CES and the Format War--Article - Page 3

Nice article -- one of the best on the format war I have read. After checking the upcoming release slate for HD-DVD and Blu-ray, I think your conclusion is warranted.

I don't agree with your statement saying HD DVD is dealing from a point of weakness. Toshiba beat BD by several critical months with their hardware launch and priced the hardware very well to gain market share, which they achieved very well. If Toshiba was in a weak position they sure have come out on top with far more player sales than all BD hardware manufacturers added together (gaming consoles excluded).

Firmware upgrades have been addressed promptly and accurately. BD companies barely address firmware fixes and upgrades.

True HD audio is an advantage for HD DVD, hardware prices are a considerable advantage for HD DVD and more advanced gen 2 HD DVD players are hitting the market as we speak.

Considering all of the facts and the quick and pro-active culture Toshiba is applying to the HD DVD format they have the upper had in many respects. If HD DVD gets more studio support BD will have a very tough time succeding.

-Robert

We carry 163 HD DVD titles in our inventory.

-Robert

Every fanboy on this site has it all wrong. It seems to always be about "winning," and what you don't understand is that there won't be a "winner," in the sense that there must be a "loser."

Currently BD has a huge edge in Studio and CE support. They aren't winning in hardware (non game) sales, and in software sales. HD-DVD even won December when players outnumbered them 3:1. The BDA had a much better Christmas release slate than HD-DVD imho as well. Yet HD-DVD still won.

The point is, and some execs are starting to see it:

THE CONSUMER DOESN'T WANT A FORMAT WAR.

So there were two ways to do deal with that. As others have hinted some Studios picked the side they were "guaranteed," to win thanks to the PS3. One exec feels "lied to," by Sony. When their own marketing group did research they found that the attach rates for the PS3 were to be far, far, far lower than Sony was claiming. Sony said "Wait, we will win December, it is inevitable," and it DIDN'T HAPPEN.

So Studios are watching HD-DVD win, and the consumers....

STILL DON'T WANT A FORMAT WAR!!!

This isn't a game machine. This isn't about whose games are better. We've had a landslide of gamers try and turn this thing into a real format war.

It doesn't have to be. With LGF making the switch to neutrality you get the first of many to make that decision. Disney will be next.

We don't want a format war. If every studio was neutral there wouldn't be one. It would be like chosing a CD from a downloaded Ipod song. Sure there are two formats, but it's not hurting the consumer, so the consumer makes the purchase that makes most sense to them.

That would likely be HD-DVD (cheaper usually wins).

Universal says they will remain exclusive as long as Sony does. The executives at Time Warner saw the signs and said "We're not picking sides, let the consumer do that," and went neutral.

Going neutral is GOOD for EVERYONE.

BD fanboys should WANT more neutral studios. If LGF, Disney, FOX, and MGM go neutral it just means more likely that Sony and Universal will.

100% Neutral studios means no war for the consumer. It means peace of mind in purchasing a product. Sure one might outsell the other, but both will exist.

I did not realize their "Number of DVDs that can be purchased today" statistic included pre-orders -- please accept my apologies. Irregardless, if one format has 20+ more titles than the other I think it all comes out in the wash.

Good article. While I disagree with a bit of it, it was well written and perfectly within the convention of a standard editorial.

INteresting post tsd. Do you have some sort of inside information which indicates more than we know now? You seem to be quite positive about the HDDVD solution.

I agree, sort of. I dont want a war so let Universal switch and end it. Ive said it repeatedly, why would 5 companies switch when 1 can to have the same effect. Again, The BD exclusive companies chose BD for a reason so why would they switch so very, very, very early. Most people still dont know what BD and HD is. Im still the only one I know that has either format and I hang out with a lot of people who love movies. They might as well give it a go on the format they chose initally and like I said It will be hard for Universal to keep up. If Sony, Disney, and Fox want BD to win and the companies that are neutral stay neutral then it is gonna be hard for Universal and Toshiba to Stop that. Each month as more titles are released and more public start becoming aware of the 2 formats they are gonna start noticing that BD exclusive titles are coming out at a rate of 4 or 5 to 1. I know things could change at CES but without someone going neutral and prolonging the war it cant last more than a year or 2 at most.

