What if, Just WHAT IF? Paramount/DreamWorks are telling the truth?

First off I apologize. This got way long.

Well I was hesitant to throw this on the HDTV Software Media Discussion page because in the end I predict more bad news for BR, but since it seems that everyone has posted their half baked theories here on this topic here is mine hahaa.

I would like this thread to explore the business bigger picture of likely events that drove this decision and the types of things IMHO that Para/Dream has to know or strongly believe will happen in order to support them making this decision.

While it is really meant as my neutral analysis of the situation beyond what is visible some of the logic and reasoning accept fundamental issues with BR that are generally not accepted and looked as as FUD or trolling if placed in the wrong forum. This is not my intent.

My assumption is that regardless of any $$$ changing hands (which has enough of the typical conflicting sources that we may never know and I do NOT want to debate that here. There are plenty of other thread for that.

In my opinion even the numbers talked about would not be enough to offset the risks and opportunity cost that staying neutral (given what we currently believe is the status quo) provides them now. This includes:
• Consciously putting themselves into a minority slice of the market (an extreme minority if UNI were to go neutral)
• While at the same time pissing off a lot of customer (which they clearly have). Which if this were a temporary for the money thing they are hoping to win back while trying to explain why they jerked them around in the first place… Somehow I think they may be smart enough to know this wouldn’t be a sound plan.

So if you believe that the only reason they did this was because of the evil MS or HD-DVD empire throwing money at them or some such then please in consideration of this threads intended discussion points either don’t bother responding or simple say”$$$” and we will know where you stand.

What I hope against hope is that people from all three camps (BR, HD-DVD and Both) will take a look at the assumptions I am making below regarding what I think Paramount MUST know or they would never have made this move.

Is it possible we are all so caught up the great debate, where facts are attacked and misdirected and everyone is pretty much is having a wipe out your spin to see who’s is biggest contest that we can’t see it.. Is the fog of war so darned instilled in us now that most of us can’t or won’t even entertain the idea that this was an honest business decision by these studios?

It must be hard to actually hear a studio come out and say that it is dropping BR for all the reasons that everyone on the HD-DVD side has been driving as reasons why not to buy or support BR. That has to pretty much be BR’s worst nightmare. If believed it basically in one big bang kind of swoop, invalidates their format superiority stance.

Put yourself in their shoes with even just the profile issues. How keen do you think they must have been to take on all that bad press and customer sentiment that is going to be unavoidable from people trying to work the extras on their shinny Paramount BR that won’t work in their $1000+ first gen player (Assuming the PS3 works that only leaves the nice expensive ones that do not). Telling the customer that it isn’t there fault it’s the player just isn’t going to cut it from a customer support/relations perspective. Can you say refund… credit… OUCHY.

They have to look at it from a big picture perspective. Sure lots of us may not care much for extras, but clearly Paramount does and even more importantly does not want the Customer relations headache.

The fact is people they may just be telling the absolute truth, but I don’t think that even what they are saying in the surface is enough. I think this move can only have been made if there is far worse news in store for BR in the near future.

So all the above being said, given the information we have this still may not make that much sense given the status quo and BR’s media sales lead for example. On the surface it seems that if anything they could have dropped HD-DVD and stayed with the bigger slice of the pie. I am sure they could have pretty much asked Sony/BDA for just about anything and yet they didn’t and chose what appears to be the much higher risk path… Or is it?

I would be willing to bet a lot that at least some of the following if not either are already or are coming as they pretty much have too to make this a sane decision.

• UNI is not going neutral any time soon. No way would Para/Dream risk simply replacing UNI as the sole torch bearer for HD-DVD. They simply would not have done this if they were not pretty darn well assured that UNI was standing pat for the long term.
• UNI must also have also known for a while that this was coming in order to help them internally support staying exclusive. UNI also cannot/could not risk long term sole support if HD-DVD.
• Others are following or at least going neutral. How do I know this? Because on its own this move pretty much splits the pie in half or even puts Para/Dream in a lesser position with UNI as the sole exclusives plus the other neutrals. I just cannot see Paramount making a conscious decision to limit itself to what on the surface looks like < 50% of the market which would be the case if they didn’t think other studios where following.
• There will be a lot of $199 or cheaper players in the retail chain very soon. They could not be thinking to make a market with a few hundred thousand players and some Xbox add-ons against even just the PS3 alone. Something is happening here. Maybe not exactly the Wal-Mart thing but something is out there.

So what do you think? If you were the Paramount/DreamWorks presidents standing in front of the board of directors needing to make your argument stick to people who only care about the stock price, do you think that you must be able to ensure them of some of this or similar to justify your business plan?

If you think the business move has other supporting reasons lets here them. If you think parts of my theories and extrapolations are flawed then lets here why you think so with a reasoned out argument. I may be wrong about some, but they would make business sense if they were true.

Cheers,

Richard

Very well thought out. Nothing to add since I believe you are correct.

I've always been a big supporter of HD-DVD while also trying to be fair to blu-ray. Today @ my office, I've had people who don't own any HD players and I didn't think were following the news at all, asking me if I heard that blu-ray was "dead". I couldn't believe that. I honestly told them that no, I think both formats will co-exist as Sony will never drop blu-ray while the PS3 is still around. Sony pictures may wind up being the only studio releasing someday, but dual format players will be the norm by then.

What if, Just WHAT IF? Paramount/DreamWorks are telling the truth?

First off I apologize. This got way long.

