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Is the Hi-Def Battle Over or has It Just Intensified?

All evidence points to the fact that the Hi-Def optical disc battle between HD-DVD and Blu-ray is essentially over with Blu-ray the clear victor. But there is too much money in royalties to be won for the HD-DVD camp to just bow out. Sony undoubtedly learned from their failed Beta cassette battle with VHS that content is king and is clearly winning the content game. This is evident by the exclusive backing of a majority of major Hollywood film studios (not to mention the fact that Sony owns one of those major Hollywood studios), the declaration that disc rental and retail outlets like Blockbuster and Target have agreed to carry Blu-ray exclusively in their brink and mortar stores, and even the recent announcement that Netflix, Inc, the online movie rental company, will carry Blu-ray discs exclusively as well.

Netflix previously carried both HD-DVD and Blu-ray discs, but said the decision of four of the six major studios to issue films only in the Blu-ray format made it likely that the Sony format will be the ultimate victor. The momentum seems to be squarely in the Blu-ray camps favor, however the HD-DVD camp, helmed by Toshiba, is not giving up without a fight using the only advantage it has left, price.

Toshiba has lowered the price of all HD-DVD players to as low as $150 plus Microsoft lowered their price significantly for the HD-DVD player attachment for the X-Box 360. Whether this approach will garner any momentum for the flailing HD-DVD camp, it’s hard to say, however the reported sales volume for HD-DVD players vs. Blu-ray players reported narrowed to a statistical dead heat for the week of January 29th, 2008. This could be an aberration or a minor shift in the market due to the price drop which will correct itself once the consumer market realizes the shortage in content, or it could lure some content providers and retailers back into discussions with the HD-DVD camp. Only time will tell, but I for one hope that we either see a true champion emerge soon or a collaboration that will allow each format to play and burn in compatible equipment, much like the agreement reached between the battling DVD-R and DVD+R format. The longer this battle wages, the longer consumers will more likely sit on the sideline and discover a new technology better than both HD-DVD and Blu-ray. Then both parties will loose because they will have spent a fortune developing and marketing a product that never made it into the mainstream consumer market place. Does anyone remember how the DAT was going to revolutionize the audio experience? Of course not because the price was too high for the components and product so a more effective format emerged as the champion known as the Compact Disc. Technology moves fast and waits for no one, if these two warring parties don’t realize that, they may both miss the boat and the riches they are battling over.

Has Blu-ray finally won the HD battle?

A major blow was dealt to HD DVD when the last remaining major Hollywood studio to definitely pick a preferred format, Warner Bros., chose to back the Blu-ray contingency and release all future home video projects on Blu-ray only starting in May 2008. This announcement all but halted any momentum that HD DVD was making in hardware sales due to the significant lower sales price compared to Blu-ray players. In some cases the price difference between a HD DVD player compared to a Blu-ray player was as much as $200 ~ $300.

An excerpt from an article in the Hollywood Reporter, titled Warner’s HD DVD shift may hurt sales, By Thomas K. Arnold on January 24, 2008 shows:

“According to raw retail data collected by NPD, consumers bought just 1,758 HD DVD players the week of Jan. 12, down from 14,558 players the week before. In contrast, consumers bought 21,770 Blu-ray Disc machines, up from 15,257 the previous week.

NPD would not confirm nor deny the actual sales figures, saying they are proprietary. (A copy of the report was provided to The Hollywood Reporter by a third-party source.)”

Even though individual week sales does not create a long term trend, it’s safe to say that content will be a larger driving force compared to hardware pricing. Even though HD DVD plans another aggressive price drop shortly on the players, if the content doesn’t exist, consumers are not likely to want them. At this time, the Blu-ray camp includes Warner, Fox, Sony, Disney, & Lionsgate which together account for approx. 68% of all home video sales while the HD DVD camp is comprised of Paramount & Dreamworks accounts for approx. 22% of all home video sales, based on estimates from Jan. 1, 2007 through Sept. 30, 2007. The remaining 10% is made of various independent studios. This deficit is far too wide to overcome based solely on hardware pricing. The consumer is smart enough to realize that if they can’t find titles for their HD DVD player, it would be a bad investment.

Considering how much has been spent by both the HD DVD and Blu-ray contingencies thus far, I don’t see HD DVD giving up just yet. However, it would be a major coup if they are able to recover at this stage to overcome such a significant deficit. To put this in the concept of baseball, it’s the bottom of the ninth and the home team is down by 20 runs with 2 outs. Can they rally and come back to win, sure it’s possible, but is it feasible, I think not too likely.