I know someone at a Studio that is currently exclusive to BD. He is rather high up in the system. He and others are starting to compare the war to SACD/DVD-A where nobody won because consumers:

1. Weren't educated on it, and had no idea what it meant.

2. It was a format war with record labels picking sides, and nobody winning. Consumers didn't want to invest in something not knowing if their favorite music would all make it on the format.

Ofcourse the number 2 situation only happened for those consumers who were able to even know what the two were.

HD-DVD and BD are right now fighting a losing battle. The initial marketing group reports had Studios estimating MUCH larger sales. The reason is simple:

CONSUMERS WANT HIGH DEFINITION CONTENT

The consumers are now buying HDTV sets. They need content. HDMI (the one cable solution) is a SMART consumer decision, it is much easier to deal with than Component, etc. Simplifying things into one cable is brilliant.

However consumers are still confused MASSIVELY about 480p, 720p, 1080i, 1080p, etc. Not to mention the new audio codecs!

The Studios know that market reports show that the consumer wants a simple HD solution. They know they want that content. They also know that sales are MUCH LOWER than estimated. This can be blamed on hardware issues, but it's also primarily the fault of the FORMAT WAR.

Attachment rates are incredibly low on the PS3. HD-DVD is winning the software sales war. However recent reports state that the majority of HDTV buyers said they wanted to wait before buying into the HD Content Players. They were either confused or wanted to see "who would win."

Right now there is a winner or loser outlook. This exec I know is thinking this could end up more like LPs and Cassettes if Studios level the playing field. Neutrality is a good thing to promote the sales of either format.

If you make the consumer worry less, they are more likely to buy. The only way that will happen now is:

1. One side wins.

or

2. Studio Neutrality.

Number 1 can't happen anytime soon, and I believe PS3 sales, and the success of HD-DVD have shown that both will be around for awhile.

That leaves number 2 as the most likely solution to getting the consumer to buy into either format. That is why LGF and Disney will be the first to go neutral and FOX will not be far behind. MGM has to worry about Sony owning 20% and not pissing them off, but they will be making that same decision as well.

Then it will come down to Sony and Universal, and I think when/if that time comes both will make the switch to Neutrality at the same time.

Thus allowing consumers to make the decision they want. For Sony, their brand image should be enough. They've been winning the TV battle for ages...

There is room for two HD Content formats to thrive. It can only happen with studio neutrality. Until then sales for both will remain lower than they potentially could be.

Plus you still have to educate the masses.

The common consumer won't buy into HD Content if there is a war. Just like they didn't buy into the SACD/DVD-A formats. Fighting at the consumer's expense is never a good thing.

Universal will hold out longer than any studio. They don't care about the BD sales and won't for YEARS. They care about DVD sales. For Universal it's not about the money it's about how the whole format war came about. They aren't going to let Sony BUY a format war.

In fact you and others keep asking about changes "so early," it's not that early. By the time the Studios that are exclusive start releasing in a neutral format the war will be close to a year old. It will compare a lot to the time frames of DVD and DIVX.

Most importantly Sony is paying for portions of software production costs. That timeframe is quickly coming to an end. When that is over, HD-DVD is going to look that much more enticing.

Again Universal will hold out the longest of the bunch. So if you want to see titles on both sides, the best thing to do is hope that Disney makes their switch SOONER rather than later. Because when DISNEY makes their switch, FOX & MGM will be right behind them.

Then it's just Sony and Universal. They will both make the switch to neutrality at the same time.

An all Neutral Studio world is best for consumers and best for either format in surviving. A format war just means nobody will win.

I dont need neutrality. On average 90% or so of content is or will be available on BD. Neutrality is pointless. Why would every studio put out the same title on 2 HD formats for the nex 10 years or so just because of the first 100 or 200 thousand hi def fans were split. Their goals is going to get 100 million BD or HD player out there and have them in every home. They dont want 50 million of one and 50 million of the other when basically it is the same thing.

Hey some of my predictions have been correct:

- 200 HD titles
- Bad discs getting through quality control (both formats)

Ok, that would be easier except that HD DVD is the current market preference. Why should the leader in the race drop behind just to let second place take the checkered flag? It's not that easy, there is too much money invested. Going neutral by all studios is the only choice that makes sense. Let the market decide. I see a lot of BD supporters saying exactly what you said here instead of supporting neutrality. Why is that? It's not that hard for a studio to produce product for both camps. I think the reason most BD supporters say what you did is because they know if the other studios went neutral HD DVD would probably win the format war.

