HD DVD, UMD Movies Among Big Marketing Blunders Of Last 10 Years

The last decade in the CE world has produced its bumper crop of fiascos. Here’s our roundup and analysis, gleaned from interviews with industry executives, of some of the biggest marketing blunders of the last 10 years:

HD DVD.Few would disagree that HD DVD’s epic format war with Blu-ray was among the top CE and home entertainment stories of the last decade. On the eve of the January 2008 CES, Warner, the last studio to release films on both formats, dealt HD DVD a serious body blow when it announced it would abandon HD DVD and support Blu-ray exclusively (CED Jan 7/08 p1). Soon, Best Buy, Netflix and Walmart made similar announcements. In the end, Toshiba waited about six weeks, until Feb. 19, 2008, before pulling the plug on the HD DVD business for good (CED Feb 20/08 p1).

Many think HD DVD’s fate may well have been sealed years earlier when most of the world’s other big and small CE brands flocked to Blu-ray. That left Toshiba virtually as the CE world’s only HD DVD brand, save for an unsuccessful HD DVD outboard drive that Microsoft marketed with the Xbox 360, and an RCA-branded HD DVD player that Thomson marketed briefly as an accommodation to its Technicolor replication subsidiary, which wanted hardware support for the HD DVD discs it manufactured for Universal.

To this day, former HD DVD insiders we canvassed still look back on Warner’s decision with disdain. One said it’s hard to reconcile the studio’s decision with the success HD DVD was enjoying at the time. Between 2007’s Black Friday and New Year’s Eve that year, this former insider said, Walmart had sold about a million Toshiba HD DVD decks at $99 each. That momentum gave HD DVD enthusiasts great hope that in 2008 economies of scale would even more hasten HD DVD’s hardware price advantage over Blu-ray decks, which were priced considerably higher, the insider said.

Were the format backers to trumpet that advantage, said this former insider, HD DVD adoption would have grown by leaps and bounds, leaving studios little choice but to release more movies in the format. That Warner pulled the plug when it did will forever differentiate the Blu-ray-HD DVD skirmish from Beta versus VHS in this manner, the insider said: Consumers decided the format winner in Beta-VHS. In Blu-ray-HD DVD, other forces, particularly the highest levels at Warner, made that call. Warner repeatedly has declined to discuss the factors that went into its 2008 decision, other than to repeat the wording of its announcement that it acted in the best interests of consumers. It declined to comment for this article.

Ultimately, studios and CE brands say they supported Blu-ray because its data capacity advantage over HD DVD made it the more future-proof technology. Pioneer executive Andy Parsons, who for years has served as the Blu-ray Disc Association’s chief U.S. spokesman, said he thinks the industry’s migration to 3D packaged media will ultimately validate Blu-ray’s long-held argument that capacity is king. “I think it would have been really tough for them” to pull off an HD DVD 3D format without significant improvements in compression, Parsons said. “You need the full 50 gigabytes to do it properly,” he said of dual-layer Blu-ray media. “I know they were talking about a three-layer, 45-GB disc at one point, but from a technical point, that was really going to be tough to pull off. From what I remember from my replication days, making three layers work dependably at a cost-effective, high-yield rate would have been a very tough challenge. I never saw a three-layer disc demonstrated. I always thought it was more forward-looking than actual at that point."

Parsons has always believed that capacity “is very important when you're introducing a new format,” he said. No one ever criticized a new format for having “too much capacity,” he said. “People will always fill it up with something.” For example, some Blu-ray titles have used maximum bit rates for better video and sound quality, he said. “Running it at pretty much full blast all the way through, that will consume a huge percentage of the available capacity just by doing that.” So the data demands of 3D would have put HD DVD in a bind, he said.

