Blu-ray Disc vs. HD DVD Epilogue

The battle between Blu-ray Disc and HD DVD to replace DVD just keeps getting more and more interesting.

The HD DVD camp concluded a good 2007, convincing 2 movies studios to support HD DVD exclusively, and capturing a little better than 50% market share in the battle to become the high definition replacement for DVD. Then on Friday January 4, 2008, all the Hi-5’s and backslapping came to an abrupt end at camp HD DVD with an ill timed (or perfectly timed for camp Blu-ray) announcement from Warner Bros. Just days before the beginning of the 2008 Consumer Electronics Show (CES), Warner Bros. with its 20% plus share of the home video market, announced that it would no longer support HD DVD and would go exclusively with the Blu-ray Disc format. Reeling from the announcement Toshiba hastily cancelled its HD DVD press conference at CES 2008.

Almost every consumer electronics journalist, website and blog was quick to proclaim that the format war was over. Blu-ray Disc has won and HD DVD is dead, with the count of major studios supporting each format now 5 to 2 in favour of Blu-ray. The week following the Warner announcement, Blu-ray devices comprised 90% of all HD video hardware sales. Indeed the war was over and Blu-ray was victorious.

The number everyone had been quoting came from the market research company NPD Group, who were quick to remind everyone that numbers from one week do not indicate a long term trend, and there were a series of mitigating circumstances in play that week affecting the device sales numbers. Many Blu-ray manufacturers (Sony, Samsung etc.) began promotions that week packaging Blu-ray Disc players and movies with the purchase of an HDTV. Many web sites trying to get more mileage out of the Warner announcement, reported that the lack of new HD DVD title announcements and the cancelation of the CES press conference, was a sign that Paramount and DreamWorks would exercise an out clause in their agreement with Toshiba, and support Blu-ray exclusively. Also, the instant rebate Toshiba had been running ended on January 5, 2008 effectively pushing the final cost to the purchaser back up. Another factor is that with each major announcement of support for one camp or the other, some fence sitters will decide that they have enough information to finally make a choice and make a purchase.

Paramount and DreamWorks have announced that they still support HD DVD and have no plans to change that. On January 13, 2008 Toshiba announced price cuts to HD DVD players, dropping the MSRP on entry level players to $149.99, and the price of the top-of-the-line HD-A35 to $299.99. By the end of the following week, January 19, 2008, HD DVD had rebounded; grabbing about 33% of device sales. A little while later, Universal made an announcement that they plan to release “Charlie Wilson’s War” to HD DVD in the spring; ... and life goes on. Not quite!

Mainstream television new shows begin to report on the Warner defection and the death bell for HD DVD starts ringing louder and louder. Eventually the dominoes began to fall; Netflix announces that they will only be offering Blu-ray Disc going forward. Reports begin to spread that Best Buy and Circuit City will no longer carry HD DVD. Statements from Best Buy and Circuit City deny the rumour. But reports of the death of HD DVD will still not subside, and then the big body blow comes, when retail giant Wal-mart announces that they will only stock Blu-ray Disc in stores. Best Buy follows Wal-mart’s lead, and on February 19, 2008 Toshiba makes it official, announcing they will officially abandon HD DVD.

All studies conducted thus far on the adoption of an HD replacement for DVD have shown that the rank and file consumer is not interested in upgrading. Most just continue to purchase up-converting DVD players or just stick with what they have. In early January just after the Warner announcement that it would support Blu-ray Disc exclusively, I had a conversation with a gentleman purchasing an HD DVD player. I made a comment to the gentleman regarding the Warner announcement that they would support Blu-ray exclusively. He responded that he thought Blu-ray would eventually be the winner if there was one, but he was purchasing the HD DVD player because at $149 it was affordable compared to $400 plus for a Blu-ray player. Now that the format war is over, it will become clear whether or not it was the format war that was preventing consumers from adopting an HD replacement for DVD.