WHY? WHY? WHY? I can not understand the logic of prolonging a war and having 2 formats. I dont want 2 formats. Nobody wants 2 formats. That is just pointless. I dont want a mix of red and blue cases on my shelves. HD has the lead now but its not a big lead and its still way to early. High Def formats havent even occupied 1% of SD players. So if the companies that make on average of about 50% of film box office grosses want one format, and then about 40% want both formats and the lonely 10% or so want to be the only one supporting a format then why drag it out.

They could switch because the reasons they chose BD turned out differently than expected. Perhaps promises were made that weren't kept. Perhaps reality has spoken louder than hype. Who knows?

What reality? The reality that the handful of HD fans on here are louder than the handful of BD fans on here? If movie companies executives jumped ship and changed their minds over the slightest blips on the radar (and thats what HD and BD are right now) then they wouldnt be good at their jobs. None of them are gonna overeact to anything just yet. Why would they?

If Universal announced going neutral at CES I wouldn't be the least bit concerned at this point. One studio going neutral is not going to make a difference. If it did, HD DVD would not have sold a single disk with only one exclusive large studio. Obviously thats not the case, since HD DVD is ahead in every single category. Exclusive studios has not helped BR at all. The biggest sellers have been the neutral studio titles.

I believe all studios will be forced to go neutral this year for one simple reason. If they don't, neither side will win and they will be stuck with dvd for another 10 years. That, is the very last thing they want to happen.

The studios are in this for 2 reasons.
1. Profit
2. Better protection for the product.

They don't care who wins, just as long as one does. They all thought it would be BR by a lanslide. That is not going to happen now and they will adjust their plans accordingly.

Just to be clear, your position is that Lions Gate will definitely be announcing neutrality at CES (by Janaury 12th or so). Is that right?

That same logic could be used to say that Disney shouldn't go neutral unless they are resigned to HD DVD winning or an even longer war. And a similar kind of thing for Universal, although them going neutral could be even more significant as far as giving the win to the other side.

--Darin

But there are 2 formats, with both camps having invested heavily. That's a fact that can't be changed at this point.


Wah. These are movies, not necessities.


So you admit HD DVD is ahead, but they should throw in the towel. Why not let the format in 2nd place concede to the winning side? You act like thousands of BR titles are already pressed to disc and whole libraries would have to be reworked. The fact is that both formats have a similar number of releases to date, so it's the same amount of rework. And the earlier BR titles need reworked anyway, it might as well be on HD DVD.


This is a circular question. You're asking it with respect to studios going neutral. Well, if a studio goes neutral, then they don't still want one format, do they?

Why can't you just be reasonable and admit that YOU don't want to have to replace YOUR player and YOUR library. There's no shame in picking the losing format. Somebody has to.

I believe that according to tsd2005 the end of the year numbers from videoscan will show that at the end of the year HD DVD was running at about a 1.5:1 advantage for software sales, although maybe that was a longer period and not the run rate right at the end. Is that what you consider one selling and the other not selling?

--Darin

Because they don't want a repeat of sacd/dvd-a.

The reality is that HD DVD is outselling BR despite all the alleged advantages and despite the fact that HD DVD was supposed to be behind by now. If both camps are just blips right now, then what difference does it make who switches? 90% studio support means NOTHING on paper. How much effort does it take to change your mind on paper? There are THOUSANDS of titles out there that haven't been pressed to ANY next gen disc yet and can just as easily be put on one as the other.

Who are you to judge what makes a movie executive good at his/her job? They made decisions based on the information available to them at the time. If they feel that the circumstances have turned out differently, and that it warrants rethinking their strategy, who are YOU to say that's a poor decision?

If all the studios went neutral this war would be over much quicker than if they didn't.

The studios tried to force a winner but they now are seeing that is not going to work. The consumer has screwed up their plans by supporting HD DVD in larger numbers than they ever expected and in much smaller numbers for BR than they expected.

It will now be decided by the consumer and that means by price.

Based on box office numbers it looks like Universal is going to have to dig deeper into their choices (and go with more older hits) if they really want to counter the other side. Of their top 5 box office titles from the last 4 years, they have already released 14 out of 20. For 2005 and 2006 they have already released 8 out of 10. All they have left of their top 5 box office titles from each of the years to release are:

2003: Bruce Almighty, American Wedding
2004: Meet the Fockers, Along Came Polly
2005: The 40-Year-Old Virgin
2006: Inside Man

While it is impressive that Universal would release 80% of their 5 top box office draws of the last 2 years in the first 9 months of the format, it makes it more difficult for them to continue at that pace. Much like a deck of cards where a lot of good cards come out at first. It means they can't come out later, even though some may interpret it as a great deck of cards. I will be interested to see how many of the above get announced at CES.

