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Mixed Messages From HD DVD Camp

Talk about news stories of ironic proportions. On Monday the HD DVD Promotional Group trumpeted record sales of standalone HD DVD players three weeks into an agressive marketing campaign that featured major advertising support and $100 in-store rebates on players. According to the press release, 150,000 standalone HD DVD players have been purchased by consumers, representing 60% of the dedicated player market.

Before one could even pause to consider the relevance of standalone player sales vs. game consoles, Reuters on Tuesday reported that Toshiba had slashed its sales targets for HD DVD players and recorders by a whopping 44% citing that "sales in the US have been slower than expected."

According to the Reuters piece, Toshiba's new target is to sell 1 million HD DVD players in North America by the end of calendar 2007, down from the original estimate of 1.8 million units. In this case no distinction was made between standalone players and the HD DVD add-on drive for the Xbox 360.

And adding further spin insult to sales injury, while the HD DVD Group touted a superior "4 to 1 movie attach rate over competing formats," the available sales data tells a different story. According to Nielsen/VideoScan numbers Blu--ray is leading the software sales market 59% to 41% in total unit sales since inception, and year to date for 2007 Nielsen has Blu-ray dominating to the tune of 67% to 33% for HD DVD. While Universal's Ken Graffeo recently stated that people are buying PS3s for gaming only, the numbers dispute that claim.

I only bring up this last part because I feel it's downright useless to downplay the significance of both HD game consoles in this format war. Just as the PS3 is obviously having a big impact on Blu-ray's market penetration and software sales, Toshiba is obviously counting heavily on Microsoft's Xbox 360 add-on HD DVD drive, with the help of cheap players from China, to reach that 1 million unit mark by the end of the calendar year 2007.

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