http://www.startribune.com/535/story/1331648.html
From my local newspaper. Interesting article because Target has it's global HQ here in Minneapolis and is leaning strongly towards Blu-Ray.
Technology format feud a Great DiViDe
HD-DVD or Blu-ray? Retail giants might settle a costly clash over the future of video players before the holiday shopping season.
By Chris Serres, Star Tribune
Last update: July 29, 2007 - 9:29 PM
Ready for a rerun?
Hollywood movie studios and technology manufacturers might have learned a lesson from the VHS-Betamax videocassette war of the early 1980s, but instead it looks like a repeat is getting under way.
As was the case 20 years ago, two competing and incompatible technologies have emerged for viewing home movies. In one camp are the HD-DVD players, manufactured by Toshiba and supported by the likes of Microsoft, Intel and other technology heavyweights. On the other side are Blu-ray players, pioneered by Sony and backed by most of the major Hollywood studios.
High-definition DVDs, with their sharper images and more room for interactive features, were supposed to kick-start movie sales. But that hasn't happened. Fearful of shelling out hundreds of dollars for technology that might soon become obsolete, many movie buffs are staying on the sidelines.
Big-box retailers, determined to eliminate customer confusion before the holiday sales season, are beginning to pick sides in hopes of forcing a resolution. Since June, both Target Corp. and Blockbuster have thrown their weight behind the Blu-ray format. If other retailers follow their lead, HD-DVD could become the next Betamax, say technology experts.
The big wild card is Wal-Mart Stores, the world's largest retailer, which so far has refused to pick sides. However, there is speculation among technology watchers that Wal-Mart has been buying massive numbers of HD-DVD players, which often cost half as much as Blu-ray players, and is preparing a big holiday marketing push.
High-definition DVDs are expected to represent more than 40 percent of all DVD sales nationwide by 2012, up from 4.2 percent this year, according to Adams Media Research, an entertainment research and consulting firm in Carmel, Calif.
"It's in everyone's interests to have one, or the other, format prevail," said James McQuivey, principal analyst at Forrester Research in Cambridge, Mass. "Because until one does, consumers will just throw up their hands and say, 'I can't decide.' "
The first Toshiba HD-DVD players hit the market in April 2006, while the first Blu-ray player was introduced three months later.
Their key selling points are storage capacity and picture quality. For instance, Blu-ray discs have up to 10 times more storage space than traditional DVDs, which gives extra capacity for DVD extras such as "behind the scenes" interviews. And both formats offer a high-definition picture that is crisper and brighter than standard DVDs.
Though the HD-DVD camp initially had the upper hand, the balance has shifted somewhat in recent months as more studios release films for Blu-ray. Seven of the eight major studios, including Disney, Fox and Sony, are supporting the Blu-ray format.
Blockbuster, the largest U.S. movie-rental chain, said Blu-ray rentals have been more than double those of its rival.
"We were just following the customers," said Randy Hargrove, a company spokesman, explaining the company's decision to support Blu-ray.
But with so much money at stake -- DVD sales in the United States topped $16 billion last year -- Toshiba is not about to back down. This week, for instance, Microsoft said it would trim the price of an HD-DVD player add-on for its Xbox 360 video game console and give away movies with the player, in an effort to support the format. The announcement came one day after Target said it would promote Blu-ray.
Target would not say why it decided to sell Blu-ray players, but a spokeswoman said the retailer isn't proclaiming a preference for one format over another. Target also sells the HD-DVD add-on for the Xbox 360.
"We are simply merchandising Blu-Ray hardware as our initial foray into the category," said Brie Heath, a Target spokeswoman.
HD-DVD format also has more support from computer hardware manufacturers. Hewlett Packard, Toshiba and Gateway have all agreed to put HD-DVD players in their laptop computers. Toshiba has announced that next year all of its laptop computers will have HD-DVD drives.
But Toshiba's HD-DVD has another, more obvious advantage -- price. At $299, the lowest-price HD-DVD player costs about $200 less than the lowest-price Blu-ray player. The HD-DVD camp is hoping that its lower-priced format will have appeal at a time when high fuel prices, rising interest rates and a depressed housing market are eroding people's spending power.
"What drove the DVD business is when the price point [for the players] fell below $200," said Ken Graffeo, an executive vice president at Universal Studios and co-president of the HD-DVD Promotional Group. "We're already nearing those levels."
McQuivey of Forrester Research foresees a showdown this fall, but not necessarily an outcome.
Wal-Mart could choose to offer the lower-priced HD-DVD to appeal to its more price-conscious customers, while Target will put its marketing muscle behind Blu-ray format, which has more movie titles.
"We may not resolve this for another year," he said.
And ultimately, the arrival of high-definition DVD players may not do much to rescue sluggish movie sales, said Jan Saxton, vice president at Adams Media Research. Many people have built large libraries of DVD movies over the past decade, and they are compatible with the new players. So, instead of buying new movies, they are simply inserting their old ones in the new players, Saxton said.
Overall, households who own high-definition players are buying on average about 12 DVDs a year. That's less than half the number of movies purchased by the new DVD owners in 1998, a year after the standard DVD player was launched, according to Adams Media Research.
"HD and Blu-ray will not have the impact at retail this year that the movie studios were hoping for," Saxton said.
Chris Serres 612-673-4308 cserres@startribune.com
© 2007 Star Tribune. All rights reserved.
