You're dead! - No I’m definitely not! - Yes you are, you just haven't stopped moving yet.

Financial Times ran an interesting, if improbable, pricing story today. It teaches us that with the right price, you can sell anything.

You may remember the High Definition DVD format war from last year. Two electronics giants were offering their own formats for cutting-edge High Definition DVDs. In one corner we had Sony with its Blue-Ray technology, and in the other corner was Toshiba with HD-DVD. While each format provided identical image quality, and both were burned on the same size and type of disc, each format also has its own pros and cons when evaluating the technology and the manufacturing of the discs themselves.

In a re-cap of the Betamax vs VHS format war of the 1970s, in the fall of 2007, both proponents embarked on comprehensive and expensive advertising campaigns trying to get consumer pull while at the same time working to form exclusivity arrangements with the major film studios. From early on in the war Sony had been including a Blu-Ray player within its popular PlayStation 3 game console. This lead to a much higher installed base of Blu-Ray players, albeit not in standalone devices, but in the PlayStation 3, leading to higher sales of Blu-Ray movies. This eventually tipped the scale in favor of Sony, and on February 19, 2008, Toshiba admitted defeat and announced it would stop making HD-DVD players.

HD-DVD is dead. Long live HD-DVD!

So what Financial Times report today, surprisingly, is that sales of HD-DVD are up! Sales of both HD-DVD hardware and movie titles are actually increasing. But how can that be? Well, HD-DVD players, that also play regular DVDs, can now be bought for less than $60 while the cheapest Blu-Ray players are at a higher price point of around $250. Furthermore, while the movie selection on HD-DVD is limited (and no new titles are being released on HD-DVD) they are much cheaper than their counterparts. Blu-Ray titles can cost up to $40, with typical prices around $25, while the typical price for a HD-DVD is only $9.95.

With no new movie titles coming out on HD-DVD, there is obviously no long term future in the format. Sooner or later all the HD-DVD titles will have been seen by the people who want to see them. Yet, a number of quick moving entrepreneurs managed to see that there was a segment in the market, an HD-DVD bubble if you will, that are extremely price sensitive. They are so price sensitive, in fact, that they are willing to ignore that HD-DVD is dead . . . and are instead focusing on the fact that it has not stopped moving yet.

So how does this relate to your end-of-life products? Can you find new market segments for them? If so, are these segments price sensitive or not? Many times they are not, and you can instead, believe it or not, increase your prices. No matter what strategy you take, it’s important to realize that just because a product has been declared dead doesn’t mean it can’t have a few last breaths of profitable life.

With still warm late September regards,

Per Sjofors
Founder & Managing Partner
Atenga Inc
www.atenga.com