Toshiba cuts HD player prices in Blu-ray fight

Consumer electronics maker Toshiba Corp (6502.T: Quote, Profile, Research) said on Monday it is slashing prices of its HD DVD format players by between 40 to 50 percent as major Hollywood studios move to embrace Sony Corp's (6758.T: Quote, Profile, Research) Blu-ray format high definition DVDs.

Toshiba America Consumer Products said it cut prices of its HD DVD players effective January 13 to boost market adoption of its next-generation DVD players by mainstream consumers after what it said was a successful fourth quarter in unit sales.

"While price is one of the consideration elements for the early adopter, it is a deal-breaker for the mainstream consumer," said Toshiba executive Yoshi Uchiyama in a statement.

Toshiba's players will now start as low as $149 going up to $399 for the top-of-range player.

The company said it is also stepping up its marketing drive with major initiatives including joint advertising campaigns with studios and extended pricing strategies. Toshiba said it will continue with on-going promotions including five HD DVD titles for free with any of its HD DVD player.

The battle to dominate the next generation of DVD players appeared to have tipped in Sony's favor earlier this month when the biggest Hollywood studio Warner Bros, a unit of Time Warner Inc (TWX.N: Quote, Profile, Research), said it would exclusively support Blu-ray disc. It had previously supported both next-generation formats.

Analysts saw Warner Bros's move as an end to the next generation DVD war that they say has confused consumers and delayed the development of a multibillion-dollar market.

So far Toshiba has secured agreements with studios including Universal Home Video, Viacom Inc's (VIAb.N: Quote, Profile, Research) Paramount Pictures and DreamWorks Animation SKG.

But Blu-ray has support from News Corp's (NWSa.N: Quote, Profile, Research) 20th Century Fox, Walt Disney Co (DIS.N: Quote, Profile, Research) and Lions Gate Entertainment Corp (LGF.N: Quote, Profile, Research). In addition Sony's PlayStation 3 video game system can play Blu-ray movies while Microsoft Corp's (MSFT.O: Quote, Profile, Research) Xbox 360 works with HD DVD. But Microsoft said at the Consumer Electronics Show earlier this month that it could consider supporting Blu-ray technology should consumers want it.

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PlayStation 3 Production Costs Halved, Says Analyst

From $800 down to a bargain $400, the PlayStation 3 has its production costs in hand, claims wholesale investment bank Nikko Citigroup's Kota Ezawa. While the rest of the Business Week article retains the skepticism prevalent in just about any dissection of PS3 economics, it's the following that may be of interest to anyone who views the system's shortcomings in shades of sticker shock.

Nikko Citigroup's Kota Ezawa estimates the games division will lose $1.4 billion this fiscal year, following last year's $2.1 billion loss. And while he doesn't expect the business to be prosperous until late 2009, Ezawa applauds Sony's efforts to shrink the PS3's chips and tweak its design. Already such changes have cut the cost per machine to around $400 now, from above $800 just before it went on sale in November, 2006, he says. (The PS3 with an 80-gigabyte hard-disk drive retails in the U.S. for about $499.) "We think the biggest factor here is that simplification has become possible through a reduction in the parts count, leading to a reduction in costs," Ezawa wrote in a Dec. 27 report.

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Brits To Pay Less For iTunes

Apple on Wednesday said it will lower its music prices on its U.K. iTunes Store to match standardized pricing on iTunes in the rest of the European Union.

The move is partially in response to a European Union inquiry based on a pricing complaint from a British consumer group.

Apple said it charged more for U.K. citizens because Apple pays more to some British recording labels for U.K. distribution. Those same labels charge less to distribute to other Europeans, Apple said.

"This is an important step towards a pan-European marketplace for music," Steve Jobs, Apple's CEO, said in the announcement. "We hope every major record label will take a pan-European view of pricing."

In addition, Apple said it will consider halting license agreements with British recording labels that won't lower their wholesale prices in the United Kingdom to match the rest of the European market.

"Apple will reconsider its continuing relationship in the U.K. with any record label that does not lower its wholesale prices in the U.K. to the pan-European level within six months," the company said in a news announcement.

The company said prices would drop to match those in Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, and Spain.

Since the United Kingdom uses pounds while other EU residents use the euro and prices of each fluctuate against the dollar, the difference Brits pay has varied, but it generally amounts to 10 U.S. cents per song.

It's unclear whether the change will also allow European residents to buy music on iTunes from other countries. Right now, if a French citizen wants to download music while visiting Germany, he or she could not do it without a German-issued credit card and address.

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