effectiveness of this government program,” the fact sheet said. “Directly contrary” to the $40-per-box government subsidy designed to make the boxes affordable, “converter boxes have now been classified as subject to import duties that can only increase the cost of these essential products,” the fact sheet said. Waiving the duty not only will make boxes more affordable for the “tens of millions of households who now rely on free, over-the-air” TV, but also will have no bearing on federal budgets since “no agency has included DTV converter box tariffs as a part of its revenue stream,” the fact sheet said.
EchoStar, which made CES headlines when it said it will sell $39.99 DTV converter boxes that would be free except for sales tax when purchased with a $40 coupon (CED Jan 8 p2), is working hard to develop a coupon-eligible box that’s even cheaper, EchoStar Technologies President Mark Jackson told a House Telecom Subcommittee hearing Wednesday on the progress of the DTV transition.
Consumers requested just over 400,000 DTV converter box coupons in the week ended Friday, NTIA said, raising total requests to 4.58 million since the government began accepting applications Jan. 1. The total is 20.6 percent of the 22.25 million coupons that NTIA has budgeted for the “base” phase of the program, when all households are eligible for coupons. A “contingency” phase, if needed, would allot 11.25 million coupons to households that certify they depend on over-the- air signals alone for TV. The pace of requests has slowed significantly since Jan. 1, NTIA data show. An average of 1.27 million coupons was requested in each of the first three weeks, the agency said. Since Jan. 25, weekly requests have averaged just over 382,000, it said.
“When Best Buy speaks, consumers listen,” and Best Buy has “clearly spoken” with its announcement Monday that it will push consumers toward Blu-ray as the “preferred format” (CED Feb 12 p1), the Blu-ray Disc Association said in a statement. “We are obviously thrilled by this announcement, and trust that it will dramatically accelerate the adoption of Blu-ray as the single high definition format for the future,” the association said. “The retail store is where all the excitement happens, and there is nothing more convincing than a recommendation from a trusted, highly influential retailer like Best Buy.” Meanwhile, Toshiba denied Tuesday it has canceled its HD DVD ad campaign in wake of Monday’s Best Buy and Netflix setbacks. “To support our retailers, Toshiba will continue their advertising efforts, especially for the upcoming President’s Day sales,” a spokeswoman told Consumer Electronics Daily.
“Imation has earned the position as global market leader in recordable optical media by working through our channel partners to deliver the products that the market requires,” the company said in response to our report that it had halted HD DVD investments and HD DVD blank media pilot production at its Oakdale, Minn., plant and would source HD DVD product from third-party contractors if demand emerges (CED Feb 1 p1). The company said the report “drew erroneous conclusions,” but did not specify. “As market demand for Blu-ray and HD DVD advanced optical formats grows, our strategy to meet market demand for both formats does not change,” Imation said. “We will continue to deliver a broad portfolio of recordable optical media products, backed up by a portfolio of strong brands -- Imation, TDK Life on Record, Memorex, and HP… The market will decide which products it requires and Imation will continue to deliver those products globally as demand dictates.”
Best Buy and Netflix dealt HD DVD a double-barreled blow Monday, with each announcing they'll abandon or de-emphasize HD DVD because they think Blu-ray has won the format war or soon will. As of early March, Best Buy “will prominently showcase” and recommend Blu-ray as “the preferred format,” though it also will continue carrying HD DVD, it said. Netflix went further, saying it won’t reorder HD DVD movies and will phase them out altogether by year-end.
Philco’s $59.99-list TB100HH9 coupon-eligible DTV box -- offered Wednesday at Amazon.com at a discounted $56.53 (CED Feb 7 p4) -- was pulled from active sale on the site Thursday, with no reason given. Amazon isn’t a certified NTIA coupon program retailer, but it need not be one to sell the TB100HH9 or other coupon-eligible boxes if it doesn’t accept coupons, an NTIA spokesman said. Amazon still features the TB100HH9, but now invites consumers to sign up for notice when the box becomes available. Gone is the photo accompanying the TB100HH9 entry when Amazon advertised it Wednesday. Amazon didn’t respond to Consumer Electronics Daily inquiries about why it jumped the gun on TB100HH9 sales without mentioning coupons and then pulled the product, and whether it plans to seek certification in the NTIA program. Meanwhile, Circuit City pulled the page from CircuitCity.com that Wednesday had listed the $59.99-list Zenith coupon- eligible converter box for sale at $49.99, a spokesman told us Thursday. The page was only a test inadvertently made “live,” and the $49.99 price was only “a placeholder,” he said. “We have not yet announced the price for the DTV converter box at our stores. Once we start selling the boxes, we will post information about them on our Web site, as a resource. But we will make it clear that the sales are only in our stores.”
DTV converter box coupon requests passed the 4 million mark the week ended Feb. 1, according to www.ntiadtv.com, NTIA’s coupon site for retailers. The week’s 365,087 requests made the total 4,176,287, the data show. Commerce Department officials at a Washington event Thursday said the number of coupon requests had since grown to 4.4 million (See the separate report in this issue.). Texas, California and Michigan led in number of requests, but Illinois, in fifth place the week ended Feb. 25 (CED Feb 4 p1) OR (CD Feb 4 p9) leapfrogged Pennsylvania to take fourth. Wisconsin, with 128,282 requests, replaced Missouri in 10th place.
Sonic Solutions’ decision to stop developing HD DVD authoring systems (CED Jan 30 p1) is “another indication that consumer interest in Blu-ray has been steadily increasing over the course of the last year,” Philips executive Marty Gordon, vice chairman of the Blu-ray Disc Association U.S. promotions committee, said in a statement. With moves like Sonic’s and Warner’s backing Blu-ray exclusively, “we expect the momentum to continue,” Gordon said. “Everyone is following the consumer, and the consumers have weighed-in for Blu-ray.” Replicator Cinram, a big customer of Sonic authoring tools, can’t comment on the impact of Sonic’s decision because it’s in a quiet period preceding March 5 release of its quarterly earnings, a spokeswoman said. The HD DVD Promotion Group hasn’t commented on Sonic’s announcement.