If you honestly think Microsoft bought Paramount sell your BD players & movies now - AVS Forum
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post #1 of 1 Old 08-20-2007, 10:10 PM - Thread Starter
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Let's stop with the talk about how Microsoft is buying the format war.
Since the announcement I see often on the forum in various forms the idea that Microsoft simply bought off Paramount. Personally I think this is BS but honestly if you think this is true then you should sell your BD player and discs today on ebay. Sony has lost about $2.2 billion just on the PS3 plus who knows how much on BD50 subsidies and deasl with the studios. If anyone is trying to buy the format war it would be Sony. Let's see what Microsoft could do with $2 billion.

Buy studios support.
If Paramount turned for a mere $150 million then Warner could likely be persuaded for $400 million. The other smaller studios (Newline, Weinstein, Lionsgate) could like be bought for much less. Even better if the studios all understood that all 4 were in on the deal they likely could be convinced to go exclusive to end up on the right side of the format war. Being smart the deal likely would work out something like. In 2 weeks or so a minor studio announces HD DVD exclusive support and mentions the Paramount switch. Few weeks later Warner moves and announces they believe HD DVD will win the format war. For next few weeks the other minors all announce exclusive support always mentioning in the press release that BD is too expensive, HD DVD likely has momentum to win, consumers prefer the cheaper format.

Buy player marketshare.
Next big place to dump some cash would be dropping the price of the HD DVD drive. The bare drive can be bought on ebay for about $80. That should give us some clue that the build cost for entire drive w/ markup likely is not more than $100. Figure subsidize the cost $40 and announce a retail price of $59. How many drives could they sell at $59? With the bought studio support from above? Say they sell 2 million drives in next 6 months. That would cost a mere $80 million. Chump change compared to the purchases above. For about $100 per unit they could also subsidize the HD DVD drive in the 360 and keep price the same. Figure launch that right after Christmas season. With statements that games are only on DVD but the inclusion of internal HD DVD for movie now makes sense since HD DVD will likely become the only HD format in near future. The interesting thing about the elite having HD DVD while other 360s having a DVD drive is the attach rate would be much higher than the PS3. Those not interesting in HD movies would simply by the cheaper 360. If PS3 is 1/5th of attach rate of a standalone this one sku with HD DVD should have an attach rate just below a standalone (say 3/4th). 1 million 360s with HD DVD at $100 subsidy each would be another $100 million.

So for well less than what Sony has dumped on the PS3 Microsoft trojan $$$ plan could simply buy exclusive support from the majority of studios. Pump in about 3 million more players. Even with overwhelming studios support and higher # of players (even discounting PS3 by 1/5th) the BDA has only managed to pull a 66/34 marketshare. If HD DVD over next couple months pulled to parity of studio support and lead in # of players how quickly do you think the numbers would change? Combine that with a news story every week about either a studio leaving BD or a cheaper HD DVD player how quickly would HD DVD win the hearts and minds of the consumer. Throw in another $100 million for some research companies to predict that BD while technically superior is going to head same route of beta (which was also technically superior).

Now before the flames start I don't believe Microsoft bought Paramounts support and I don't think they will do anything above. I just find it funny to see the same people who express that BD will win also complaining that Microsoft is buying support. If Microsoft truly cared enough to buy support they likely could end the war for far less than the $2b that Sony has burned on the PS3 so far. As a side bonus once BD is buried Microsoft could sell new 360s with HD DVD drive and slam Sony in adds with it's support for the failed HD format.
If you really think Microsoft cares enough about this format war to buy studio support then sell your BD gear now because the $1 to $2 billion it would take to bury BD is less than 5% to 10% of their annual profit.
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