Well I was hesitant to throw this on the HDTV Software Media Discussion page because in the end I predict more bad news for BR, but since it seems that everyone has posted their half baked theories here on this topic here is mine hahaa.

I would like this thread to explore the business bigger picture of likely events that drove this decision and the types of things IMHO that Para/Dream has to know or strongly believe will happen in order to support them making this decision.

While it is really meant as my neutral analysis of the situation beyond what is visible some of the logic and reasoning accept fundamental issues with BR that are generally not accepted and looked as as FUD or trolling if placed in the wrong forum. This is not my intent.

My assumption is that regardless of any $$$ changing hands (which has enough of the typical conflicting sources that we may never know and I do NOT want to debate that here. There are plenty of other thread for that.

In my opinion even the numbers talked about would not be enough to offset the risks and opportunity cost that staying neutral (given what we currently believe is the status quo) provides them now. This includes:
• Consciously putting themselves into a minority slice of the market (an extreme minority if UNI were to go neutral)
• While at the same time pissing off a lot of customer (which they clearly have). Which if this were a temporary for the money thing they are hoping to win back while trying to explain why they jerked them around in the first place… Somehow I think they may be smart enough to know this wouldn’t be a sound plan.

So if you believe that the only reason they did this was because of the evil MS or HD-DVD empire throwing money at them or some such then please in consideration of this threads intended discussion points either don’t bother responding or simple say”$$$” and we will know where you stand.

What I hope against hope is that people from all three camps (BR, HD-DVD and Both) will take a look at the assumptions I am making below regarding what I think Paramount MUST know or they would never have made this move.

Is it possible we are all so caught up the great debate, where facts are attacked and misdirected and everyone is pretty much is having a wipe out your spin to see who’s is biggest contest that we can’t see it.. Is the fog of war so darned instilled in us now that most of us can’t or won’t even entertain the idea that this was an honest business decision by these studios?

It must be hard to actually hear a studio come out and say that it is dropping BR for all the reasons that everyone on the HD-DVD side has been driving as reasons why not to buy or support BR. That has to pretty much be BR’s worst nightmare. If believed it basically in one big bang kind of swoop, invalidates their format superiority stance.

Put yourself in their shoes with even just the profile issues. How keen do you think they must have been to take on all that bad press and customer sentiment that is going to be unavoidable from people trying to work the extras on their shinny Paramount BR that won’t work in their $1000+ first gen player (Assuming the PS3 works that only leaves the nice expensive ones that do not). Telling the customer that it isn’t there fault it’s the player just isn’t going to cut it from a customer support/relations perspective. Can you say refund… credit… OUCHY.

They have to look at it from a big picture perspective. Sure lots of us may not care much for extras, but clearly Paramount does and even more importantly does not want the Customer relations headache.

The fact is people they may just be telling the absolute truth, but I don’t think that even what they are saying in the surface is enough. I think this move can only have been made if there is far worse news in store for BR in the near future.

So all the above being said, given the information we have this still may not make that much sense given the status quo and BR’s media sales lead for example. On the surface it seems that if anything they could have dropped HD-DVD and stayed with the bigger slice of the pie. I am sure they could have pretty much asked Sony/BDA for just about anything and yet they didn’t and chose what appears to be the much higher risk path… Or is it?

I would be willing to bet a lot that at least some of the following if not either are already or are coming as they pretty much have too to make this a sane decision.

• UNI is not going neutral any time soon. No way would Para/Dream risk simply replacing UNI as the sole torch bearer for HD-DVD. They simply would not have done this if they were not pretty darn well assured that UNI was standing pat for the long term.
• UNI must also have also known for a while that this was coming in order to help them internally support staying exclusive. UNI also cannot/could not risk long term sole support if HD-DVD.
• Others are following or at least going neutral. How do I know this? Because on its own this move pretty much splits the pie in half or even puts Para/Dream in a lesser position with UNI as the sole exclusives plus the other neutrals. I just cannot see Paramount making a conscious decision to limit itself to what on the surface looks like < 50% of the market which would be the case if they didn’t think other studios where following.
• There will be a lot of $199 or cheaper players in the retail chain very soon. They could not be thinking to make a market with a few hundred thousand players and some Xbox add-ons against even just the PS3 alone. Something is happening here. Maybe not exactly the Wal-Mart thing but something is out there.

So what do you think? If you were the Paramount/DreamWorks presidents standing in front of the board of directors needing to make your argument stick to people who only care about the stock price, do you think that you must be able to ensure them of some of this or similar to justify your business plan?

If you think the business move has other supporting reasons lets here them. If you think parts of my theories and extrapolations are flawed then lets here why you think so with a reasoned out argument. I may be wrong about some, but they would make business sense if they were true.

Cheers,

Richard

great write up,imo

As usual - objective & lots of good points.

Because no corporation has ever been deceitful to the consumer. What if they are right? What if they just did it for the money? Who cares? Does anyone actually believe them at 100% face value? If HD DVD truly is the best format, then I just have to ask why they needed $150 million to see the truth? If that's what they truly believed, then they could have made the switch without any financial incentives.

Nice post. I agree completely.

http://arstechnica.com/news.ars/post/20070822-reasons-financial-and-technical-lurk-behind-paramounts-hd-dvd-coup.html

Connectivity and Managed Copy
I can't help but sense that the biggest technical consideration was the connectivity requirements, however. Referring back to HD DVD's mature specifications, Bell noted that "all [HD DVD] players from day one have [online] capability," which is not true for Blu-ray. This means that HD DVD can universally support several important next-gen features.