Blu-ray taking another step toward universal acceptance

One prohibiting factor in the wider acceptance of the Blu-ray recordable discs (BD-R) is the great expense for the disc manufacturers to add new lines dedicated to the production of the BD-R disc. With the market for BD-R discs slowed by the public’s hesitation to adopt a hi-def disc format between Blu-ray and HD DVD, it’s a significant gamble for a company to invest the funds required to create a BD-R line when the return on investment could be prolonged to say the least.

Recently, a joint venture between Pioneer and Mitsubishi, successfully developed the ability to successfully use an organic dye film to create the BD-R discs. This innovation will help lower the overall cost for media manufacturers to create BD-R lines and in turn lower the cost of BD-R discs to the end user. At an average retail cost of $15 per disc for a single layer 25GB BD-R, it’s much higher than even the DVD9 8.5GB DVD+R which typically retails for $1.50 ~ $2.00.

With this organic dye, media manufacturers can convert their standard DVD-R and CD-R lines to BD-R lines with minor alterations as apposed to major retooling. This is a huge accomplishment for the BD camp by removing one of the most prohibitive factors for media manufacturers to produce BD-R discs. Combine this with the fact that HD DVD still has yet to release a recordable drive and hence has no recordable media on the market, Blu-ray will continue to make bigger waves in the duplication market and smaller production studios. The battle still wages between HD DVD and Blu-ray, but as far as the duplication market is concerned, Blu-ray is widening the gap toward universal acceptance.

Sub $200 Blu-ray reader in the plans for Sony

As the driving force behind Blu-ray disc (BD) technology for optical discs and drives, Sony has announced its plans for a Blu-ray reader (no burning capabilities) to retail for less than $200. With the increased size and clarity of computer monitors, more people are watching movies and even television through their computers. In fact, the laptop is fast becoming the business travelers’ portable entertainment system.

Even though prices are dropping on BD players, including the Sony PlayStation 3 and optical writer drives, they still retail in the neighborhood of $500 plus. So introducing a BD reader at less than $200 gives anyone with a HD computer monitor the ability to save over 50% off the cost of traditional BD players.

This is also big news for the duplicator field as in most manual tower CD and DVD duplicators, they are equipped with 1 reader only drive and multiple writer drives. The reason being is that the reader is typically much less expensive than the writer drives. In addition, having a separate drive devoted to reading only, reduces the wear and tear on the writer drives. Up to this point, there have only been BD writer drives on the market so all BD duplicators required a writer drive to act as a reader for at least one run. That increases the overall cost and lowers the productivity for BD duplicators if a drive is being tied up as a reader instead of being able to make copies. By having a low cost BD reader, it makes the BD duplicator far more efficient and prolongs the BD writer drives lifespan while keeping the unit in a respectable price range.

As for HD DVD, they still have yet to introduce a reader or writer drive for the duplication market. Even though there are prototypes on display at various CE trade shows, none have hit the market or are slated to be released within 2007. This is putting the HD DVD camp farther and farther behind the BD camp in terms of reaching the independent video market and the highly lucrative medical, education and financial field for data storage. Maybe that’s not the markets they are courting at this time, but in the end, they will be big factors in who wins the format war.

Microsoft giving HD DVD a push

I’ve been trying to keep up with the HD DVD and Blu-ray battle, mainly because I think the competition is good and I want to see how far they are willing to go. Today I read that Microsoft was going to back the HD DVD format even more by adding its trademarked HDi™ logo to the brand. The HDi logo means that Microsoft’s Interactive TV feature will be supported by the players and movie releases.

 

Microsoft has cut a deal with Toshiba, Paramount, and Universal to include the HDi logo on the HD DVD players and discs. So now when you’re watching the new Warner Bros. HD DVD release, “Blood Diamond” you might be able to go online and do things like download new trailers, buy ring tones or merchandise, and share your favorite scenes with other HDi HD DVD users.

 

Jodi Sally, the vice president of marketing for Toshiba America Consumer Products, has said “With Microsoft’s HDi technology, Toshiba is able to offer consumers a consistent movie-watching experience in a way that simply isn’t possible with today’s DVDs or available with any other format right now. Advanced navigation using Microsoft’s HDi technology has been offered on all of Toshiba’s HD DVD players — from the models introduced last spring to our third generation of models that are shipping today.”

