On-demand internet provider Vudu is halving the retail price of its basic 250GB Vudu HD player to $150. The company’s spin: the lower price is being driven by a mix of lower component prices, higher movie revenues and, hard to gauge from this perspective, holiday sales that are now fueling more content demand. Not included in the list: vying for dollars in a highly competitive market during tough economic times. I have to agree with Gizmodo: the message is mixed.
Gizmodo suggests the sale means the company is phasing out the hardware in favor of a software solution; I’d say it’s the realization that the real money comes from getting people to rent or buy the 13,000-plus titles from major studios, including new releases on DVD day-and-date so the box needs to be as cheap as possible if Vudu has any chance of success. (Standard def, 99 cents to $3.99; HD, $3.99 to $5.99; TV episodes, $1.99; movie buys, $3.99 to $5.99.) Holiday buyers got a $200 content credit on the $300 box when picked up at Best Buy, making the end cost even lower than the new rate but putting the initial content cost on the company.
Vudo’s also cutting its home theater Vudu XL, which can store 500 movies, to $500 and adding in a connectivity pack that previously cost more than $100.