Originally Posted by nzk
I know that they issued a statement that they'll see how Q4 goes financially, but aren't they leaning towards HD DVD? They've released a bunch of titles on HD DVD exclusively, and it's been said that HD DVD is more profitable even with less units sold. In that case, isn't it just a matter of time?
Here's the recent Twice interview with Warner president Ron Sanders
Here's some interesting quotes:
We're talking to both sides and it's crazy right now. We remain committed to both for the time being. We'll see how the fourth quarter plays out. The consumer is still kind of divided, and we still believe that we should offer the content in both formats. Now, we will watch the marketplace very closely, and see how it plays out, but for now we are supporting both.
...Toshiba is getting very, very aggressive on pricing, which is putting pressure on Blu-ray player manufacturers to bring prices down. As a content company we just want more hardware in the homes. So what ever drives more hardware is good to see. Right now it looks like there is price pressure on both sides because there are two formats more pressure than there would be if there was only one format. So, for our interests, more razors means we'll sell more razor blades down the road.
Our top seller to date has been 300, and before that it was Planet Earth, and before that was The Departed. We have had the top-selling HD title since we released The Departed at the Oscars.
By Christmas, we'll probably do half a million units in high definition for 300, so the marketplace is off and running. It's becoming meaningful on a title basis
I think with Blu-ray 2.0 coming this fall, we are going to see a lot more Web-enabled content coming from everyone. Consumers want it...
I think there is going to be a pent-up demand that is going to be very interesting to watch once [Web-enabled Blu-ray] products launch into the market.
In reviewing these statements probably nothing will happen until Warner gets to evaluate the results of the holiday season. They will carefully watch the trend in player sales driven by aggresive pricing. If they are smart they'll pay particular attention to standalone players sales. They are undoubtedly also waiting on Wal-Mart to weigh in. Wal-Mart had planned to make an announcement by mid-August with regard to their approach to marketing high definition players. I suspect that the unexpected Paramount defection has caused Wal-Mart to defer that announcement until trends become clearer.
Warner will also evaluate how quickly consumer demand for HD discs grow. They've already stated that they think that "the marketplace is off and running". This growth in demand is very important. If it takes off quickly this season that would put Blu-ray at a distinct disadvantage, because they have limited production facilities and their yields of BD-50 discs is marginal.
This yield problem was particularly evident in 2006. Even though demand for Blu-ray discs was very limited apparently they were still not in a position to produce sufficient yields of BD-50 discs. Despite the advertising hype about superior capacity, virtually all Warner discs produced in 2006 were BD-25s with no advanced Interactive features.
So getting back to growing demand, what does Warner do if they want to release large quantities of long playing, feature-rich, blockbuster movies? After all, Warner admits Web enabled Interactive features is something consumers want. They can't do this on BD-25s.
There's little doubt that Sony is currently subsidizing the cost to produce BD-50s for Warner, but should the demand grow into the millions Warner must consider what will happen when the subsidy runs out. More importantly Warner must be assured that there is ample production capacity to meet their disc demand.
There is no question that currently Warner remains format neutral. However, I think the trends in player pricing, the demand for more feature-rich interactivity, and serious production Blu-ray constraints both in lines of equipment, yield and cost effectiveness, is likely to give HD DVD an edge as Warner looks to the future.