March 19, 2008 — -- Like Circuit City before it, Best Buy is jumping on the customer-consolation bandwagon to sooth angry buyers of HD DVD players who now own a high-tech has-been.
The No. 1 electronics retailer is offering to mail $50 gift cards to anyone who purchased a player before Feb. 22. Customers do not have to return their HD DVD players to receive the cards, which are expected to be issued by May 1, Best Buy said.
The move comes less than two weeks after Circuit City announced its own return policy for the discarded format players. Circuit City will take returns of HD-DVD players purchased in the 90 days before March 8 in exchange for full store credit for the purchase price.
Steve Baker, vice president of industry analysis at NPD Group, called Best Buy's policy a brilliant marketing move.
"Most people are going to end up keeping their players because they invested in movies. Best Buy is talking to those specific customers who are likely to be big spenders and early adopters, exactly the type of person they want to bring in their store," Baker said. "It also gets those people in the stores when the market looks a little challenging."
After a long tussle with Sony-supported Blu-ray, the competing high-definition DVD format, Toshiba announced last month that it would no longer make or develop HD DVD players.
Before Toshiba's announcement, HD DVD players could be purchased for about $300. Now, they can be found for as little as $120. Sony Blu-ray players start at $400.
Trouble loomed on the horizon for HD DVD starting in January, when Warner Bros. announced it would release the high-definition version of its films on Blu-ray. Nationwide retailers, most notably Wal-Mart, followed suit.
Analysts contend that the Blu-ray format is still not a sure thing due to competition from online movie downloads as well as the players' high price compared to standard DVD players.
Still, consumer support for next-generation DVD players, both for Blu-ray and HD DVD, has been small at best. Less than one million of the new DVD players of both types were sold last year, according to NPD Group. In comparison, consumers bought 10 million standard home DVD players in 2007.
Both Best Buy and Circuit City said they will keep selling HD DVD players and HD DVDs at closeout prices.
At Best Buy, HD DVDs are being sold for 30 percent off. The chain will not replenish inventory after the players and DVDs have been sold.
According to Michael Gartenberg, research director at Jupiter Research, the unceremonious demise of HD DVD, and the angry consumers left in its wake, are all just part of being an early adopter.
"Let the buyer beware," Gartenberg said after Circuit City's announcement. "You can always spot the pioneers by the arrows in the back. That will definitely be true of those adopters of HD DVD."
Some HD DVD players will play standard-def movies, so at least those models won't become paperweights.