But adapting HD DVD for 3D was very much doable, and in fact the camp began working on such a project when HD DVD was still alive, the former HD DVD insider told us. A team headed by Microsoft’s top HD DVD executive, Amir Majidimehr, corporate vice president of the company’s Consumer Media Technology Group, believed there were ways to manipulate HD DVD’s “VC-1” compression system so 3D could be encoded without substantially increasing the bit rate, that insider said. A studio insider concurred that good compression would have made HD DVD 3D viable, saying the MultiView Video Coding codec that has worked so well for Blu-ray 3D would have done likewise for an HD DVD 3D format.

Still, “coming in with something that was a crossover from the old red laser technology” of DVD is what doomed HD DVD from the beginning, Parsons said. Nevertheless, Parsons praised HD DVD technology as one “hell of an achievement.” From a technical standpoint, “what they were doing was quite remarkable,” he said. “Using a 0.6-mm-thick substrate to do blue-laser work was not easy, so I always admired what they were doing. But the bottom line came down to what does it mean to the consumer? Are they going to be able to have the best experience they can get? I always felt that was a fundamental advantage we had."

Super Audio CD and DVD-Audio.Bob Dylan’s classic album Blonde on Blonde was the first hybrid SACD (one layer regular CD, the other layer SACD) to roll off the new production line that Sony’s DADC replication plant in Terre Haute, Ind., dedicated on May 2, 2003 (CED May 6/03 p2). In ceremonies that day, Mike Mitchell, the plant’s general manager, hailed the achievement as the plant’s most significant since it began producing Bruce Springsteen’s Born in the USA CD two decades earlier, helping to transform the CE industry. Today, due to SACD’s lackluster consumer acceptance, except among audiophiles, Terre Haute no longer produces SACDs, Mitchell said in an email. All SACD replication within Sony has long since been consolidated in the company’s Austrian facility, he said, but the move happened so many years ago, he can’t remember exactly when.

As for DVD-Audio, King Crimson’s Starless & Bible Black: 40th Anniversary Edition, due to be released on Oct. 24 at $24.99 list, typifies the kinds of obscure titles still being put out on that format. It’s from a British-based independent label called Discipline Us, founded about 15 years ago by the English guitarist Robert Fripp, according to the online chat site last.fm.com. DVD-Audio discs today are playable on high-end universal machines still marketed by the likes of Denon and Pioneer that also play SACD titles. Sony even offers SACD playback on a $99 Blu-ray player, the BDP-S185. But Sony Computer Entertainment (SCE) decided about three years ago to discontinue SACD playback in later versions of the PS3 so it could eliminate as much hardware cost as possible from the console.

When it came to DVD-Audio and SACD, consumers “didn’t buy either one because there was a format war in which both sides were putting out all kinds of propaganda,” said John Kellogg, who served as Dolby’s DVD-Audio evangelist at the peak of the format battle. “They were focusing on the high-end audio part of it, which no one really cared about anyway,” said Kellogg, now a senior executive at SRS Labs. “And so consumers just said, ‘Now this is confusing.'” Meanwhile, along came the iPod, “and consumers said, ‘Hey gee whiz, look at this cool little thing that fits in my pocket that I can put a thousand songs on.'"

DVD-Audio “should have been the last great optical music format,” Kellogg said, conceding that SACD’s backers felt the same way about their format. “It had better quality sound, though at the end of the day, I'm not sure that mattered that much. It also had 5.1 surround and all these other capabilities. There were just so many things we designed into it to make it have value, plus it was copy-protected. Still, the technology executives at the labels got it, but the rank-and-file executives just couldn’t get their heads around it, or were just myopic. I thought it was a terribly missed opportunity. Oftentimes, when disruptive new technologies happen, many companies just cling to their old business models as long as they can. Generally by the time they've figured out that they've clung on to them for too long, it’s too late. I think we could've gotten another five years out of another optical music format."