Managed Copy—the feature that could allow you to legally make a backup copy—requires connectivity for DRM and transactional purposes. HD DVD's uniform connectivity capabilities would also make it easy to deliver updated or ancillary content, such as bonus scenes, additional language tracks, and commentary. While there is plenty of space on an HD DVD for multiple language tracks, Bell talked of the possibility of retroactively adding additional language support long after a disc had shipped.

Connectivity is also important because of so-called "transactional offerings" that Paramount and other studios have planned. Interactive features could reach out over the 'Net to commercial sites selling items related to a movie, for instance.

In sum, Bell simply claims that HD DVD is a better bet, and he's unfazed by the size difference between the two. Whether or not any of these "must-have" features are really all that important to early adopters remains to be seen, but Bell is encouraged by the fact the upcoming players from Toshiba will all meet HD DVD's specifications—and at low prices.

Wow, nice post, well thought out.

I hope those that disagree will be able to take the high road, and not simply start with the "You suck your wrong"

I always thought, why cant it be both? They saw the future, and said "Thanks for the 150 mill"

If HD DVD truly is the best format, then I just have to ask why they needed $150 million to see the truth?

I can just loosely quote one enterpreneur from Chicago:

"You can do a lot with the better format. You can do a helluva lot more with the better format and a $150mln.".

Rrosn, you bring up some good points. P/DW is obviously privy to information we are not. An unprecedented business decision like the one they made does not happen with kickbacks alone. There is clearly stuff going on behind the scenes (other studios going neutral / hd exclusive, walmart or other retail deals, etc.). I also think the profile spec had something to do with it. No company wants to have their movie be the one that crashes all the G1 BD players. Sure its Sony and the BDA's fault, but the headlines will read: "Shrek 3 crashes BluRay players" or some similar sensational headline ("Blu-Ray players obsolete..."?). No company wants that kinda bad press.

The other possibility is that they realized this war is quickly turning into a stalemate and figured the best bet was to go with HD DVD. With player pricing hitting <$200, HD DVD has a real chance to hit big this holiday season. BluRay won't make it on the standalone mainstream market until 4Q 08. BD is not going to win with the PS3 alone. This was likely also considered.

I can just loosely quote one enterpreneur from Chicago:

"You can do a lot with the better format. You can do a helluva lot more with the better format and a $150mln.".
And: "You can do a lot with the better format and a $150m. You can do a helluva lot more with the worse format and $300mil?"

Your quote says nothing definitive. My quote says nothing definitive. That's the point. Lots of money was involved in this deal, which always distorts the facts. Unless we can definitively read the minds of Viacom executives that signed the agreement, none of us know why Paramount made the switch. Of course they're going to say all the right things afterwards, that's to be expected no matter what their true intentions are. Like I said, nothing can be positively determined by the Paramount move, except that HD DVD strengthened it's position.

Long but sound write-up. Paramount has all the reasons that I have for supporting HD-DVD.

And: "You can do a lot with the better format and a $150m. You can do a helluva lot more with the worse format and $300mil?"

Your quote says nothing definitive. My quote says nothing definitive. That's the point. Lots of money was involved in this deal, which always distorts the facts. Unless we can definitively read the minds of Viacom executives that signed the agreement, none of us know why Paramount made the switch. Of course they're going to say all the right things afterwards, that's to be expected no matter what their true intentions are. Like I said, nothing can be positively determined by the Paramount move, except that HD DVD strengthened it's position.

Look, better format doesn't really mean squat.

There is no doubt in my mind Betacam was better format than VHS. You know the result.

I am not saying HD DVD is better format than BD.

Yes, maybe if BDA would come out with the $300mln, Para/Dream would make an opposite decision.

However, the OP says that it was not "just" $150mln. There might be developments we don't know about just yet.

And the original quote was "You can do a lot with the smile. You can do a lot more with the smile and a gun".

You asked in your original post "why" did it take Para/Dream $150mln to see the light. I have tried to answer.

The other possibility is that they realized this war is quickly turning into a stalemate and figured the best bet was to go with HD DVD. With player pricing hitting <$200, HD DVD has a real chance to hit big this holiday season. BluRay won't make it on the standalone mainstream market until 4Q 08. BD is not going to win with the PS3 alone. This was likely also considered.
I agree completely. I also agree with the connectivity. I've said it from the get-go, the internet connectivity is a big deal. Many here poo-poo it as most don't have the home network to take advantage, but like many things give them the feature & they will grow to use it. ArsTechnica link points out a good many things, chief among them is the ability to utilize specialized content. Can you imagine what Disney could sell with content links? (wonder how many ringtones the 300 sold) Watch PoTC, check the live content = for a limited time only a "Captain Jack doll" exclusive for disc owners. The same goes for every other studio.

I also agree that Para, Uni, WB, etal have information not available to us - board meetings & strategy sessions made have given them an entirely different take on the market as they see it developing.

As one example - are they really happy that a competing studio controls the production lines? I don't care what promises or contracts I had I would be very leery of letting my competitor control my production.

Really the truth is we're all just guessing.............but I imagine we'll soon see.

I agree with Dakota81 on both points. It was about money and politics; simply put. This is how its done in Washington D.C., and Hollywood as well. All they did was prolong a format war. But, my question is; what happens after 18 months and the numbers still are in BD's favor? It could be 5:1 or even greater by then. I don't have anything against HD-DvD, but it is what it is.

