VUDU shuns economic reality; targets high-end

$1299? Are they out of their minds?

Last week, I posted an entry about VUDU, the company that's selling a $300 set-top box that enables consumers to rent or buy downloadable movies. I like the service, but in these economic times, it's tough - though not impossible - to convince customers to cough up a few hundred bucks for a device that allows them to spend even more money. 

But instead of launching a big marketing blitz for the holidays or some sort of cool promo that puts a "free" VUDU box into living rooms, the company this week instead announced a $1,299 VUDU box targeted at the home theater enthusiast. Yes. That's One Thousand, Two Hundred and Ninety-Nine dollars. For an Internet movie box. In this economy.

To be fair, I'm sure this product was being planned long before the economy turned sour. But I still don't agree with the company's priorities. That's the thing about this economy. It changed everything instantly and companies have been forced to adjust their priorities overnight. It doesn't appear that VUDU has done that here.

I'm sure there are still high-end customers out there with this sort of disposable income, it just seems unrealistic that a company trying to gain ground in this economy can do so by catering to high-end enthusiasts - especially in a market that's starting to be penetrated by established brand names, in this case Netflix and Blockbuster. Even Apple shaved off a few bucks to offer a sub-$1,000 laptop computer. And that's a brand that customers are willing to pay a premium to get.

I hate to pick on VUDU because I think it could have a strong future - it's already established itself as a leader in HD offerings and, as a living room product, it can upsell the at-home entertainment value to penny-pinching families starting to hunker down. But it was a bad call to announce this high-end product now - as we head into the worst economic climate since the Great Depression and just a week before what's expected to be one of the worst holiday shopping seasons in recent memory.

Word is that the company is running a promo through Best Buy that will put a VUDU box in your living room for as low as $99. By the way, I know about this promo because I went looking for it, not because a marketing campaign told me about it.