 

“For studios to truly enhance and change the way people watch movies, HD DVD provides the features and the flexibility we need to offer a personalized experience,” said Ken Graffeo, executive vice president of Universal Studios Home Entertainment and co-president of the North American HD DVD Promotional Group. He also added that “web-enabled network features made possible through HDi are particularly compelling because they bridge the gap between physical media and the Web-based world of the MySpace generation.”

 

But we can’t forget about blu-ray. I’m sure their engineering team is working on a strategic plan to deal with the HDi feature.  Honestly, that’s what makes this so interesting. It’s safe to say that soon, watching movies at home will not be the same.

Money Talks in the Battle Between Hi-Def Formats

Apparently HD DVD will not go away without a fight and recently two heavy weight Hollywood Studios, Paramount and DreamWorks Animation, have issued a press release stating that they will back HD DVD exclusively.  This means that major holiday offerings like Shrek the Third, which grossed over USD $300,000,000 theatrically in North America will be offered only in the HD DVD format.  This is a major boost for HD DVD which had lost ground to Blu-ray with the announcement that Blockbuster would only stock Blu-ray titles and retailers like Target would only stock Blu-ray players in their stores.

So what caused this major shift toward HD DVD for Paramount, which previously offered titles in both Blu-ray and HD DVD, and DreamWorks Animation, which had yet to release a title in either format?  According to the corporate spin, the official comment is that HD DVD players are cheaper and better price positioned for the consumer.  But many feel there’s an ulterior motive working here that may be rooted in a financial gain for the two Hollywood Studios.

As reported in the New York Time, (published 8/21/07), according to two Viacom executives (parent company of Paramount) under the condition of anonymity, “Paramount and DreamWorks Animation together will receive about $150 million in financial incentives for their commitment to HD DVD”.  These incentives apparently will be cash payments and promotional guarantees like using the HD DVD release of Shrek the Third in HD DVD player marketing campaigns.  Although none of the entities involved confirmed this transaction took place or played any part in their decision, it’s entirely possible that HD DVD is throwing out all the stops in a last ditch effort to make a huge impact during the lucrative holiday season.

Time will tell whether this gamble pays out, but it looks like the HD DVD contingency has already put their money where their mouth is and will not back down without a fight, but will Blu-ray take the beating or will the consumer ultimately pay the price?  I guess time will tell but one thing is for sure, Money TALKS!

The HD-DVD/Blu-ray Battle Rages On

The format war battles on between HD-DVD and Blu-ray while each postures that they are the format of choice.  On one hand, Blu-ray seems to have the upper hand in content and availability whereas HD-DVD still holds the advantage in price.

Recently two major retail giants have announced that they will only carry the Blu-ray Disc players in their stores in the lead up to the Christmas rush.  The major retail conglomerates Target in the USA and Woolworths in the UK have agreed to carry only the BD players while not publicly siding with either format.  In fact Target will continue to offer the HD-DVD add-on for the Microsoft X-Box console and continue offering HD-DVD players on their online stores.  In addition, they plan to still offer HD-DVD software and content in their retail stores.  While Woolworths admitted the sales for either format is still slow, the release and sales of the Sony Playstation 3 (PS3) has given the Blu-ray format an edge.  In both cases, this gives the Blu-ray format a considerable edge in visibility and perceived superiority through greater presence.

However, the HD-DVD camp remains un-phased and still touts their lower price as an advantage over BD players.  At an average price of $200 ~ $400 lower than the BD players, the HD-DVD camp is banking that the consumer will be swayed by price over visibility.  With advances and greater confidence in online shopping, consumers are savvier bargain hunters for the products they want.

Another major force in the format war is the adult video (Porn) industry.  The porn industry is widely credited with helping the VHS format defeat the Sony Beta format in the early 80’s and they look to be a major player once again.  However, both sides are quietly garnering support in the industry as the topic of porn is still a social stigmatism in the general public consciousness.  However, within North America, HD-DVD appears to be the format of choice for the porn industry while Blu-ray has gained favor with the producers of porn in Japan.

So just as in tennis, HD-DVD and Blu-ray are hitting the ball in their opponents court waiting to see who will falter and who will eventually come out on top.  This holiday season should provide a lot of answers, but the consumer seems to be a bit timid to make the wrong decision and be stuck with the loosing format in the end.  Just as the consumer will ultimately decide the winner of the format war, the more they hesitate, the more likely a third choice will evolve leaving both HD-DVD and Blu-ray on the sidelines.