First of all neither Paramount or Univeral have any real stakes in this format war.

Both acknowledged that in the end HD DVD will be cheaper in production costs long term.
Others will follow. Disney is most likely the first to break the ranks.

Nobody denies that the hardware spec of br is superiour but the sidenote always has been that the bigger size isn't that much important. (They can always do two discs.)

The software side of the spec there is the superiority of HD DVD.

No doubt that Paramount tested br java, and found all the ingredients for a bugfest waiting to happen. (What else to expect from a language that boasts a build in 'garbage collector'..., it's an open invitation to sloppy programmers.)

If Disney goes neutral then br is dead.
HD DVD backed by one exclusive (Universal) is alive and kicking. Br backed by one exclusive (Sony) is dead....Just like the other Sony exclusive formats.

Look how Sony is embracing Dolby TrueHD, basically the core technology of DVD Audio that was the competitor against Sony's DSD. (sacd)

No doubt that Paramount tested br java, and found all the ingredients for a bugfest waiting to happen. (What else to expect from a language that boasts a build in 'garbage collector'..., it's an open invitation to sloppy programmers.)
:D:D

Careful - you'll awaken the gods of all that is holy in IT, the java dogs.

I have to agree on the features. While in the debating arena here saying that someone does not have any interest (and I have limited interest myself) in PiP etc may represent a given individuals view, how many times do the studios need to say they believe it is VERY important for us to take it seriously as a factor?

I didn’t get into some of the greater WAGs that may be influencing things, but things like these may be in play and we will probably never know and they are pure speculation. Remember they are just WAGs that pop into my head.

• Sony/BDA has missed some time commitment timelines on the profile 1.1 stuff to the point where they are skeptical
• PS3 numbers are not what was modeled and/or attach rates are falling short of a workable business plan.
• They may be getting the sense from CE’s that there are no (Paramount target customer affordable) Profile 1.1 or 2.0 BR players arriving in soon enough for them or they cannot accurately predict what and when that will shape up. Tough from a planning perspective. Also ties into their cost concerns.
• They are not yet convinced that the PS3 is Profile 1.1 (this falls into the super WAG pile. I cannot imagine a scenario where it isn’t, but maybe it isn’t proven yet. Fits with not having seen an official “Yes of course the PS3 is Profile 1.1 and/or 2.0 compliant” statement from Sony. Makes you wonder why they wouldn’t kill any speculation right up front.. Note: If they have then I just missed it)
• Warner and Paramount are just going through the motions with BR to meet any commitments they had made. Seems possible due to the perceived favoritism. They gave it a try and for whatever reason it grew sour.
• Warner is going exclusive possible hint. Warner goes through the expense of designing and making a reality the TotalHD disk and then just as they are getting ready to start using them they can it. If they were planning on releasing dual format long term this makes no sense as it has to be cheaper and more customer/.retailer/rental friendly solution. In the end it is also possible it just never worked reliably as well hahaa.
• Disney and/or Fox going neutral conspiracy theories about regarding the lack of actually opening their catalogue vaults. They can say anything they want when talking to the press, but releasing 100 movies would speak louder. FOX may indeed be waiting for BD+. I would be nervous about Disney if they are really waiting on the interactivity of profile 1.1 if they any of the WAGs around that are true.
• MS is giving anyone who has ever released a movie 100 billion dollars to go HD-DVD exclusive. Note: Bill just PM me and we will arrange the delivery of my vacation video at your earliest convenience.

Cheers,

Richard

:D:D

Careful - you'll awaken the gods of all that is holy in IT, the java dogs.

When they get walked owners are trailing them with plastic bags to collect the garbage they drop. :p

Or... They made the decision, and took the money, to help slow HD media by the general public, in favor of other interests.

form the mouth fof the top guy and DreamWorks Animation, last week
"Jeff Katzenberg told a Bank of America conference that he expected "neither" high-def DVD format to win the war "because they're not going to become the next platform."

Why do you think he said that ?

I agree with Dakota81 on both points. It was about money and politics; simply put. This is how its done in Washington D.C., and Hollywood as well. All they did was prolong a format war. But, my question is; what happens after 18 months and the numbers still are in BD's favor? It could be 5:1 or even greater by then. I don't have anything against HD-DvD, but it is what it is.

What flavor is that Kool-Aid?:rolleyes:

I think the biggest reason is one that is not mentioned, scalability. Blu-ray currently does not have the infrastructure to compete against DVD. Let's say that you want high-def to become more mainstream with cheap players (<$200). How will you feed those players? BDA simply does not have enough plants that can press BD-50 in large enough quantity to seriously compete against DVD. Making new plants cost time and money ($1 to 2 million per line). If Paramount, Universal, or WB decided that their next blockbuster DVD was going to be HD DVD combo only, current plants can make this this happen.

Some considerations:

FIRST
I do not think the reason Paramount and Dreamworks went HD DVD exclusive has to do with $150 millon paid. No studio on Earth would be neutral, then go exclusive in the format that's selling less... only to have to go back neutral or go exclusive BD (if it wins 18 months later). This is ridiculous.

Paramount/Dreamworks would never do such an erratic move if they did not believe HD DVD would not survive.

SECOND
The downplaying of the Paramount/Dreamworks move reducing it to a mere "bribe" case came too fast from the BDA side (or it's well connected supporters). For me, the reason it came so fast (almost in sync), was because the BDA already knew that they were going to lose Paramount/Dreamworks (but couldn't say it themselves). The "it's a bribe!" weapon (used by blu-ray supporters and not the BDA members themselves) came in several places at the same time. It was a weapon that was there just waiting for the Paramount/Dreamworks announcement.

