I was at a major retailer yesterday, and saw a large pile of Toshiba HD-DVD players for sale. HD-DVD is the "also ran " format in Australia by a wide margin, with the XBOX360 add-on drive holding the majority of the HD-DVD player market.

This is the first time I'd ever seen HD-DVD players available "on the floor " from a major retailer. Previously, if I'd ask about HD-DVD, they'd shuffle and say they could get a player in, but didn't carry them, and that I really should consider Blu-Ray instead.   Everyone carries Blu-Ray.

The Toshiba HD-A2 (list price US$299) is not available here, but its equivalent in Europe and ANZ is the Toshiba HD-E2.   This is retailing at around AUD$550, which is about US$480. Like the A2, the E2 is limited to 1080i. Externally it looks like the same unit, so I'm guessing it is probably mostly identical internally too.

BTW, before anyone calls the HD-A2 the "$99 " player, it's not. The BOM (Bill of Materials) cost for the A2 would be close to $99, without including distribution or marketing or retailer profit. The $99 price was a "loss leader " sale, designed to get headlines. It is not a sustainable price, and while interesting for political reasons - especially the question of who subsidized the promotion (I'm looking at you Microsoft) - it doesn't represent a true market entry.

Back to the store: the sales manager had some interesting news. He said that the Toshiba rep had told him that post-Christmas prices would drop significantly, putting the HD-E2 in the AUD$299-$349 range.   This makes it still more expensive than the HD-A2, but the difference is less egregious.

So, Toshiba's strategy: price gouge until after Christmas, then sell them at closer to the price the rest of the world enjoys.

My strong feeling is that the "tipping point " price for the low-end player is AUD$250. Right now, the format war makes either format a risky purchase. But most middle- to high-income earners would consider AUD$250 to be low enough to accept the risk.   Below AUD$199 and it's a killer. The advent of the sub-$200 player around 2000 is when DVD's really look off in Australia, so my $250 is really just that, scaled for 7 years of inflation.

In Blu-Ray news, players are still start at around the AUD$650 mark, comparable to the price of a PS3.   Blu-Ray titles are still moving off the shelves significantly faster than HD-DVD's (3:1 is what I was told by one retailer), but it's also notable that many stores are discounting both formats right now.   JB, for example, has a "buy two get the third free " offer right now, which could suggest that their HD disk sales for both formats are not meeting expectations.

Perhaps this is also due to the price premium of around 33% for a HD titles, with a new-release DVD averaging AUD$25 to AUD$30, and the equivalent HD-DVD or Blu-Ray in the AUD$40-AUD$45 price range?

Another possibility is that they're expecting a post-Christmas rush of new titles, and need to clear the shelves of the first batch, which were largely back catalog reissues. This is supported by a rumor I heard, which suggested that Sony was holding back a lot of releases with the aim of tidal-waving HD-DVD in the new year (mostly on the back of Christmas PS3 sales). If true, that's a risky strategy.

Finally, a thought on the format wars. I was listening to a commentator on TV the other day, bemoaning the format wars. He had very little interesting to say, but it did remind me of an old conundrum.

One thing which is always forgotten is that DVD was, mostly, a good format. I could argue about the hideous frame rate conversion hacks (inverse telecine for NTSC and 24 to 25 upspeeding for PAL), and PuOPs, but otherwise the DVD design was pretty damn good.

But saying just one format is better for consumers assumes that the one format was good. I'd call that an unreasonable assumption, especially where Hollywood studios are involved.

So that's the conundrum, and definitely something worth thinking about. Which is worse, a bad standard, or no standard at all?