Electronics Makers Find DVD Success Bittersweet

from the high-volume,-low-margins dept

For all the articles about how rapidly DVDs have been adopted and how much money its made Hollywood, there’s another side that’s been left out. As happy as consumer electronics makers are that DVD players are being bought at record paces, it also means that margins have been squeezed and there’s very little profit to be had in selling DVD players. Some companies are trying to sell “premium” DVD players, but consumers have figured out that a DVD player is a DVD player and aren’t willing to spend too much more on extras. Of course, this is just basic economics at work. Competition drives down the price to a point where margins are minimal.

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Comments on “Electronics Makers Find DVD Success Bittersweet”

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Oliver Wendell Jones (profile) says:

You get what you pay for

I bought an Apex 3 disc DVD changer about 3 years ago as I thought it was a good deal. At the time it was the only DVD player for sale that had MP3 playback. I had to return/exchange it within the first 30 days when it quit working.
The replacement worked but it would routinely lock up for no apparent reason when loading a DVD and would have to be unplugged and plugged back in.
I finally got frustrated enough I went out and bought a ‘brand name’ Magnavox DVD player for about 1/2 of what I paid for the Apex and it works perfectly.
Apex DVD players originally sold really well as they were the first with a widely disclosed hidden menu that enabled you to disable region encoding, CSS encryption, Macrovision, etc. Even though Apex removed that menu from the player, plenty of hacked BIOS’s are available for download to restore the hidden menu. That coupled with their low price is the primary reason for the success of the Apex players. Imagine that – give people what they want (all the quality of DVD without the ‘mandatory’ restrictions other brands include) at a dirt cheap price, and they sell more than any other brand.
If they could work on increasing their quality a small amount they could easily take over the market, but as long as they continue to make them as cheaply/poorly as they do, I won’t buy another Apex.

Steve says:

Why such a fast drop compared to VCRs

VCRs took forever to get below $100 (really didn’t until DVD players became more popular) while DVD player prices have fallen like rock. So why? Are there that many more companies making DVD players than there were VCR makers at the same stage? Obviously DVD uptake had been quite a bit faster than VCRs, but in a circular way, I think that’s at least in part due to a much lower cost for an entry-level player. Is the inability to record what makes that big if of a difference–ie Hollywood some how imposed a “piracy tax” on VCRs? Not that I’m complaining or anything, just wonderin’ why.

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