Tuesday, February 19, 2008
The fat lady sang. The other shoe dropped.
HD DVD is dead. I predicted it right.
This report has been updated several times since the original posting early Tuesday morning.
The New York Yankees' most quotable catcher Yogi Berra said, "it ain't over 'til it's over."
Well, it's over for HD-DVD, and it's time for me to brag a bit. In December, 2006, right in this blog, I predicted that the Blu-ray hi-def DVD disk format backed by Sony, Panasonic and most of the movie makers would defeat the competing HD DVD format developed by Toshiba and backed by a few studios, plus Intel and Microsoft.
During 2007, Hollywood and the consumer electronics product makers were horrified when sales of DVD movies and players dwindled as consumers waited for the format war to end. The industry had hoped and expected shoppers to buy the new hi-def movie players to use with the very popular flat screen hi-def TVs.
Both hi-def disk formats could provide excellent pictures. Blu-ray players were more expensive, but Blu-ray disks could play longer. People were afraid to invest money to back the loser, in a replay of the VHS vs. Betamax VCR format war in the 1970s and 80s. Back then, Sony lost to Panasonic.
A few players were introduced that could provide some insurance against obsolescence by playing both formats, but they were much more expensive than single-format players. HD DVD players were made only by Toshiba, not an important name in consumer electronics. OTOH, Blu-ray players were available from big names like Sony, Panasonic, Pioneer, Philips, LG, Mitsubishi, Sharp and Samsung. Blu-ray disks could also be played in millions of Sony PlayStations that were bought by people who did not particularly care about movies, but ended up with the ability to play Blu-ray anyway. Eventually, many PS3 owners bought the new movies.
Toshiba said about one million HD DVD players were sold globally, including players that can be attached to Microsoft Corp.'s Xbox 360 videogame console. That was still far short of Blu-ray's 6.3 million players, including PlayStation 3. In the fourth quarter of last year, Blu-ray made up 96 percent of hi-def DVD player sales in Japan.
Many writers (BUT NOT ME) wussed-out and sat on the fence, advising readers to hang onto their credit cards until one side won.
Last year, movie renter Blockbuster decided to cut back on HD DVD and back Blu-ray. Then Target stores did the same. Early this year, Warner Bros. -- the huge studio that had been making movies in both formats -- grew some cojones and decided to back Blu-ray exclusively to try to give a jolt to the business. And this month, Netflix, Sam's Club, Wal-Mart and Best Buy joined the growing Blu team. Outside the US, Blu-ray has had a wide lead over HD-DVD. Porn film makes initially backed HD DVD, and now blue movies will be on Blu-ray.
Toshiba kept a stiff upper lip during the growing defections, made huge price cuts, and aired an expensive Super Bowl commercial; but it couldn't stop the bleeding.
Finally, this morning Toshiba announced its withdrawal from the high-definition DVD business, conceding defeat to Sony. Paramount and Universal were the only major movie studios still supporting HD DVD at the end, and now they're free to make Blu-ray flicks.
Universal (like NBC, part of General Electric), wasted little time. Just a few hours after Toshiba’s concession statement, the studio’s home entertainment unit president said Universal will now begin Blu-ray production. “The path for widespread adoption of the next-generation platform has finally become clear,” stated Craig Kornblau. “Universal will continue its aggressive efforts to broaden awareness for hi-def’s unparalleled offerings in interactivity and connectivity, at an increasingly affordable price. The emergence of a single, high-definition format is cause for consumers, as well as the entire entertainment industry, to celebrate. While Universal values the close partnership we have shared with Toshiba, it is time to turn our focus to releasing new and catalog titles on Blu-ray.”
Don't be surprised to hear a similar announcement on Wednesday from Paramount and its affiliate DreamWorks Animation, which makes the popular Shrek films. They came out in support of HD DVD last summer.
Toshiba said it planned to end sales of its HD DVD machines by the end of March, clearing the way for the Blu-ray format to become the industry standard. "We carefully assessed the long-term impact of continuing the so-called next-generation format war and concluded that a swift decision will best help the market develop," said Toshiba chief executive Atsutoshi Nishida. Toshiba will still make laptops and nuclear reactors and other products, but had hoped that HD DVD would make it a power in the consumer electronics business.
Besides ending sales of stand alone hi-def players, Toshiba said it would stop volume production of HD DVD disk drives for computers. It will also assess whether to keep making PCs with integrated HD DVD drives. The company will continue to provide support for people who have already bought HD DVD players and recorders.
For those of you unfortunate folks who made the wrong decision, you'll still be able to use your Toshiba boxes to play your collection of HD DVD and standard DVDs, but they'll never be able to play the winners.
It's another failed format, like Circuit City's nearly forgotten DIVX (Digital Video Express).
Back in 1997 the company and some movie studio shysters devised a Pay-Per-View scheme for watching movies on your DVD player. Circuit City hoped to collect money every time a movie was played at home.
The players were sold by CC and a few other retailers and were more expensive than regular DVD players. The actual movies were less expensive than buying. Prices were as low as $4.49, and that price paid for unlimited viewing in a 48-hour period. To watch the movie after that time, a person had to reactivate the viewing period with the DIVX player connected to Circuit City's computer though a phone line, and enter a credit card number. The advantage over regular rentals was that no return trip was necessary, and the dead disk could be used as a drink coaster,or to shim up a wobbly table.
Whether due to public pressure, or lack of industry support, Circuit City announced the demise of DIVX in 1999, after blowing through $114,000,000. Customers could still view all their DIVX discs and were given a $100 refund for every player that was purchased before June 16. Disc prices dropped from $4.49 to $1.99, and then to 99 cents. All discs that were unsold at the end of the summer were destroyed. I wonder how low HD DVDs will go.
All is not rosy for Blu-ray, however.
During the nearly two years that people avoided investing in either format, other competition appeared. The big advantage of the DVD over broadcast and cable has been that the viewer can choose when to watch which movies. This advantage has been eroded by video-on-demand from cable companies, and many VOD movies are now in hi-def. Comcast, for example, is the country's biggest cable company, and plans to offer more than 1,000 hi-def movies this year. Many cable companies, and the satellite video services, offer a constantly expanding array of non-VOD hi-def channels, too.
Last week Apple improved its Apple TV box to handle hi-def rental movie downloads from the Internet. Microsoft's Xbox 360 game console can shows downloaded hi-def movies. However, with present technology, it takes a long time to download a hi-def movie, and lots of people still like to have rows of plastic boxes on the movie shelf.
So, until downloads become a big threat, and with no need for Blu-ray makers Sony and Panasonic to compete against HD DVD, they can compete against each other, just like they did in the days of Betamax vs. VHS.