Hollywood’s fight over which high-definition technology will replace standard DVDs seemed to be nearly over on Friday, with Warner Brothers siding with Sony-backed Blu-ray over Toshiba's HD DVD. Back in December of 2006 (CLICK), your humble editor voted with his credit card, paying about $1K for a Panasonic Blu-ray player. I figured the format had a good chance of winning because it was supported by both Sony and Panasonic, who had been on opposite sides in the Betamax vs. VHS war.
In some ways, the hi-def disc fight is a replay of the VHS versus Betamax battle of the 1980s. This time, however, the Sony product appears to have prevailed.
Behind the Warner decision are fears about the sagging movie industry, as piracy, competition from video games and the Internet, and soaring costs have cut into profitability. Analysts predict that domestic DVD sales fell by nearly 3 percent in 2007, partly because of confusion in the marketplace over the various formats.
HD DVD is not dead yet. Paramount and Universal continue releasing their movies exclusively on HD DVD, as does DreamWorks Animation. Warner Brothers will continue to release titles on both formats until the end of May.
But by supporting Blu-ray, Warner Brothers, the largest player in the $42 billion global home entertainment market, makes it next to impossible for HD DVD to recover.
Consumers have been largely sitting on the sidelines, waiting to buy high-definition players until they see which will have the most titles available. Retailers have complained about having to devote space to three kinds of DVDs. The movie business has delayed tapping a lucrative new market worth billions. High-definition discs sell for a 25 percent premium.
“Consolidating into one format is something that we felt was necessary for the health of the industry,” said Barry M. Meyer, chief executive of Warner Brothers. “The window of opportunity for high-definition DVD could be missed if format confusion continues to linger.”
In addition to Sony, a consortium of other electronics makers back Blu-ray. For Sony, Warner’s decision is a chance to rewrite history: the company faltered in its introduction of Betamax in the consumer market in the 1980s. Many analysts say the HD DVD players now risk becoming the equivalent of Betamax machines, which died out in large part because it became harder for consumers to find Betamax movies as studios shifted allegiance to VHS.
With Warner on board, Blu-ray now has about 70 percent of the market. Walt Disney, 20th Century Fox, MGM, Lionsgate and, of course, Sony are all on Blu-ray. Warner Brothers has some of the bigger releases set for 2008, including “Speed Racer,” the Batman sequel “The Dark Knight” and the sixth Harry Potter installment.
“This doesn’t necessarily kill the HD DVD format, but it definitely deals it a severe blow,” said Paul Erickson, an analyst at the NPD Group’s DisplaySearch. “When a consumer asks a store clerk which format to buy, that clerk is now going to have a hard time arguing for HD DVD.”
Warner Brothers has been courted for months by both sides. Toshiba dispatched Yoshihide Fujii, the executive in charge of its HD DVD business, to the studio three times in recent months. Sony has aimed even higher: Howard Stringer, the conglomerate’s chief executive, has leaned on Jeffrey Bewkes, the new chief executive of Time Warner.
Money was an issue. Toshiba offered to pay Warner substantial incentives to come down on its side — just as it gave Paramount and DreamWorks Animation a combined $150 million in financial incentives for their business. Kevin Tsujihara, president of the Warner Brothers Home Entertainment Group, declined to comment on whether any payments were offered for support of Blu-ray.
Which high-definition technology is better has been the subject of intense debate in Hollywood and electronics circles for years. HD DVD players have been less expensive than Blu-ray players, but Blu-ray discs have more storage space and more advanced protections against piracy. Both versions deliver sharp resolution.
Consumers were inundated with marketing from both sides during the recent holiday season. Wal-Mart, as part of a temporary promotion, offered Toshiba players for under $100. Sony and its retailing partners, including Best Buy, responded by dropping prices on Blu-ray players, although not to the same level. Blu-ray players can now be purchased for under $300.
Still, Blu-ray was emerging as a front-runner as early as August. Blu-ray titles have sharply outsold HD DVD offerings, and some retailers started stocking only Blu-ray players. Blockbuster said last summer that it would carry Blu-ray exclusively. (info from The New York Times)
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