Format War Hurts Sales

Few things irritate us more than stupid format wars. We thought they’d learned their lesson when they avoided a war with DVD, but, alas, no. This time, though, the electronics manufacturers may be paying the price. From the Denver Post:
“The fight between Blu-ray and HD-DVD, reminiscent of the 1980s battle between Betamax and VHS tape formats [is] shaping up as a business disaster for movie studios, electronics companies and retailers that had counted on a robust holiday selling season for the fancy new players – which cost $500 to $1,000 – and movies to play in them.

Technology companies have divided into two warring camps, each backing one of the formats. Attempts to come up with a single format collapsed last year, so the two sides decided to duke it out in the marketplace. As they do, consumers are mostly staying on the sidelines, causing sales to fall far short of initial projections.

A winner could still emerge, but experts say it’s just as likely that consumers, fearful of buying an expensive player that will turn out to be worthless, will just say no to high-definition discs. In the best case, analysts predict, the format war will go on for another year or so before a clear winner emerges, delaying an industry switchover to the improved discs.”

Any thoughts on which format will win? Or have they all shot themselves in the foot? —MEGHANN MARCO

New-age DVD players’ battle paused [Denver Post]

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  1. saintjohnson says:

    For individuals that already have Xbox360’s, the financial risk is less with the Xbox360’s HD-DVD add-on for $200.

    But this only ties the price of the PS3 base system that plays Blu-Ray at $500.

    (But there will only be a little over 1.5 Million units of the PS3 in the U.S. by Spring 2007. The estimated # of units sold in the U.S. of the XBox360 by Spring 2007 is $6 Million.)

    So standaalone Blu-Ray players, priced at $800 (via BBY) would have to drop a little more in price since the standalone HD-DVD player costs $500.

    It may come down to the gamers that love movies calling this fight. The Xboxers vs. The PSers

  2. Funklord says:

    Both formats are dead in the water. No one will buy, as they don’t want to be stuck with a bunch of betamax tapes. Even if the “war” was resolved, who wants to pay $1000 for a dvd player and $35 for a dvd disc, be it blu-ray or HD-DVD? For all that extra money, you get a slightly better picture (assuming you already have an expensive television set that cost thousands of dollars so you can play the discs). You also get a much heavier DRM hand dealt your way.

    By the time this is resolved, and by the time prices fall to a reasonable level, we’ll all either be downloading movies instead of buying them on disc, or a new technology will have replaced the dvd.

  3. Skeptic says:

    “…delaying an industry switchover to the improved discs.”

    Err, I’m not sure I’d call the new Crippleware discs “improved.” Improved from a copyright maximalist perspective, perhaps, and in terms of pixel resolution but there are some definite downgrades for consumers. Including built-in analog HD lockout on demand.

  4. lazyazz says:

    Ditto to Funklord. Interweb will win.

  5. Triteon says:

    It will be interesting to watch which one becomes the new Betamax; because knowledgable folk know Beta was the superior format.

  6. thrillhouse says:

    Awwww…. the poor movie industry. yep! the pooch is officially screwed. The only hope is A> one format somehow wins out over the other, B> someone comes up with a player that supports both formats (much like the DVD-RW / DVD+RW issue).

    Option C is where they both get screwed and no-one buys any of the crap. I’m going with C.

  7. MeOhMy says:

    Talk about being completely out of touch with your market (and reality). These guys really expected $500+ players without even a promise of longetivity to be a hot item?

    Even if you couldn’t get a decent DVD player for $50 these days it would be a ridiculous notion.

  8. Juancho says:

    I think Blu-Ray will win, not only because of of the PS3, but the fact that they own a movie studio. It is a moot point, though, as the consumer always loses.

    I think full downloading of DVD-quality movies with all the extras is a way off. It took until this June to actually kill off the VHS tape. The studios aren’t ready to deliver product in this format, and the infrastructure for data tranfsers isn’t nearly there. I know lots of people who still can’t get DSL-level Internet access.

  9. yamabushi says:

    unless MS starts including thier HD-DVD with the 360 hardly any of those 6 million will have it. meanwhile every techno-geek w/ a PS3 will have Blu-ray.

  10. Metschick says:

    Interesting article from slate, agreeing with what Funklord says.

    http://www.slate.com/id/2153877

  11. jorywoah says:

    I think the whole hesitation, atleast for me as a consumer (and the masses I’m sure), also exists in the fact that I also would have to upgrade to an HD ready television to maximize whichever player breaks away from the pack. The feud is interesting, but until I fork out for a new television – the format war isn’t really a priority.