From my local newspaper. Interesting article because Target has it's global HQ here in Minneapolis and is leaning strongly towards Blu-Ray.
Technology format feud a Great DiViDe
HD-DVD or Blu-ray? Retail giants might settle a costly clash over the future of video players before the holiday shopping season.
By Chris Serres, Star Tribune
Last update: July 29, 2007 - 9:29 PM
Ready for a rerun?
Hollywood movie studios and technology manufacturers might have learned a lesson from the VHS-Betamax videocassette war of the early 1980s, but instead it looks like a repeat is getting under way.
As was the case 20 years ago, two competing and incompatible technologies have emerged for viewing home movies. In one camp are the HD-DVD players, manufactured by Toshiba and supported by the likes of Microsoft, Intel and other technology heavyweights. On the other side are Blu-ray players, pioneered by Sony and backed by most of the major Hollywood studios.
High-definition DVDs, with their sharper images and more room for interactive features, were supposed to kick-start movie sales. But that hasn't happened. Fearful of shelling out hundreds of dollars for technology that might soon become obsolete, many movie buffs are staying on the sidelines.
Big-box retailers, determined to eliminate customer confusion before the holiday sales season, are beginning to pick sides in hopes of forcing a resolution. Since June, both Target Corp. and Blockbuster have thrown their weight behind the Blu-ray format. If other retailers follow their lead, HD-DVD could become the next Betamax, say technology experts.
The big wild card is Wal-Mart Stores, the world's largest retailer, which so far has refused to pick sides. However, there is speculation among technology watchers that Wal-Mart has been buying massive numbers of HD-DVD players, which often cost half as much as Blu-ray players, and is preparing a big holiday marketing push.
High-definition DVDs are expected to represent more than 40 percent of all DVD sales nationwide by 2012, up from 4.2 percent this year, according to Adams Media Research, an entertainment research and consulting firm in Carmel, Calif.
"It's in everyone's interests to have one, or the other, format prevail," said James McQuivey, principal analyst at Forrester Research in Cambridge, Mass. "Because until one does, consumers will just throw up their hands and say, 'I can't decide.' "
The first Toshiba HD-DVD players hit the market in April 2006, while the first Blu-ray player was introduced three months later.
Their key selling points are storage capacity and picture quality. For instance, Blu-ray discs have up to 10 times more storage space than traditional DVDs, which gives extra capacity for DVD extras such as "behind the scenes" interviews. And both formats offer a high-definition picture that is crisper and brighter than standard DVDs.
Though the HD-DVD camp initially had the upper hand, the balance has shifted somewhat in recent months as more studios release films for Blu-ray. Seven of the eight major studios, including Disney, Fox and Sony, are supporting the Blu-ray format.
Blockbuster, the largest U.S. movie-rental chain, said Blu-ray rentals have been more than double those of its rival.
"We were just following the customers," said Randy Hargrove, a company spokesman, explaining the company's decision to support Blu-ray.
But with so much money at stake -- DVD sales in the United States topped $16 billion last year -- Toshiba is not about to back down. This week, for instance, Microsoft said it would trim the price of an HD-DVD player add-on for its Xbox 360 video game console and give away movies with the player, in an effort to support the format. The announcement came one day after Target said it would promote Blu-ray.
Target would not say why it decided to sell Blu-ray players, but a spokeswoman said the retailer isn't proclaiming a preference for one format over another. Target also sells the HD-DVD add-on for the Xbox 360.
"We are simply merchandising Blu-Ray hardware as our initial foray into the category," said Brie Heath, a Target spokeswoman.
HD-DVD format also has more support from computer hardware manufacturers. Hewlett Packard, Toshiba and Gateway have all agreed to put HD-DVD players in their laptop computers. Toshiba has announced that next year all of its laptop computers will have HD-DVD drives.
But Toshiba's HD-DVD has another, more obvious advantage -- price. At $299, the lowest-price HD-DVD player costs about $200 less than the lowest-price Blu-ray player. The HD-DVD camp is hoping that its lower-priced format will have appeal at a time when high fuel prices, rising interest rates and a depressed housing market are eroding people's spending power.
"What drove the DVD business is when the price point [for the players] fell below $200," said Ken Graffeo, an executive vice president at Universal Studios and co-president of the HD-DVD Promotional Group. "We're already nearing those levels."
McQuivey of Forrester Research foresees a showdown this fall, but not necessarily an outcome.
Wal-Mart could choose to offer the lower-priced HD-DVD to appeal to its more price-conscious customers, while Target will put its marketing muscle behind Blu-ray format, which has more movie titles.
"We may not resolve this for another year," he said.
And ultimately, the arrival of high-definition DVD players may not do much to rescue sluggish movie sales, said Jan Saxton, vice president at Adams Media Research. Many people have built large libraries of DVD movies over the past decade, and they are compatible with the new players. So, instead of buying new movies, they are simply inserting their old ones in the new players, Saxton said.
Overall, households who own high-definition players are buying on average about 12 DVDs a year. That's less than half the number of movies purchased by the new DVD owners in 1998, a year after the standard DVD player was launched, according to Adams Media Research.
"HD and Blu-ray will not have the impact at retail this year that the movie studios were hoping for," Saxton said.
Chris Serres 612-673-4308 cserres@startribune.com
© 2007 Star Tribune. All rights reserved.