Kellogg thinks “the industry focused on the wrong thing” when it came to DVD-Audio, and thinks the same can be said for SACD, he said. “There was this focus and obsession on high-quality, master-quality music,” he said. “Much of this was driven by a small, small, small faction within the music industry and by the audiophile community. And it was the wrong thing to listen to them, because consumers didn’t know what we were talking about, and they didn’t care because they just wanted to listen to their tunes. What we did in response was we told consumers they were wrong. And all we were doing was just driving consumers away."

Parsons at Pioneer recalls his company was among the first to market dual-format SACD and DVD-Audio players and that its experience proved later that dual-format players wouldn’t work to resolve the Blu-ray, HD DVD format war, he said. It’s not the hardware that counts, it’s the content, so dual-format players were a case of “the tail wagging the dog,” Parsons said. “The notion that studios would make two of everything to make everyone happy was a dead end,” Parsons said. “People generally don’t want two formats that do the same thing, they want one format that does the job. It was like a red herring to say if you could have a player that could play these two publishing formats, that’s really the solution to the problem. But the solution is to have a single format, because that would solve the format war, not a player that could play both. There’s a whole business for creating content and a pipeline for delivering it, distributing it, displaying it in a retail store, that far outweighs the notion of having one box that could play everything. That’s looking at it upside down."

Still, Pioneer decided to market a dual-format DVD-Audio and SACD player anyway because, “Why not? They're really not that hard to make,” Parsons said. In the midst of the “long, protracted format war” between DVD-Audio and SACD, “we were just trying to make a product that would make everybody happy,” Parsons recalled. “I think we did it because neither format seemed to be going away. They were both on the market for a while. At that juncture, it seemed like a good idea to do, but in retrospect, it was not."

Also in hindsight, Parsons thinks “those of us in the technology industry who have been around for a long time didn’t quite grasp the significance of what audio compression was going to do” in perfecting the iPod, he said. “When you consider the quantity over quality in the consumer’s mind of everything you own in the palm of your hand wherever you go with good enough sound quality, that outweighed in most consumers’ minds the idea of having yet another disc format that had superior performance capabilities, but lacked the portability and sheer quantity of content. Many of us were doing what we typically do, which is reach for something better, better and better in terms of performance and overall functionality. You can easily overlook the importance of something that’s actually inferior quality, but gives you something that’s far more valuable to people. We didn’t quite grasp that until later when the iPod exploded. It changed everything."

The unfulfilled potential of DVD-Audio and SACD serves as an “unpleasant reminder of what we often run the risk of in this technology business,” Parsons said. “What you think you know so well sometimes can become obsolete, because somebody else comes up with something that gives you a new capability that affects your lifestyle in a way that’s far more important to you than a little more dynamic range or better frequency response."

In defense of those who drew up SACD and DVD-Audio, “it certainly seemed logical” to devise formats that would bring audiophile-quality music to the masses on a CD-like form factor that had proved immensely successful,” Parsons said. “The CD had a huge impact on the CE industry in that people were upgrading their audio systems left and right. So I understand the rationale” behind SACD and DVD-Audio as to why both promoted “better fidelity as a good idea,” Parsons said. “But the timing perhaps was bad because meanwhile MP3 came along and I don’t think anyone recognized that for what it was."

Universal Media Disc as a Movie Format.It wasn’t enough that SCE developed a proprietary optical disc format for games on its PSP, which became the first handheld videogame system to use an optical disc format when it launched in 2004. Sony decided to also push its Universal Media Disc (UMD) as a format for movies and other non-game video content. Initially, Sony Pictures Home Entertainment (SPHE) and rival studios supported UMD with movies, and some retailers stocked them. But one by one, UMD lost all that support.

"Launching new media formats is very difficult,” said NPD analyst Ross Rubin. Sony was asking consumers to buy “the same movie over again” on yet another format, he said. Despite the PSP boasting a large display for a portable game system, it’s still smaller than “what we typically see sold in the portable DVD segment,” Rubin said. “Even today, on tablets, we see a lot of the video service providers note that they see far more” broadband delivery of video content to the home to devices that connect to the TV than other devices -- “even with all the success of the iPad,” he said. “Given a choice, consumers prefer to enjoy long-format on the best screen available,” which tends to be the TV, he said.