  12. meanie says:

    I have no idea why people keep trying to compare this to vhs vs beta. This is totally minidisc vs DCC the latter of which people have all but forgotten about.

    The new formats offer almost nothing to the average joe and are way too simular to existing DVD tech to really stand out. I doubt either will will make much of a mark and be eclipsed by some downloadable option in the near future.

  13. enzo says:

    I guess I’m gonna be one of the few HD disc proponents, huh. Well, I bought the HD-DVD drive for the 360 when it came out and I love it. It’s such a huge upgrade in video quality I regretted not putting up $500 for the Toshiba player when it was released. I can barely go back to SD DVD.
    That said, I’m a much bigger fan of HD-DVD just because Sony isn’t involved. I don’t think it’s a wasted investment because they’re likely going to continue making HD discs for the next year or two, so plenty of movies will be released. There isn’t going to be any shortage of software for a while, and if HD-DVD does get thrown away, then I can purchase all those (still) beautiful looking discs at a discount. Not such a bad proposition.

  14. viriiman says:

    How about this scenario. Four years ago, my parents bought a 47in wide screen HD-ready projection TV. Had the best inputs at the time.

    The problem is that the TV lacks any sort of digital connection (DVI, HDMI). Because of this, if they tried to hook up a HD-DVD OR Blu-ray player, the best quality they could get is DVD quality.

    I am in no way affiliated with this site, but it sums up just about everything I feel about this format war:

    http://bluraysucks.com/

  15. enzo: I’m behind you with HD-DVD winning. Regardless of which one is right, or which one is better… it really … well..

    It comes down to this simple statement:

    “Well I gots me an HD teevee I guess that means I probably want an HD-DVD player.”

    Name recognition for the win.

  16. ChazB says:

    You don’t need a 360 to use the HD-DVD drive. You can use it on any windows XP computer by following the directions at http://uneasysilence.com/archive/2006/11/8303/. Basically, the drive is an OEM Toshiba HD-DVD drive in a USB enclosure. All you need is the drivers and a media player that’ll play HD-DVDs.

  17. woodenturkey says:

    “The problem is that the TV lacks any sort of digital connection (DVI, HDMI). Because of this, if they tried to hook up a HD-DVD OR Blu-ray player, the best quality they could get is DVD quality.”

    the 360 can do a 1080p with Component video cables. it was a software upgrade from last week. or could get a VGA cable with a DVI adapt.
    HDMI = DRM bla

  18. weave says:

    I dropped $500 on a Hi-Fi Betamax deck in 1983.

    I’ll never make that mistake again.

  19. Juancho says:

    Meanie makes an excellent point. DCC…it took me a minute to process back to that.

    MiniDiscs are killer for cheap live recording, however. Beats the hell out of DAT in terms of cost.

  20. SirNuke says:

    I personally feel that this war is more like the super-floppies in the mid to late 90s. By the time the Zip Drive had enough steam to potentially replace the 3.5 floppy drives, CD-Rs killed the entire super-floppy market.

    The big question is what format kills the High Def disk? Many people would probably say some type of downloadable format. In my opinion, broadband is in poor shape to support this (the trend away from net neutrality, low bandwidth [particularly upload speeds], and lack of competition between providers in many areas). I believe the format that will win will be a future format that places a huge emphasis on “always works, anywhere” mentality. I don’t believe any new format can offer the quality increase that DVDs offered over VCRs (even on the same TVs and Speakers). However, a well implemented downloadable format can offer advantages in portability. Of course, that portability could severally cut into movie studio’s profits, so it’s unlikely any of them are going to jump.

  21. Ben says:

    I will certainly wait and see what happens. I remember the LED watches of the 70’s, for what we paid for one basic time/date watch back then you can buy an entire “wrist-top computer” now.

    I love DVD’s because they are cheap and easy. I’m in no hurry to part with my money to “upgrade” just yet.

  22. I agree with Troy F.

    I can’t believe they were actually expecting a lot of people to run out and spend hundreds of dollars on new DVD players and TVs just because there’s a new format, especially when there isn’t a standard yet for high definition DVDs.

    Name recognition for the win.

    Double true.

  23. zibby says:

    I’ll never care enough about watching a friggin’ movie that I’ll need better than DVD. They can cram it.