--Darin

You're right nobody really wants two formats, but at the same time we are talking about huge investments here. Why do you care if it's a bit more expensive for the studios to produce dual products? It's not your money and the additional sales gains will offset the cost. I don't think a company, on either side, should throw away all the capital they've spent in developing a format just because you want to color coordinate your collection. This ain't Queer Eye For The HD Guy. The fact is that not everyone supports the format that you support just the same as you don't support HD DVD. Let the consumer decide not the corporations. If HD DVD didn't exist we would probably be saddled with the substandard releases that constituted initial (and still plague some current) BD titles. You shouldn't want a victory to be bought and paid for, you should want the best format to win. Now is that HD DVD or BD? Well specs would say BD, but specs mean nothing in the real world. The only thing that means something is the quality of the product that is out in the market and, sorry to say, right now HD DVD is putting forth a better effort in that department. Sure BD has more CE support and studio support, but that means nothing if the product is not putting it's best foot forth and BD certainly isn't at this point. Yes BD has produced some very nice titles, but even now 6 months after launch they are producing some real stinkers much more frequently than the HD camp. As I said before, if all studios went neutral, HD DVD would win. They have name recognition, much better pricing (J6P is not going to by a PS3 as a standalone player) and better overall quality at this point. I find it funny that BD supporters use the "just wait" line constantly. It's like asking an official to add more laps after the race has started just to allow the 2nd place driver time to take the lead.

Taking the position for a second that HD DVD would win in the above scenario, would you agree that the war would be over quicker if Disney switched sides (abandoned Blu-ray) than if they went neutral?

We could also look at the scenario where you think the above would make Blu-ray the winner, but I'm guessing that isn't what you believe and so I'll stick with the HD DVD being the winner in your scenario unless you say you think it would be the other way around.

Studios are supposed to make decisions individually, so that is really what matters to a person at a studio trying to decide what they should do, other than some collusion that they might or might not get away with. If one person were making the decisions for all studios they could of course choose to have the format war be basically over tomorrow, by only supporting one side.

I doubt Disney will go neutral unless they are willing to give up the bandwidth and 50GB of space of Blu-ray, if they understand that going neutral would be more likely to bring about a scenario where those capabilities are not really available to them in the future (at least not for the majority of discs they will sell with high definition encodings).

--Darin

...and QUALITY!! I own both, but my HD DVD's look better across the board. And from the reviews I have seen, even BD only supporters admit that their titles are grainier....and I don't think it is just film grain....but even if it is it is too much grain for HT users to be happy with. Most consumers don't know what film grain is, and will likely see that as an inferior picture. Some grain is fine, but BD titles seem excessive. Feels to me like they are rushing them out to market too fast. The argument that BD buys you better quality has been proven wrong. Now if BD used newer codecs and did a better job mastering their releases THEN quaity would be a draw and price would decide.

In my view, BD supporters should THANK HD DVD for forcing BD studios to give a damn about quality! Competition is good here.

I agree somewhat with curlyjive, the poster above. One way to look at this is a) competition is good for many reasons and b) consumer have many choices when they are buying consumer products, why not HD DVD or BD.

Personally and professionally, I believe one optical disc format would be best for all of us, but consider this.

We all have to make choices, when you are buying a flat panel HDTV you can get a LCD or plasma or a gaming console where you need to decide on Nintendo, Sony or MS and when we select our programming source we need to decide on satellite or cable programming. HD DVD or BD is just another consumer choice.

Can both co-exist? Maybe so.

-Robert

I don't see any possibilty of any studio switching sides. Neutral yes, switching sides no. I also don't believe Disney going neutral alone will make much of a difference over the next year or so. They won't release any real animation titles in that time frame anyway.

I don't believe bandwidth is a huge conern for Disney since their big catalog titles are animation and don't need the extra bandwidth anyway.

I do believe that neutrality would benefit HD DVD more than it would BR. But, to be honest, I am more concerened about HD being accepted by the public than I am about who wins, BR or HD DVD. Lets let the market decide. I will accept whatever happens, obviously.