11.21.2007 — Over the past year, the war between Blu-ray and HD-DVD has been like a teeter-totter: one week one camp is declaring supremacy based on software or hardware sales figures, then next week the other does the same.

Up until this fall, hardware sales had been slow, even scant.

It’s only been in the past month that we’ve started to see real excitement and drama in the format war at the retail level. Toshiba’s bold HD-DVD price cut move in Wal-mart and Sony’s decision to price cut the Playstation 3 and use it to grow the Blu-ray installed base (at the expense of their dedicated players) have moved things forward.

So far, the focus has been on mass-market retail, and really, that’s where the battle will be won or lost. The winner needs to get as big an installed base as possible.

But where does that leave the small independent dealer? Whether they’re hybrid custom/retail or a straight custom-only shop, it’s still unclear, but small dealers have some options still open to them.

Custom Brands Choosing Sides

When I talked to custom dealers about the format war last Christmas, they were all on the sidelines, watching and waiting. Installing complete systems is not like selling boxes at retail—you don’t want to risk sticking your customer with a product that ends up facing a premature obsolescence.

Another reason for being hesitant last year was that by their nature, custom dealers carry minimal lines. While some, primarily hybrid retail/custom dealers will offer a three brand “Good, Better, Best” strategy, oftentimes a custom shop will only have one line of A/V hardware, due to the relatively low sales volume compared to retail.

A lack of commitment from Hi-Fi brands last year was a deciding factor for custom shops to remain neutral in the format war.

This year, more Hi-Fi brands are on board with one format or the other. Denon has a Blu-ray player, and Onkyo/Integra are supporting HD DVD. Since both of those brands have a strong custom presence in addition to retail, they’re a good bellwether of a divided custom channel.

If you’re a one-line custom shop, and you have no other compelling reason to change lines, your decision of which format to offer your clients is going to end up being made for you.

Gaming is a Realistic Alternative

What other options do you have if you don’t want to put all your eggs into one basket?

One is to resell hardware that your client wants and you don’t carry. When doing big custom integration systems, it’s not uncommon to do things like purchase iPods, Xbox 360s and HD satellite receivers from a big-box store on your client’s behalf.

Really, if there’s precious little margin in $199 Toshiba HD DVD players, why not just buy one at retail for your client and add it into the system price? Doing that might be less trouble than going through the steps to add another product line to your business.

Another option is to remind your clients of what gaming systems can do for them. Odds are, you’re being asked to integrate gaming systems into your home entertainment installs more often than not these days.

If you don’t want to take a side in the format war, simply making use of your client’s game console might be a smart move for now.

If it’s not obvious, I’m still on the fence between the two formats and not yet keen on taking a side. If you’re a custom integrator, your priority should remain on delivering complete systems that make your clients happy.

At this point, I believe that you should leave choosing a format up to your clients.

Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com