  24. Jesse in Japan says:

    For consumers who don’t yet own HDTV, a DVD is perfectly fine.

  25. juri squared says:

    How much do you want to bet they’ll blame a lack of sales on piracy, not their own stupidity?

  26. I’d really have to upgrade my eyes before I bother upgrading my TV to HD, and I don’t care enough to bother with that.

  27. d0x says:

    Having owned both formats I can say that HD-DVD has the superior image quality since it uses more modern codecs it can fit better video in less space. I have since returned both players due to their high prices.

    I was planning on picking up the cheap yet nice HD-DVD drive for the xbox 360 after xmas but now that they are starting to offer HD tv shows and HD movies over Xbox Live im not sure if there is a reason too. It really depends on the library of content MS can gather on the service.

    The day 1 stuff was actually really good and they have worked out the launch day bugs on the service over the Holiday (wow) weekend.

    At the end of the day im not really wanting another disk format. While I fear losing true ownership over my media with digital distribution, the ability to have it all there whenever I want is nice and so far the pricing is decent but I wouldnt mind it to be a bit cheaper.

    I fear in terms of online distribution we will have to live with crazy DRM until the market gets a good foothold and maybe it will loosen from consumer outcry.

    I dont know if either HD format will ever take hold. Most consumers dont have HD-TV’s and the price isnt exactly mass market yet. When we see a 26 inch+ HDTV averaging around the same price as a 26 inch SDTV then things like this will take off but for now its a niche market. Most HDTV owners dont even have a clue and dont get HD channels from their cable companies, why would anyone expect them to drop another $500 + on a new player and then $25+ on new movies they may already own.

    Like I said above though HD-DVD is the best format here, not only is the picture better but the standard features are excellent and something Blu-Ray cant match. I really like how it can download new content so say if a Special Edition of a movie comes out with extra scene’s the HD-DVD player can download those instead of forcing you into buying the movie all over again like we do on DVD right now…

    Sorry that was so long winded and maybe oddly structed but ive been up for almost 24 hours catching up on Jericho in HD on my Xbox 360 and playing Zelda to death on my Wii.

  28. d0x says:

    @ Funklord

    The picture difference between HD and normal DVD is not small, in fact its quite a leap if your paying attention. When watching something in 720p you feel like your there, like you cant touch what your watching.

    @ Skeptic

    HDCP is disbled for at least 10 years according to studios by that time everyone will have HDMI HDTV’s and both formats DRM schemes will have been broken. In fact they already have to an extent, both HD-DVD and Blu-Ray disks are available on the net for download if you know where to look. They can be played on a PC even without a drive, or they can be streamed to an Xbox 360 over a home network provided you have Media Player 11 or Media Center…or Vista BETA.

    @thrillhouse

    Samsung and another company has already created dual format drives.

    @Troy

    When DVD first came out players were more then $1000 and didnt start dipping below $300 for a couple years after that and even then they were not reliable and did not have many standard features that a $60 dvd player has today. So thats not really an issue, new formats always cost more to offset R&D and new production costs.

    @Juancho

    If you read my other post you will see Microsoft is already offering standard and high def movies and tv shows over xbox live for the xbox 360.

    @jorywoah

    If your a gamer your missing out not having an HDTV, the difference between 480p and 720p is huge…1080p is BS though, it really isnt different from 720p when you get down to it.

    @viriiman

    HD-DVD has component video out, Blu-Ray does not.

    @SirNuke

    If you dont believe any format can offer the quality increase that dvd did over vcr then you havent seen much HD video or heard the audio. Its a pretty big leap, if you dont believe me compare the same video side by side. I did so this weekend with Jericho, I downloaded the SD and HD versions and compared and the difference was big enough that even my Girlfriend was impressed and thats saying something.

    @Ben

    The prices will drop, you can buy HD-DVD’s at Target for $20, and netflix rents them for no extra fee.

  29. How much do you want to bet they’ll blame a lack of sales on piracy, not their own stupidity?

    It’s not a bet if it’s a sure thing.     :(

  30. LintMan says:

    There actually was a minor format war over DVD’s – anyone remember DivX? http://www.penny-arcade.com/comic/1999/01/15 If you don’t, it was Circuit City and a bunch of Hollywood lawyer’s heavyhanded DRM attempt: you buy the disks as “no-return rentals”, and the DivX player would phone-home to authorize it for 24 hours of viewing, after which you could no longer watch it, unless you paid another fee, or paid an inflated purchase price to “own” it (though the player still needed to phone home to get the OK to play the disks you “owned”).