"This is where these manufacturers just don’t get it,” said Phil Hannon, general manager at retailer Abt Electronics in Glenview, Ill. “The consumer doesn’t want to have to buy the same title four different times -- one for the home, one to load on their iPod or iPad, one to load in their videogame” system. “They want to buy it once and be able to use it in multiple ways,” he said. It didn’t help that UMD discs only work on a PSP, he said. While Abt carries the PSP, it doesn’t sell software for it, even the games.

"Nobody wants” to buy movies on a proprietary disc format, said Stuart Schuster, president of home theater retailer Marvin Electronics in Fort Worth, Texas. “Many customers don’t want any disc players anymore” either, he said. When performing custom installation jobs now, “a lot of” customers “don’t even put Blu-ray players in” their home theater systems, he said.

Philip Rosenberg, senior vice president of business development at SCE America, told us at the NY Games Conference last month that he believed movies were still being released on UMD. But he didn’t provide any specifics. An SCEA spokeswoman sidestepped our question on the future of UMD movie support, saying only, “We continue to support the PSP and UMD business. We have nothing further to announce at this time.”

But Universal said last month that it stopped producing UMD movie discs in 2007, declining to say why. Fox Home Entertainment said last week that it stopped making UMD movies in 2006 as part of “a general business decision.” Even SPHE said last month that it “no longer releases UMD titles,” declining to say why. Its support for UMD, however, had softened already by 2006. A company spokesman said then that SPHE would continue to release movies for UMD only on a title by title basis, conceding that the format was taking a back seat to Blu-ray as the launch of that format neared (CED June 7/06 p6). A few months earlier, the company said it was experimenting with combo packs featuring the same movie on DVD and UMD, at the same price as a UMD movie, as a way to boost interest in UMD movies (CED Feb 21/06 p4, Feb 13/06 p7). Image Entertainment Senior Vice President-Sales Richard Buchalter complained the same year that mass retailers “hadn’t been that supportive” of UMD movies from the start.

Market-watchers deem the future of UMD as a game format also questionable because Sony’s coming PlayStation Vita handheld system will use proprietary game cards instead of UMDs when it ships later this year in Japan and next year in the U.S. Rosenberg, however, said Sony planned to keep the PSP in its product lineup and support it with games once the Vita ships.

MP3 Device Makers Not Named Apple.Apple’s dominance in the MP3 player market continues, even as sales of its own iPhones and iPads cannibalize more and more of its iPod market share. Manufacturers introduced MP3 players before the iPod and after it, but none have come close to capturing a significant share of the market since the iPod became a hit. A separate case can be made for Apple being the big winner not only among MP3 player makers, but also among music retailers in the digital age, especially in light of the departures of retailers including Tower Records.

"Early on, there were some technology advantages to the iPod,” said NPD’s Rubin, pointing to its “high-capacity and very fast music transfer.” But what really catapulted the device’s success was the way that Apple integrated iPod with the iTunes online music store, he said. ITunes went on to become the No. 1 retailer of music. “Other device companies had a difficult time” competing against the integration of hardware and software that Apple achieved, Rubin said. “Because Apple had such a head start and it was difficult to compete with them in the a la carte music purchasing business, many of the other companies tried emphasizing subscription plans,” like Microsoft with the Zune, he said. And that never proved to be as popular with consumers as iTunes. Some competitors -- like Creative Labs and SanDisk -- “staked out the sub-$100 segment” of the MP3 player hardware market, but he said that was “difficult to be profitable in.” While SanDisk once had a “double-digit share” in MP3 player units, that has shrunk, and the company was “not very successful with higher-end models,” he said. Creative, meanwhile, “dramatically scaled back their offerings in the market,” he said.

