DVD Prices On The Rise

The trade journal Video Business has published a report depicting that the DVD formatís average suggested retail price has drifted upward over the past year, despite early proponentsí efforts to price DVD on a par with VHS sell-through.Rather than adopt the Warner Home Video and Columbia TriStar Home Video pricing models to keep DVD prices below $25, recent converts Paramount Home Video, 20th Century Fox and DreamWorks are releasing discs at premium prices. This is the case as well with Universal Studios Home Video and Buena Vista Home Entertainment, the first studios to engage in a high-price strategy for DVD.According to an analysis conducted by Nimbus CD International, the average suggested retail price or SRP for all titles currently available on DVD has risen 6.2 percent since the formatís introduction, from $24.98 in first quarter 1997 to $26.53 in March 1999.According to VideoScan, which tracks point-of-sale information, 45 percent of DVD discs sold so far in 1999 were priced $25 or higher, and 44 percent were $20 to $25. In 1998, 51 percent were in the lower pricing range, and about 4 percent were in the higher range.The higher price range is not just reserved for collectorís editions. Studios are increasingly adopting a higher-price strategy for standard releases. For example, Fox is pricing its standard featureless releases at $34.98. Disneyís Miramax division is pricing to standard releases, both the animated Beauty And The Beast sequel and A Bugís Life, at $34.99. The companyís standard releases are normally $29.99 and collectorís editions $39.99.The attitude of those studios surveyed by Video Business was that if DVDs are priced anywhere between $24 and $34, for the most part, consumers will buy them.In large measure, the DVD market is testing various price points to arrive at a single wholesale price point that accommodates both a rental model and a purchase model ñ a distinction that is rapidly disappearing. Then too, some studios want to establish a competitive low price point while others see DVD as an opportunity to maximize profit margins before home video pricing becomes pressed by electronic delivery. Suggested Retail Price For Open-DVD Releases:1Q 1997 - 38 titles - $24.98 average price2Q 1997 - 81 titles - $24.30 average price3Q 1997 - 126 titles - $24.50 average price4Q 1997 - 283 titles - $23.75 average price1Q 1998 - 277 titles- $25.66 average price2Q 1998 - 341 titles - $25.75 average price3Q 1998 - 381 titles - $25.58 average price4Q 1998 - 503 titles - $26.03 average price1Q 1999 - * 464 titles - $26.53 average price-* Through week ended March 19, 1999Source: Ralph Tribbey, DVD Release Report