Vision - January/February 2008 - (Page 28) The HD DVD notebook is significant also for the diversity of product it represents in the high-definition video arena. Indeed, Panasonic’s Gene Kelsey predicts that major battles in the format war in 2008 increasingly will be fought around a greater breadth of CE products, not just on DVD players. “You’ll see an expansion of product assortment in Blu-ray, alternative configuration,” Kelsey said, adding that he expects more companies that support the format to offer home theater products as well as mobile Blu-ray players for minivans and SUVs. “We’ll keep adding on to the momentum that is Blu-ray in both hardware and software,” he said. But Blu-ray proponents face some of the same pricing challenges for ancillary We’ll keep adding on to the momentum that is Blu-ray in both hardware and software. Panasonic’s Gene Kelsey market, is the momentum gained from robust sales of high-definition flat-screen TVs. Kaufhold said, “there are a lot of households with a wide-screen HDTV, and now they’re aware of these next-generation players. I’m thinking going into the Christmas season of 2008, combo players will be the really hot item.” • Online High-def Content Distribution Last fall’s Blu-ray Festival in Los Angeles was a celebration of the high-definition DVD format and an opportunity for its proponents to toss darts at its HD DVD rival. In a criticism of HD DVD backer Microsoft during one session, 20th Century Fox Home Entertainment Worldwide President Mike Dunn suggested that Microsoft’s goal was for both formats to ultimately fail, leaving consumers with little choice but to buy their high-definition content online. Microsoft denied the claim. But all the uproar over high-definition video content streaming through millions of households may be unnecessary. It is simply not a scenario that is likely to play out anytime soon, analysts say. “I think it’s unrealistic,” analyst Josh Martin of the Boston research firm Yankee Group said of expectations of widespread distribution of high-definition video content. Distributing such content faces broadband speed challenges, a lack of storage capability in the average household and the inability to move content around the household, he said. “It also is the nature of people to want to own something,” Martin adds. “With all of these factors, it’s a ways off before digital distribution can be a blip on the radar to compete with prerecorded HD such as HD DVD or Blu-ray,” Martin said. “That being said, there are other distribution outlets for high-definition content, one being VOD. It’s not a replacement, but it can inhibit people from adopting a next-generation format immediately.” Gerry Kaufhold, principal analyst at In-Stat research firm in Scottsdale, Ariz., cited the strong “momentum” that packaged DVDs have as evidence of their staying power. “Most people have a fairly significant library of DVD titles, the current generation DVD titles, so they still want to be able to play those for the next 20 years,” Kaufhold said. “They are going to upgrade their old DVD player because eventually it’s going to break. They will buy one of the new ones, either HD DVD or Blu-ray, or a combo player, and that protects their existing investment in old-style DVDs and gives them the widest option for what they purchase in the future.” Kaufhold pointed to In-Stat research, showing that roughly 12 percent of people the firm interviewed have downloaded a movie, though “even those people still predominantly buy DVDs or rent DVDs from their local store” or through a mail service. “Optical discs in general are much more flexible than a download,” he said. “This usage model of sharing DVDs with your friends says that packaged goods have more value than we thought they did,” said Kaufhold. He points to the Web links and enhanced interactive features, such as actor interviews that some studios provide on their high-definition DVDs. “So the DVD, the actual packaged good, can be used as a teaser to take you online for other stuff,” he said. “So now all of a sudden the Internet isn’t displacing the packaged good, it is enhancing the packaged good and that’s a model that’s in its infancy. The packaged DVD business is a much more robust market than people give it credit for.” • Optical discs in general are much more flexible than a download. In-Stat’s Gerry Kaufhold products that they do on DVD players. The high price of Sony’s Playstation 3, despite including Blu-ray technology, for example, could put off consumers, analysts say. But Sony head Stringer said he expected Sony to sell 10 million PS3s by the end of its fiscal year in March. All the jockeying for support for Blu-ray and HD DVD products from studios and retailers may ultimately be moot, according to Kaufhold, the In-Stat analyst. The strategy that Kaufhold says really counts is centered around dual-format players. LG Electronics was the first to offer a dual-format player and, at press time, Samsung was expected to introduce a dual-format player during the holiday selling season. “By mid-2008 I believe the prices of the combo players will start to come down and there may be other participants beside LG by then,” Kaufhold said, adding that consumer concern over which format to support will drive them to look for more hybrid high-definition DVD players. Also boding well for the high-definition 28 January/February 2008 www.ce.org http://www.ce.org
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