Most prominent among the failed iPod rivals have been Zune and Sony, the latter if only because of the dominance that Sony once enjoyed in the portable audio device space with the Walkman line of products.

The Zune achieved about a 10 percent share of the market after launching, but “faded after that,” Rubin said. Part of the reason for its failure was “the reliance on subscription as a differentiator,” he said. Also a problem was that the hardware and software “were mutually exclusive, so you couldn’t use Rhapsody tunes on Zune and you couldn’t use the Zune music service with other MP3 players, so it was a double challenge of trying to build this case for subscription with incompatibility with existing services,” he said. The Zune HD was “favorably received” due in part to its OLED screen and multi-touch user interface, he said. But it faced an uphill battle competing with the iPod Touch, which went on to become Apple’s best-selling iPod, he said.

It didn’t help that shortly after the Zune HD was released, Apple released a software development kit for its iOS devices that brought apps to the iPod touch, he said. “That was really what drove the Zune HD into the ground because, while the Zune HD had nice, competitive hardware there just became this incredible library” of apps available for the iPod touch that Microsoft couldn’t compete with, he said. Although the iPod touch is taking share away from other iPods, and iPhones and iPads are taking share away from iPods, Apple doesn’t care because consumers are still buying its devices, he said.

It’s widely believed that Microsoft scrapped the production of Zune devices altogether, although it expanded the Zune music delivery service to multiple devices including the Xbox 360 and increased Zune service offerings with video. Microsoft declined to say if it has ruled out future Zune hardware. The company issued a statement saying only that it was “committed to providing the best movies, music, and TV show experiences through Zune Music + Video on Xbox, Windows PC, Windows Phone and Zune devices."

Retailers we polled said they either stopped carrying Zunes or never carried them to begin with. Trans World Entertainment used to carry Zune devices and accessories, but they “underperformed our expectations,” Mark Higgins, vice president of merchandising, told Consumer Electronics Daily. A Best Buy spokeswoman said that as of September, “we no longer carry Zune either in store or online.” It “probably” still had “a few yet in stores for sale as we exit” the SKUs from its product mix, and “we no longer have new ones available online,” just some refurbished ones, she said. GameStop said in 2008 that it stopped carrying Zunes because they “did not work with our product mix for the long-term” (CED May 23/08 p6). Microsoft indicated no great concern at losing GameStop shortly after that, saying it had “a set of great retail partnerships that give Zune a strong presence at retail including Best Buy” (CED June 2/08 p9). Microsoft said then that it had sold “more than 2 million Zunes to date” since the first model went on sale in 2006. That was far fewer than the installed base for iPods. Microsoft’s been largely silent on how many Zunes it sold since then.

Abt’s Hannon said his company “tried” carrying Zunes, and they “did about as good as you thought” they would. “It was very hard to hold a candle to” Apple devices, he said, telling us Abt stopped carrying Zunes a while ago. Zune demand “never really materialized, and we do OK with most Microsoft products,” he said.

"It is amazing how” Apple “can keep just figuring out what people need,” Hannon said. “If you look at ... the iPod’s success it was really iTunes” that “put it over the top,” he said. Its ease of use also is significant, he said. Marvin’s Schuster agreed, saying Apple’s “stuff works so great.” While there are other MP3 players on the market that are “cheaper, who cares?” because iPods “aren’t expensive to start with.” He doesn’t sell portable audio devices in his store anymore because there “no money in it,” he said. But he said “we do go buy them for our customers when we do” installation jobs, and when customers ask for an MP3 player, “it’s only the Apple that they want."

"Sony, meanwhile, never mounted a significant challenge to the iPod,” said Rubin. “Some of that was due to Sony’s proprietary format, ATRAC, in the early days,” he said. More recently, Sony “picked up share,” and it’s “one of the few companies still playing in that $100-plus segment.” But its share is still dwarfed by Apple. Sony Electronics declined to comment for this story.