THIRD
Universal was right, after all, keeping itself exclusive. Paramount just joined the team. Some people say that Paramount just came in as Universal is about to drop out. That's nonsense. Paramount/Dreamworks would not join a team they already know well (they were neutral) just to discover the thing that made Universal go out.

FOURTH
While it is easy for a studio to go neutral... it is much more rare for one to go back into exclusive. I'm sure we saw many turns in the past... but they were all before both formats were released. After 2006, all camps were quite defined. What makes the Paramount/Dreamworks case monumental is that it's a MAJOR player doing a MAJOR move in the least expected moment (when HD DVD is selling less). Nine months ago, before the PS3, such a move could be called a bet, a hunch, a faith or whatever. Today, with both platforms working, it's certainty.

FIFTH
I'd say that a studio could go neutral due to several factor: uncertainty, money, etc. But once neutral, you know how both groups work... what they cost, what can be done, etc. No money would make Paramount/Dreamworks drop Blu-ray (a format soooo many people think it is winning). If Blu-ray is that good and winning... only Paramount, Dreamworks and Warner are in a position to comment - because they've been there in both.

SIXTH
The BDA is in a very hard position now because clearly, time is against them. They tried to get a structure of massive exclusivity (The blockbuster deal, The Target deal, etc etc etc) based on the idea that they are massive (and HD DVD minimal). That structure should be unbeatable... or big enough to make its massiveness a consummated fact even to Paramount and Dreamworks (who by then, wouldn't dare to jump out). And yet they did.

SEVENTH
But somehow, Paramount and Dreamworks did the total opposite... leaving that massive structure more fragile than ever... because you do not leave a winning team. Blockbuster wasn't expecting that 2 months ago. Had Paramount and Dreamworks left at that time, I'm sure Blockbuster would have acted differently.

EIGHTH
And almost in sync with Paramount, Fox announces the release of all the titles they were pushing for later. Coincidence?

NINE
Disney and Warner seem very quiet.

TEN
Given all the effort to downplay the Paramount/Dreamworks deal, I'd say the BDA is very displeased. And being displeased, I'm sure they did all they could to maintain Paramount and Dreamworks in the group... and let's admit... if $150 million is enough to pull Paramount and Dreamworks into a "losing" or "dead" format, I'm sure Sony could have bought Paramount and Dreamworks exclusivity into the "winning" format who's "outselling 2 to 1" for much much less.

And yet, it couldn't be done.

Thanks.

I think the biggest reason is one that is not mentioned, scalability. Blu-ray currently does not have the infrastructure to compete against DVD. Let's say that you want high-def to become more mainstream with cheap players (<$200). How will you feed those players? BDA simply does not have enough plants that can press BD-50 in large enough quantity to seriously compete against DVD. Making new plants cost time and money ($1 to 2 million per line). If Paramount, Universal, or WB decided that their next blockbuster DVD was going to be HD DVD combo only, current plants can make this this happen.

DING DING DING. IMHO this is the winner.

The studios have much more information of media that we do. Player costs will go down. It is a minus for the BD side that their gear costs more but in time it will come down to J6P levels. I don't think players are the issue.

BD50 has a lot of unanswered questions. Why can I find the replication prices by third parties for CD -> HD DVD (15 & 30GB) online for orders from 1000 units to 100,000+ units but there is NO info on BD50.

BD50 is the major advantage BD has over HD DVD. If the majority of titles are limited to BD25 then the bandwidth advantage goes out the window unless it is a very very short movie (<80 minutes).

So far Sony DADC has a half dozen lines and Panasonic has 2. Two other distributors purchased equipment but no news reports on any actual product moving off the line. A year after BD launch and we have no idea how much worldwide capacity there is for BD50 and at what cost.

On the insider thread the insider from Pacific Disc reported they have no information on if/when they will get BD50 equipment. Not that it is too expensive, or there is no demand there simply is no roadmap right now.

If I am a studio looking at a format that is going to replace DVD (a massively high volume, low profit product) the idea that we have no idea how many BD50 discs I can make and at what price is very troubling.

Right now volume is low so Sony can "fake the funk" is they need to. Reject rates are 10x DVD - no problem. We are only running 100K-200K copies anyways. Costs are 5x DVD. No problem we can subsidize them at less than a million per movie. What happens when HDM has 10 million players and disc sales in the couple million range per week?

Simply put I think Universal figured out that BD is a luxury with a luxury pricetag while HD DVD works, is scalable to even DVD production levels (15 billions disc annually), and is cost effective. There are a lot more Ford Taurus on the road that Rolls Royce. It took P/DW longer but they are reaching the same conclusions. I think in time if HD DVD can get back to parity in disc sales Warner will jump also. Fox, Disney & Sony will take some time.

Of the final big 3 Disney will fall the easiest. If HD DVD can sell a lot of players and the studios pump out big movies and HD DVD is leading in players & discs then Disney has an easy choice. Them staying put likely will keep a stalemate forever but them jumping ship will end the war.

The big question is can HD DVD now sell enough players (millions) to move the software back to close to parity (55/45?)? That likely will be enough to pull Warner. Then can HD DVD move enough discs to convince Disney that jumping ship will end the war? Fox and Sony will only stop when it is obvious that BD has no future (90/10).

