Sony is declaring “War is over!” Is it really over?
ACNielsen’s partner company VideoScan, an industry leader in collecting and analyzing DVD sales
information, reported that in January 2007, Blu-ray titles out sold HD DVD titles by a margin of 2 to 1.
The Blu-ray camp (Sony) immediately declared victory. David Bishop, president of Sony Pictures Home
Entertainment stated, “The message that we’re going to put out to the consumer now is, now it is safe to
make a choice. No more fence-sitting is needed.”
More good news for the Blu-ray (BD) camp! As of January 2007, an estimated 1.5 million devices worldwide
can play BD compared to just fewer than 200,000 HD DVD capable devices. Also, 19 of the top 20 selling
movies of 2006 are from studios that support Blu-ray. 16 are from studios that support Blu-ray exclusively,
3 from studios that support both formats and only one from a studio that supports HD DVD exclusively.
Seems the statement from David Bishop, “I think finally
everything that we knew going into this format has started to happen,” is right on point. Right?
Is the war indeed over? Not even close! This war will never end! This is just round two or of an
older war, and not the one you’re thinking of. Here’s the history lesson.
David Paul Greg is credited with inventing laserdisc technology in 1958 using a transparent disc. In
1969 Royal Philips (a BD supporter), developed a superior videodisc using a reflective mode disc. Philips
partnered with MCA and introduced LaserDisc in 1978; about 2 years after the Betamax /VHS war began. With
400 lines of horizontal resolution, vs. the 240-250 for VHS and Beta, LaserDisc offered far superior picture
quality. Not too bad for 1978, when you consider DVD which was introduced 18 years later, had 480 lines
of resolution. LaserDisc didn’t catch on, because, among other things, you couldn’t record on it and the
disk was the size of an LP (that’s a 12-inch long play record, for anyone who can’t remember what we used
before CDs). However, laser technology didn’t disappear; it had a rebirth with the compact disc, (that was
Philips and Sony getting together).
In the early 1990s two laser video technologies were developed to replace VHS. One was called
Multimedia Compact Disc by Philips and Sony, and the other Super Density Disc, (you guessed it) by Toshiba.
Fearing another lengthy format war, (Betamax vs. VHS raged on for almost 12 years, before Sony called “No
Mass!”), IBM brokered a compromise. The DVD format was the result. It was almost entirely the same as
Toshiba’s Super Density Disc, so it’s not hard to figure out which side profited most. But, before the ink
was even dry on the DVD format, both sides were back in the lab, Sony and Philips working on Blu-ray,
Toshiba working on HD DVD. So here we are, like a bad “B” movie, part II. End of the history lesson.
Who’s winning then? The math is pretty straight forward. On stand-alone players, HD DVD has outsold Blu-ray by a slight margin. 1.43 of the 1.5 million Blu-ray capable devices mentioned earlier are
Playstation3 gaming consoles. So it’s safe to say that most buyers purchased Playstation3 to play games.
They were not making a BD/HD DVD choice. Sure, lots of those Playstation3 gamers will spend the $20 - $40
a title to buy and watch Blu-ray movies. It’s always easier to close the add-on sale once a buyer has made
the initial purchasing decision, (think McDonalds, “Would you like to supersize that?”). If selling the
add-on is easier, then how tough will it be for the HD DVD side, with an estimated 10.5 million Xbox 360s
sold? If Xbox 360 owners want to experience high definition movies, they can go out and buy a Blu-ray player
for $599, or a Playstation3 for $499 (if they can find one), or drop $199 on the Xbox 360 add-on HD DVD
player. What choice would you make? The Xbox 360 add-on has out sold all Blu-ray stand-alone players from
all manufacturers combined, and if 14% of Xbox 360 owners spend the additional $199, BD’s lead in devices
is gone. One more thing, the Xbox HD DVD add-on is only good for playing movies, so you know for sure those
buyers are also going to buy movies.
On the movie title side in January 2007, 25 BD titles were released vs. 11 HD DVD titles (let’s call that
a 2:1 ratio). So Blu-ray should be outselling HD DVD 2 to 1. In total title sales, the ACNielsen / VideoScan
report has HD DVD still ahead of Blu-ray. The HD DVD CES 2007 press release indicated that HD DVD studios
expected title sales to grow 40 fold, to $600 million in revenue in 2007. That would put 2006 sales revenue
at $15 million. For the sake of argument, let’s assume that January was a big month for sales, total
revenue for HD DVD titles sits at $30 million and Blu-ray has pulled even with that. 2006 DVD sales are
about $24 billion, at $30 million in sales to-date; BD sales are 0.1% (that is 1/10 of 1%) of DVD yearly
sales. A drop in the bucket. So that ticker tape parade won’t happen anytime soon.
For signs that this format war is over, look for:
- Both sides get together and work out a shared format.
- One side, doing its best Roberto Duran impression calls “No Mass!”
- Blockbuster and Netflix both announce they will carry the Blu-ray Disc or HD DVD exclusively. Columbia House does the same.
- A new ultra high definition format comes to the consumer market (Fluorescent Multilayer Disc, Holographic Versatile Disc and Tapestry Media are standing by).
And when this format war ends, round III begins.
1 2 3 4 5 6 