Blu-ray Disc vs. HD DVD Round II

It’s the holiday season again; time to hit the stores looking for that special something for that special someone. An estimated $13.5 billion will be spent on audio / video products during the Christmas buying frenzy. So ring the bell and pull up a chair for round II of the Blu-ray vs. HD DVD battle as they vie for the title of high definition replacement for DVD. Our last look at this battle was in January 07; here is how things are shaping up now.

Market penetration for Blu-ray and HD DVD movie titles were still minuscule by the end of the 2006 Christmas buying season compared to DVD sales. Although both sides have seen good growth in sales, Blu-ray sold about 2.6 million titles to 1.4 million for HD DVD in the first 9 months of 2007, when compared to the billion + DVD title sales, those number are still small. It is also difficult to ascertain the exact number of “real” Blu-ray and HD DVD title sales, as accusations fly from both camps that the other is playing games with the numbers, via free movie offers and other shenanigans.

On the hardware front, the HD DVD is closing in on the 750,000 mark for stand-alone players, while there are an estimated 2.7 million Blu-ray capable devices (of which 2.5 million are PlayStation 3 game consoles) in U.S. households. With the sizeable lead in devices capable of playing Blu-ray disc, and a greater availability of titles that people what to see (the count was 19 to 4 of the top 20 movies of 2006 available on Blu-ray and HD DVD respectively), you would expect Blu-ray to be putting a 5 to 1 or better beat down on HD DVD title sales. Looks like despite the claims Sony was making in January, PS3 owners are not running out and buying Blu-ray movies.

More changes since January, Paramount and DreamWorks have both announced that they will support HD DVD exclusively for the next 18 months. Blu-ray supporter and consumer electronics heavyweight Samsung who had hinted they would introduce a Blu-ray / HD DVD player if the two sides could not reach a compromise, has made good on its promise (threat), and introduced the BD-UP5000, a combo player. Samsung has positioned this component as their top of the line model. Another Blu-ray supporter, LG, who introduced a combo player late in 2006, is slated to release a 2nd generation combo player shortly. HD DVD has added a second player manufacturer, Venturer, to its camp.

An entry level HD DVD can be purchased for under $250 from most retail outlets. Walmart has broken the $200 mark, selling a Toshiba HD DVD model at $198, and reportedly, sold some for $99 as in-store “Black Friday” special. Even though Blu-ray players have finally dipped below the $400 mark, K-Mart has decided to sell only HD DVD stand-alone players, citing the higher price of stand –alone Blu-ray players as the motivation for the decision.

Jupiter Research, a leading research firm in the area of emerging consumer electronics, recently published their finding on consumer feelings about upgrading to either HD DVD or Blu-ray. The results of the study comes as no surprise to me thinking back to the Beta – VHS battle, and the other technology skirmishes that have taken place over the years. The study found that the availability of HD content has little impact on consumer motivation to upgrade, refuting the assertion of the Blu-ray camp that content availability would propel Blu-ray to a position of dominance. The real battle for Blu-ray and HD DVD is to unseat the champ. The champ (DVD) is not going away without a fight. It seems consumers are opting for lower cost up-converting DVD players (DVD players that can up-convert the regular 480 line DVD resolution, to 720p, 1080i and in some cases 1080p) rather than HD DVD or Blu-ray.

If you have been sitting on the fence waiting to see what happens, I still feel it’s safe to choose either format as they will both be around for some time. I conceded from the outset that HD DVD has been doing what it takes to be the dominant format, and that still holds true. Entering this crucial time of this format war, they have placed themselves within striking distance. Up-converting DVD players range in price from about $59 to $199 on the retail floor. With everyday prices for entry level HD DVD players at the sub $250 mark, and Walmart dipping below the $200 every so often, HD DVD is in position for an outright win if everything goes their way. The one thing that will prevent an outright win, regular DVD movies still cost far less on average than their HD DVD opponents. The champ’s reign is not over yet!

We will revisit this topic once the Christmas season sales numbers have been tallied.