Apple continues to typically grab a “70 percent-plus” share of the MP3 player market, Rubin said. If you add in private-label products and Walmart, Apple’s share is lower, “but still dominant compared to any competitor,” he said. From September 2010 to August 2011, Apple had a 77 percent unit share volume in the U.S. among MP3 player makers, up from 74.8 percent the prior year, NPD said. SanDisk trailed far behind at No. 2, with a 6 percent unit share, down from 7 percent. Also beating Sony was Mach Speed, with a 4.4 percent share, up from 2.2 percent. Sony followed with a 2.4 percent share, up from 1.7 percent. In dollars, Apple’s share in the same period was even higher, at 93.2 percent, up from 91.2 percent. No other company had even a 2 percent share, with SanDisk coming in at 1.9 percent (down from 2.5 percent), Sony at 1.2 percent (up from 1 percent) and Mach Speed at 0.7 percent (up from 0.4 percent).

Honorable Mention: Debuts of 3DS and 3D TVs.There was enormous hype accompanying the launch of 3D TVs and Nintendo’s debut of the 3DS handheld autostereoscopic game system. But initial sales didn’t match up, suggesting that consumers weren’t roused by these products, or at least how they were brought to market. Bryan Burns, ESPN vice president of strategic business planning and development, in a recent keynote at the 3D Entertainment Summit (CED Sept 21 p1) surmised as much. He said that wrong industry messaging about the launch of 3D TV was suggesting to consumers that there was much wrong about the product, when in fact there was much right about it.

3D TVs and 3DS may well yet emerge as industry success stories, but if they do, it would be in spite of the manner in which they first reached the commercial market. Interoperable glasses were but one problem hindering the 3D TV story at retail. That several makers of active-shutter sets have now banded together to seek a common protocol on glasses suggests the problem is significantly crimping sales. As for the now-$169 3DS, that Nintendo slashed its price 32 percent only a few months into its availability (CED July 29 p6), was virtually unheard of in the videogame industry.

There was “a lot of hype around the launch” of 3D TVs and those models are “selling OK, but it really is just ... one of the features on a high-end” TV, said Abt’s Hannon. There’s been “not as big of an impact as I think everybody anticipated it would be,” he said. “The single biggest thing that impacted sales initially” was “confusion” -- that consumers believed if “they bought a 3D TV they had to wear their glasses on every show,” he said. But the glasses are an obstacle, he said. It’s still “early on in that technology cycle and as soon as they get a 3D set without glasses ... it'll be much more popular,” he predicted. It’s “not comfortable wearing those things,” and that’s “not really what the end consumer wants -- they want to just be able to sit down in front of their TV and have all the stuff work seamlessly for them,” he said. When 3D TVs launched, 3D was a new feature, “so there was excitement around it,” and “people were buying them,” he said. But the TVs “just didn’t carry the day at the higher ASPs,” he said. “As you get past the first people that have to have everything new, it’s still not a demand feature at this point."

Marvin’s Schuster also said consumer confusion was initially an issue, but told us “3D TV is easy to sell” to his customers “because it doesn’t cost very much” now. Customers are buying 3D TVs but “it’s not the revelation we thought it would be,” he said. Consumers “will pay that extra” $200-$300 “for the models that have it and usually the better models have it anyway, so that’s what we sell,” he said. The big problem is “there’s no software,” he said. The studios have “stubbed their own toe,” he said, saying the 3D launch compared unfavorably to the Blu-ray launch. When Blu-ray launched, “there were 200 titles the moment a player came out.” With Blu-ray 3D, “there’s “probably still not 50 titles in 3D and they're all cartoons,” he said. It didn’t help that the one 3D movie that more consumers wanted on Blu-ray 3D than any other title -- James Cameron’s Avatar -- was only made available bundled with Panasonic 3D TVs.