    IIRC, at least one or two major studios supported DivX and refused to release movies on DVD until DivX was dead and buried.

    As far as HD-DVD vs Blu-Ray, I’m wondering if the end result might be more like what happened with the DVD+RW vs DVD-RW battle: now everyone buys DVD+/-RW drives that support both formats, and you can’t even find a + or – only drive.

    Once prices drop, if one company manages to pull off a reasonably priced dual HD-DVD/Blu-Ray drive, who wouldn’t prefer that?

  31. viriiman says:

    woodenturkey: Possibly for the games, but as far as I know the signal it outputs isn’t the same quality as going through DVI or HDMI.

  32. viriiman says:

    d0x:

    The dual player drive was canceled with no reason.

    Again, while it may have component out, the quality is not the same as the DVI or HDMI. And not because it’s the analog vs digital argument, but because the component is down sampled.


    I’ve looked at the high def formats on DVD and then the “regular” DVD. I’m sure there is a difference, but the “AVERAGE” home user can’t tell the difference between the two. Hell, most people bring their high-def ready tv home, plug it in, and swear up and down that they have high-def. Convince them that there’s a difference.

  33. RobUsdin says:

    Blu-Ray and HD-DVD are both “interim” formats. Digital delivery has started in lo-res formats (aka iTunes) – it will only be a matter of time before we completely kiss shiny silver discs goodbye.

    –*Rob

  34. Holy crap, I thought I hit the wrong bookmark and went to /. instead of the consumerist…

    I agree that downloadable content will defeat Bluray and HDDVD. For those that counter with, “But there are a lot of people who don’t have even DSL speeds, etc.” Those same people aren’t going to pony up $500-$1000 for a new player and $35 a disc for content either. They’ll just stick with their DVDs. The rest of us scoff at the new formats and their anti-consumer features.

    The only danger with the new formats is the MPAA discontinuing the DVD format and forcing consumers to adopt the new DRM laden formats. That may just cause an end to civilization as we know it though.

  35. iameleveneight says:

    I’ve said it since the beginning. Both formats are not going to succeed. Even if one does come up over the other its not going to beat out DVD yet and its going to end up a high end luxury item like Laserdisc was.

    DVD is too new for a lot of people and I see a lot of Joe Publics being not ready to change over to a new format just yet and the fact that there are competing formats just compounds the situation further.

  36. Jon R. says:

    My apologies if I repeat something mentioned above; I didn’t read all of the previous comments. First, HD DVDs (in the generic sense) have a better picture quality than regular upconverted (to 480p) DVDs, but not nearly as much difference as there is between standard def and HD. If you have HBO in high def (i.e., from DirecTV) then you are already watching movies in 720p (not sure if native 1080i is available).

    Second, both BluRay and HD-DVD are dead in the water. Consumers will sit on the fence and avoid both systems like the plague (which they are). Before there is a clear winner, a superior technology (i.e., a holographic medium without moving parts) will be commercialized. That will offer a clear technical advantage to consumers. Furthermore, the ability to download movies in a quality format is just getting started. If the studios allow high-def movie downloads and don’t cripple them with completely restrictive DRMs then downloaded movies will gain popularity.

    There are relatively few movies that I watch more than once. This is one of the fundamental differences between movies and music. Most consumers are satisfied renting most movies and purchasing only the ones that they want to watch several times.

  37. MeOhMy says:

    @Dox:
    “When DVD first came out players were more then $1000 and didnt start dipping below $300 for a couple years after that and even then they were not reliable and did not have many standard features that a $60 dvd player has today. So thats not really an issue, new formats always cost more to offset R&D and new production costs.”

    I was referring not specifically to the high price, but to the notion that anyone believed these would be a hot holiday item.

    New tech, expensive, not standardized and could be extinct by Christmas? I think I’ll run out and buy one for my dad!

    It’s hard to believe anyone’s head could be that far up their you-know-what, but then again this is all connected to the recording industry so I suppose I can’t be all that surprised.

  38. Mr. Gunn says:

    I think Sony’s garnered enough ill-will to kill off blu-ray, studio backing or not. As far as HD-DVD, well, some people will get it through their xboxes, but most people won’t, and by the time everyone has HDTVs, everyone will be downloading stuff. So put me down for a vote for neither.