I agree with Dakota81 on both points. It was about money and politics; simply put. This is how its done in Washington D.C., and Hollywood as well. All they did was prolong a format war. But, my question is; what happens after 18 months and the numbers still are in BD's favor? It could be 5:1 or even greater by then. I don't have anything against HD-DvD, but it is what it is.

If it honestly just is about the money sell BD gear now. Microsoft has deep pockets (21 Billion in cash and 20 Billion in annual profit). Note that 21 billion isn't assets it is cash or readily convertible securities (money market, government bonds, etc). I don't think Microsoft had anything to do with this but let's just pretend they "bought" P/DW for the tiny sum of $150 million. Why wouldn't Warner take the same deal for say $400 million? The small studios could be bought up for another $50 million or so? For less than a billion (the interest on their cash reverse) they could end the format war.

Microsoft spent $4 billion to get a beach head into the gaming world with the first xbox. To end the format war with the 360 on the winning side and the PS3 relegated to a format that studios are not supporting for just a billion more? Imagine the damage it would do to the PS3 franchise long term. After the format war is over and HD DVD drive are cheap Microsoft could easily replace the DVD drive w/ HD for movie playback (games still on DVD). The Sony PS3 with it's "beta" movieplayer, and overpriced hardware would stay way back in 3rd place.

If anyone honestly believes Microsoft bought the largest studio (by 2007 revenue) for $150 million you would be crazy to support the other format.

Now I don't think the money was the only reason I just find it funny that people say it was all about the money and then seem to think that makes BD ok. If it is just about the money then BD is 10x worse off simply because Microsoft could buy the rest of the studios for a fraction of what the first xbox cost.

If it was only about the money and studios can be switched for $150 million then the war is already over.

All in all some very good, reasoned points. May take (hope, belief, whatever) is this:

Reports have stated that Paramount has stated that the Sony 'concession' for creating BD50s is now over. Consider back in the early days, both Warner and Paramount were HD DVD only subscribers. Now, consider if you were them. If another company comes to you and says 'put your content on our discs, we will only charge you what your current supplier costs for 12-18 months and you will have more people to sell to'. Would you try it? You get to see things from both angles for a while.

Now, get to the point where the subsidy is now withdrawn. If you want to continue on the second format, you have to pay full price for that product to be produced.

Also, this producer of the second product is essentially a competitor. Without this incentive, you you sit down, re-assess the situation and see if it was viable to go alone with your single (cheaper to produce) format plan?

As many people have pointed out, why are HD DVDs similar priced or even more expensive? Simple, because the studios can currently charge it and people will (initially) pay it. It doesn't mean it isn't cheaper to produce.

Another point is that Warner do infact get a cut of HD-DVD royalties. So IMO, Warner could be the next HD DVD exclusive to go. However, they are getting pretty good sales on both sides so they may ride it out a bit longer than Paramount did.

Also, the fact that Disney helped in the production of HD DVD's HDi. It is part their baby, they also have an interest in the format even though they do not currently support it. I believe that they are yearning for the features that HD DVD gives that BD (currently) does not. These are another candidate - maybe simply going neutral.

Fox, IMO will be BD till they are only with Sony. We all know what they were like with DIVX/DVD and how they dragged their heels monumentally switching to DVD.

Just my opinions, not wanting to ruffle feathers. Do I seem reasonable or am I just another loony Brit? :D

I agree completely. I also agree with the connectivity. I've said it from the get-go, the internet connectivity is a big deal. Many here poo-poo it as most don't have the home network to take advantage, but like many things give them the feature & they will grow to use it. ArsTechnica link points out a good many things, chief among them is the ability to utilize specialized content. Can you imagine what Disney could sell with content links? (wonder how many ringtones the 300 sold) Watch PoTC, check the live content = for a limited time only a "Captain Jack doll" exclusive for disc owners. The same goes for every other studio.

I also agree that Para, Uni, WB, etal have information not available to us - board meetings & strategy sessions made have given them an entirely different take on the market as they see it developing.

As one example - are they really happy that a competing studio controls the production lines? I don't care what promises or contracts I had I would be very leery of letting my competitor control my production.

Really the truth is we're all just guessing.............but I imagine we'll soon see.

Since we are quoting Ars Technica, we should also look at this article titled "Report: Home networking still too complex for most users"

http://arstechnica.com/news.ars/post/20070822-analyst-says-home-networking-still-too-complex-for-most-users.html

DING DING DING. IMHO this is the winner.

The studios have much more information of media that we do. Player costs will go down. It is a minus for the BD side that their gear costs more but in time it will come down to J6P levels. I don't think players are the issue.

BD50 has a lot of unanswered questions. Why can I find the replication prices by third parties for CD -> HD DVD (15 & 30GB) online for orders from 1000 units to 100,000+ units but there is NO info on BD50.

BD50 is the major advantage BD has over HD DVD. If the majority of titles are limited to BD25 then the bandwidth advantage goes out the window unless it is a very very short movie (<80 minutes).

So far Sony DADC has a half dozen lines and Panasonic has 2. Two other distributors purchased equipment but no news reports on any actual product moving off the line. A year after BD launch and we have no idea how much worldwide capacity there is for BD50 and at what cost.

On the insider thread the insider from Pacific Disc reported they have no information on if/when they will get BD50 equipment. Not that it is too expensive, or there is no demand there simply is no roadmap right now.