3D TVs now account for about 10 percent of all TVs sold, NPD’s Rubin said. But “if you go to larger screen sizes, it’s a significantly higher percentage” of TV sales, he said. In August, 3D TV sales accounted for 10 percent of all TV units sold and almost 30 percent of TV revenue, he said. That month, they accounted for 23 percent of TVs 40 inches and larger in units and 39 percent of dollars, he said.

But Rubin said, “We continue to see customer resistance,” with the top issue being the glasses, he said. The biggest issue had initially been price, but ASPs have declined and that’s shifted down to the No. 2 issue, he said. Another issue for consumers is the lack of enough content,” he said. “There’s been some progress -- significant growth” in 3D TVs sales, “but we've still got a ways to go,” he said. Some manufacturers had portrayed 3D as “the next big wave of TV evolution, after color” and HD, but now it’s largely being “positioned more as kind of a side benefit to purchasing a great 2D” TV, he said. NPD found that 3D is “just not really among the leading purchase motivators among consumers” shopping for TVs, he said. The technology is certainly not resulting in a surge for TV sales. Total U.S. TV sales were up 3 percent in units and down 5 percent in dollars through August this year, compared to the same time in 2010, NPD said. Total flat-panel TV sales were also up 3 percent in units and down 5 percent in dollars, it said.

Tim Alessi, LG director of new product development, conceded Monday that 3D TV sales “were less than initially forecasted when first introduced” in 2010. “Expensive, uncomfortable, bulky glasses, image crosstalk and limited content availability hindered sales and adoption of the technology for the average consumer,” he said. But he said LG addressed those problems with Cinema 3D TVs using Film Pattern Retarder technology, and “the adoption rate exceeds that of DTV at the same stage in its life, and we are seeing it steadily improve as awareness grows.” LG is “seeing greater adoption as the experience is more congruent with the 3D in movie theaters, where most consumers first experienced the technology,” he said. He also said that “classifying 3D as one of several features on a TV is not an attempt to ‘play down’ the capability.” Positioning 3D as one of the various features on a TV was done “to help communicate to the consumer that they would also have a great 2D TV” if they bought a 3D TV.

The 3D TV eyewear issue was “a bit of a challenge early” on, and Mitsubishi introduced 3D glasses it sourced from XpanD that “opens up compatibility with other TV brands,” said Frank DeMartin, Mitsubishi vice president of consumer product sales. “Our industry as a whole is not very good at explaining new technologies to consumers,” he said. “We often rely on retailers to take all separate brand strategies and present them to the consumer in a cohesive manner. Not easy to do.” As chair of CEA’s video board, DeMartin said he was “trying to change this situation” for 3D TVs, such as by working with retailers on initiatives including 3D TV demo days.

Wanda Meloni, senior analyst at M2 Research, said the main “obstacle” for 3D TV consumer acceptance “continues to just be having to wear the glasses,” although the lack of adequate content was another issue. She said consumers seem to be more accepting of it in games than with movies because games feature an “additional level of interactivity already.” Meloni attributed disappointing sales of the 3DS mainly to “macro industry trends with mobile devices right now.” Nintendo’s “timing was off” because mobile phones are seeing such strong sellthrough now, she said. The company also launched the 3DS at the slowest time of the year, in February in Japan and March in the U.S., instead of waiting until the holiday season.

To successfully “release a new platform” like the 3DS, “there has to really just be a lot of new and compelling content, and I don’t think anybody has really seen that yet,” Meloni said. The price was also an issue with the 3DS, she said, telling us consumers “have to make choices when they purchase a platform and smartphones are just increasing in popularity.” Consumers seem to be increasingly opting for “devices that can support multiple activities,” like the iPad and iPhone, she said. The 3DS may “be a hard sell,” even after the price cut, she said. Games for the 3DS also cost a lot more than games for Apple’s devices.

Abt’s Hannon said 3DS sales were only “fair” for his company, and it was “not lighting the world on fire.” Sales picked up “a little bit” after Nintendo’s recent price cut, but the “games are the issue,” he said, noting there was not yet a lot of content for the device.