Is Blu-ray Getting in Bed with the Adult Porn Industry

Sony certainly has fresh in their memory their failure with the Beta Max player against the VHS format in the early 80’s. During the VHS vs. Beta competition, the adult film industry (Porn), was credited with turning the tide in favor of VHS. Sony is embattled in another format war and they most definitely do not want a repeat outcome in the Blu-ray vs. HD-DVD format. Once again, the adult industry looks to play a major role in the outcome.

Sony decided to focus on family programming and an alliance with the Disney Corporation over the adult industry. Disney will not allow any replication company they work with to do business with any porn content, thus protecting their family friendly image and preventing any accidental packaging of pornographic content with their family themed productions. Sony also has an anti-porn policy when it comes to replication at its facilities. So with that and the apparent lack of support for the adult filmmakers in filming and editing in the Blu-ray format, HD-DVD has become the format of choice amongst the adult industry.

HD-DVD replication is easier to convert from the standard DVD line, so it’s easier for the adult industry to find replication facilities willing to mass produce their titles. At the same time, the adult industry has received help from Microsoft and Toshiba (strong backers of the HD-DVD format) in production of films in the HD-DVD format. That has all lead to HD-DVD having a strong foothold in the adult market.

In Japan, the BD format is preferred over HD-DVD which was helped by the inclusion of a BD player in the PS3 gaming consoles. Because of this, the Japanese porn industry is leaning toward the BD format. Since Sony DADC, Sony’s disc replicating subsidiary, is not allowed to replicate porn, the Japanese adult industry may have been forced to use HD-DVD just like their American counterparts.

Sony, most likely trying not to make the same mistake twice, has found a loop hole in their moral stance against replicating pornographic material by allowing a Taiwanese company access to the BD replication equipment. The Taiwanese company, not constrained by rules of the BD replication plants in North America and Japan, is able to take orders for adult films to be produced on BD discs. In addition, Sony has also made technical assistance available to the Japanese adult video makers stating that they are happy to provide assistance to all film makers.

So despite any previous public stance against adult video, Sony seems to be condoning the production porn on BD discs which may help them greatly in the current format war. Since the American adult industry has not produced as many HD-DVD titles as once promised, it looks as though the door in open there as well for the BD format to step in and take over the market. With so much to gain and also so much to loose, both formats are finding that they have to play on both sides of the moral fence if they want to succeed in this business. In the end, the adult industry proved that if you want to succeed in the home video format, you’ll have to get in bed with them eventually.

EC Probe into Blu-ray and HD DVD Business Practices

In an effort to ensure fair trade in Europe, the European Commission (EC) has launched a general inquiry into the business practices of the Blu-ray and HD DVD formats as it pertains to alliances with Hollywood studios.  The EC is requesting documents from all major Hollywood studios for all documentation and correspondence between the studios and the Blu-ray and HD DVD camps.  This is the initial steps in a possible larger inquiry into anti-trust and anti-competitive practices that lead the various studios to announce loyalty to one format or another.  This is not a full investigation at this point, merely a fact finding process to determine if there were any unfair actions taken by either the Blu-ray or HD DVD camps in persuading the studios to back their format over the other.

I can’t say what the outcome will be of this inquiry and it may turn into nothing, but it comes during a critical time for the formats as they battle for supremacy.  If the EC determines that either format did not compete fairly when dealing with the studios, it could have repercussions throughout the industry.  Then again, it could turn in to a fishing expedition with no results.  Only time will tell and we’ll bring it to you when we know more.

The HD-DVD format has their market too

In an effort to be fair and show impartiality in the battle between HD-DVD and Blu-ray, this article shows how HD-DVD is excelling in the corporate market. Recently, most of my postings have skewed toward how the consumer market is leaning toward the Blu-ray format, but HD-DVD has been establishing their presence in the corporate and enterprise market.

The corporate market, (such as the banking/financial, medical, fortune 500, etc.), need better ways of archiving data then standard DVD can provide. Even though the Blu-ray format holds more data, (25GB vs. 15GB for single layer or 50GB vs. 30GB for double layer), HD-DVD holds an advantage in that its components and discs are cheaper. In a time when the bottom line is everything, the enterprise market can be quite price sensitive, but in the end, performance means everything. So we’ll see how this all pans out.