If I am a studio looking at a format that is going to replace DVD (a massively high volume, low profit product) the idea that we have no idea how many BD50 discs I can make and at what price is very troubling.

Right now volume is low so Sony can "fake the funk" is they need to. Reject rates are 10x DVD - no problem. We are only running 100K-200K copies anyways. Costs are 5x DVD. No problem we can subsidize them at less than a million per movie. What happens when HDM has 10 million players and disc sales in the couple million range per week?

Simply put I think Universal figured out that BD is a luxury with a luxury pricetag while HD DVD works, is scalable to even DVD production levels (15 billions disc annually), and is cost effective. There are a lot more Ford Taurus on the road that Rolls Royce. It took P/DW longer but they are reaching the same conclusions. I think in time if HD DVD can get back to parity in disc sales Warner will jump also. Fox, Disney & Sony will take some time.

Of the final big 3 Disney will fall the easiest. If HD DVD can sell a lot of players and the studios pump out big movies and HD DVD is leading in players & discs then Disney has an easy choice. Them staying put likely will keep a stalemate forever but them jumping ship will end the war.

The big question is can HD DVD now sell enough players (millions) to move the software back to close to parity (55/45?)? That likely will be enough to pull Warner. Then can HD DVD move enough discs to convince Disney that jumping ship will end the war? Fox and Sony will only stop when it is obvious that BD has no future (90/10).
I agree, I feel that BD50 isn't ready for full scale mass production and sony and co are hiding that fact. Also I feel that java and the multiple spec nonsense is a big a deal breaker. Having to support various java vms and different hardware feature sets is a support nightmare. Not to mention studios now have to become software houses to publish movies. It's all just crazy and HDi really does all that's needed with much less fuss/cost/support to studios.

At the end of the day PS3 was meant to push bluray into the masses, it's what got all studios onboard. If you remove PS3, you start to see that HD DVD is the format that is better suited for mass market adoption.

Wow, where did all these smart, non-flaming, non-name-calling, non-fanboys come from? :eek:

Refreshing to see, to say the least. :cool:

For all the innuendo (if not downright slander) and hypocrisy coming from the BD camp for doing the same thing they did to make studios choose their format exclusively, I agree, there must be reasons we are not privy to as to why such a drastic change would occur.

I agree with the sentiments that Paramount and WB would know better than everyone else what it's like to deal with both formats. For them to forego a second revenue stream raises quite the red flag.

And I do believe there's a reason they weren't churning out as many titles as WB. They were sometimes doing seperate encodes, where as WB was doing just one and porting the VC1 over to BD. They must have realized this wouldn't be technically or monetarily feasible long term. Because of this experience with both, I think it put them squarely in the position of being the best studio to say which format was most worth the time and money. Maybe they saw there was no perceptual difference between the two seperate encodes, despite a storage and bandwidth advantage to BD? Maybe diminishing returns showed that the end resulting product's AQ/PQ didn't justify the extra cost of BD, especially with a disappearing subsidy?

I also believe the profile issue spun out of control for BD. In fairness to them, they were between a rock and a hard place. If they waited until the profiles were complete, HD DVD would have run away with it. But the other result is playing out now, where 1.5 years into the war, they still don't have a profile that can do what G1 HD DVD players have been doing all along, and now realize there's a frightening disparity of past, present, and future players in consumers' racks.

DING DING DING. IMHO this is the winner.

The studios have much more information of media that we do. Player costs will go down. It is a minus for the BD side that their gear costs more but in time it will come down to J6P levels. I don't think players are the issue.

BD50 has a lot of unanswered questions. Why can I find the replication prices by third parties for CD -> HD DVD (15 & 30GB) online for orders from 1000 units to 100,000+ units but there is NO info on BD50.

BD50 is the major advantage BD has over HD DVD. If the majority of titles are limited to BD25 then the bandwidth advantage goes out the window unless it is a very very short movie (<80 minutes).

So far Sony DADC has a half dozen lines and Panasonic has 2. Two other distributors purchased equipment but no news reports on any actual product moving off the line. A year after BD launch and we have no idea how much worldwide capacity there is for BD50 and at what cost.

On the insider thread the insider from Pacific Disc reported they have no information on if/when they will get BD50 equipment. Not that it is too expensive, or there is no demand there simply is no roadmap right now.

If I am a studio looking at a format that is going to replace DVD (a massively high volume, low profit product) the idea that we have no idea how many BD50 discs I can make and at what price is very troubling.


Here you go, another HD DVD FUD myth busted. BTW, it took me all of 10 seconds to find this link.

http://wesleytech.com/blu-ray-vs-hd-dvd-replication-costs-analyzed-again/113/

What could it be they know about the possibilities of HD DVD that we don't see at the moment?

What about this: all Toshiba players have USB ports, and ethernet ports (not to mention the XBox). What if they release a firmware upgrade which enables the support of external harddisks to store downloaded content? The Xbox marketpace is there, so the payment infrastructure is available. An HD DVD owner could find himself in the position to download additional content on demand. The links and software comes with the purchased disc. That could turn out to be pretty cool. Maybe the studios have seen the begin of the optical disc supported era of downloadable content.

EDIT: Oh yes, I forgot to mention I've seen the great Freedom Vol.1 disc yesterday. I had to upgrade my player first, but why? Could it be those discs are already triple layer (2 HD-DVD and one DVD compatible layer)?

Just a few thoughts.


