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To achieve this, NME highlights the quality of its own system, which is comparable to Blu-ray, while also pointing to the prices of the devices it has developed, which are said to be well below those of Sony players. Nevertheless, NME does not want to reignite the format war against Blu-ray, says Vice President Shirly Levich. The lower cost of HD-VMD players is due to their use of red-laser technology, as found in standard DVD players.
Blu-ray and HD-DVD devices, by contrast, use the more expensive blue-laser system. Through its pricing policy and by undercutting competitors on production, reproduction and hardware costs, NME could appeal to low-income consumers, primarily outside the United States. An HD-VMD unit is to cost 129 euros, whereas comparable Blu-ray products cost more than 195 euros.
US consumers currently have only 17 films in HD-VMD format to choose from in the NME online shop, including some relatively unknown Bollywood productions – a factor that at least puts the low device price into perspective. NME is negotiating potential distribution rights with the major US film studios. For now, its most important distribution partners are independent studios such as Anthem Pictures, Eros Entertainment and SFM Entertainment. According to the company, however, its main markets are not the USA but Australia, China, India, Central Europe, Russia and Scandinavia. Because of the low production costs of HD-VMD master discs, film rights holders from China, India and Spain have already expressed interest in the format.
Unsurprisingly, the Blu-ray camp is unimpressed and predicts failure for NME and its pricing strategy. It is a misconception that Blu-ray will remain more expensive than VMD players, which are still profitable at a retail price of around 90 dollars. Hardware costs for Blu-ray devices could be reduced dramatically through mass production of blue lasers. Prices of around 90 dollars are also conceivable in the Blu-ray camp.
Market experts warn that NME is looking for a niche that does not exist. Nevertheless, the company assumes that VMD and Blu-ray can coexist. Whether consumers who chose an HD-DVD player agree is open to doubt.