EDIT 2: Amir's recent post from the insiders thread regarding USB harddisks:

I gave you the example of adding storage to an existing machine. A person not comfortable with that scenario, can buy a new HD DVD player with built-in storage. Many such people have PVR/DVR type systems for time shifting with built-in storage. And many DVD recorders have built-in hard disks.

In addition, buy using a simple USB thumb drive, you can add storage to any HD DVD player with such a connection. Most everyone is familiar with that concept. And these cost nothing in grand scheme of things – certainly far less than the cost differential between BD and HD DVD players.

But all of this is secondary as your argument is incorrect anyway :). I am not talking about taking the primary language away from the disc. You can have a Swedish track in DD+ at 448kbs and have it not matter in the total picture (bandwidth of storage). The issue is, should that track be in lossless 24-bit? If so, would all of you who don't speak Swedish, want to lose 6 mbit/sec of your much talked about bandwidth when you watch the movie in US? And would the older person not familiar with technology, demand to hear Danish in lossless audio? I think the answer to both has to be yes.

Here is really the problem with BDA's claims here. They have to define a very narrow scenario where what they have matters. With capacity, we can go 4+ hours of fanstic video. So they have to paint a scenario where you need 6 hours, but not more. Because they run out of space. On bandwidth, they can claim that people need more lossless audio. But as soon as they put two of them in there, they reach the same bandwidth as HD DVD and then have to claim that you don't need more than that. Which of course, doesn't work. Either they can do 26 lossless languages which is as many languages as we provide in Windows, or quit making a big deal out of it and support digital distribution which is the absolute proper solution. We do this for Windows today for less used languages beyond 26.

And keep in mind that all of these corner cases are supposed to justify a manufacturing process which is still quite immature where other replicators here say they still don’t know of anyone who can make the BD-50 discs, 8 years after invention. And player OPUs (pick ups) which are much more expensive than HD DVD. So if we are worried about “cost,” we have to worry about these costs just the same.

Finally, as far as I know, people living in other countries that care a ton about audio fidelity, want to and will listen to the track in original language. The typically (not always) shun the dubbed tracks as such a track by definition is not lossless but has gone through the equiv. of human copy machine :).

SIXTH
The BDA is in a very hard position now because clearly, time is against them. They tried to get a structure of massive exclusivity (The blockbuster deal, The Target deal, etc etc etc) based on the idea that they are massive (and HD DVD minimal). That structure should be unbeatable... or big enough to make its massiveness a consummated fact even to Paramount and Dreamworks (who by then, wouldn't dare to jump out). And yet they did.

NINE
Disney and Warner seem very quiet.


http://img208.imageshack.us/img208/4633/formatwarisoverft9.jpg

Sorry, couldn't resist. ;)

Since we are quoting Ars Technica, we should also look at this article titled "Report: Home networking still too complex for most users"

http://arstechnica.com/news.ars/post/20070822-analyst-says-home-networking-still-too-complex-for-most-users.html
Actually I agree with the point..........but....it is becoming more common. Many houses now have more than 1 computer = a home network is almost necessary. One of my kids works for Magnolia & his co-workers @ Geek Squad (I know, I know - no real evidence :D ) more than 1/2 their work is setting up home networks.

Only point is that I think the mandatory connection is good, gives the studios many opportunities to do direct marketing & announcements. On the other hand I think a wireless specification would have been far better, even the Wii has that built in.

Here you go, another HD DVD FUD myth busted. BTW, it took me all of 10 seconds to find this link.

http://wesleytech.com/blu-ray-vs-hd-dvd-replication-costs-analyzed-again/113/

And yet you owns said replication lines? (for the foreseeable future) Sony. I can't imagine any studio being happy in that situation. It may not matter now but in a year? I can easily see the following

You want 3.2 million Trans 2 discs for Dec 4th? Sorry, the lines are booked for Spider-man 4. We can get them done by Dec 26th, will that work?

I can see this making studios very uncomfortable having a direct competitor control the production lines.

And yet you owns said replication lines? (for the foreseeable future) Sony. I can't imagine any studio being happy in that situation. It may not matter now but in a year? I can easily see the following

You want 3.2 million Trans 2 discs for Dec 4th? Sorry, the lines are booked for Spider-man 4. We can get them done by Dec 26th, will that work?

I can see this making studios very uncomfortable having a direct competitor control the production lines.

You guys are hard to keep up with, no sooner is one myth debunked than...

From what I can see there is no supply/demand issues with production of BRD. And Sony is not the only line producer of BRD-50. In fact there is a new
BRD replication plant that can produce 3 million disks a month. And there are others in Taiwan with similar capacity.
http://www.prweb.com/releases/2007/8/prweb545244.htm

BTW, its owned by GE, Universal Studio's parent company, maybe its
Sony that should be worried.

You guys are hard to keep up with, no sooner is one myth debunked than...

From what I can see there is no supply/demand issues with production of BRD. And Sony is not the only line producer of BRD-50. In fact there is a new
BRD replication plant that can produce 3 million disks a month. And there are others in Taiwan with similar capacity.
http://www.prweb.com/releases/2007/8/prweb545244.htm

BTW, its owned by GE, Universal Studio's parent company, maybe its
Sony that should be worried.
Please highlight where it says owned by GE - it says they're using GE plastics for construction of the discs. Slightly different.

Though Hansen says, "The competition is over. Blu-ray won, with more than a million players in the U.S. market and growing."
Sure that's not Bill Hunt?

I don't know what will happen, but the Paramount / Dreamworks deal makes a lot more sense if WB goes HD DVD exclusive.