Home Media Magazine - February 24, 2008 - (Page S16) from the blogosphere » Continued from page 15 2007 to this day. Blu-ray hardware sales were steady, despite a substantial price premium over HD DVD, and as prices have dropped, sales have increased. By December of last year, Blu-ray standalone players actually began outselling HD DVD players. Blu-ray has developed a clear edge in many other markets around the world, including Japan, Australia and parts of Europe. And the PlayStation 3, though initially criticized by many gamers for being too expensive, was seen as a genuine value by those who wanted both a game system and a next-generation high-definition movie player. Blu-ray’s edge was slow to develop, but it’s been steadily growing all along. Frankly, I started growing suspicious about the viability of HD DVD in the first half of 2007, as I began seeing repeated predictions made by that camp’s PR team fail to materialize: Low-priced players would win the format war for HD DVD, porn would win the format war for HD DVD, cheap Chinese players were the answer for HD DVD, combo players and discs would be the deciding factor, etc. All have fallen by the wayside. To be honest, I’ve long suspected that Toshiba’s strategy of aggressive hardware price-slashing would be key to the format’s ultimate demise. It seemed to me that such drastic tactics would only serve as a disincentive to other CE manufacturers to support the format, and that’s exactly what happened. Even Toshiba’s big coup last August, in convincing Paramount Pictures and DreamWorks to abandon Bluray in favor of HD DVD, has had little effect on Blu-ray’s gathering momentum. So the dominoes finally fell. Warner Bros. early this year announced it would abandon HD DVD in May, giving Blu-ray the exclusive support of more than 75% of the Hollywood studio output. Netflix this month informed its subscribers that it was no longer carrying HD DVD. Retailers both big and small announced or acknowledged plans to drop HD DVD as well. Even Best Buy gave official word that it planned to favor Blu-ray in all the chain’s stores going forward. The retail industry clearly knew that high-def packaged media was the best future for its business, and that the format war put that future in jeopardy. And so it’s over, with Toshiba throwing in the towel. Now that Blu-ray has won the war, retailers are eager to get on with it. With a slowing economy, no retailer in his right mind wanted to risk confusing his customers with mixed high-def messages for yet another holiday season. Blu-ray seems poised for a major breakout in 2008, especially if player prices continue to drop. I’ve seen all kinds of predictions that packaged media is dead, and that the future of home video is downloading. That may be true … eventually. But I wouldn’t be too quick to write off optical discs just yet. The fact is, there are all kinds of obstacles to the digital downloading future. Internet bandwidth simply isn’t good enough yet to quickly deliver high-quality high-def video. Hard drives can fail. Digital files are more susceptible to piracy. And the simple fact is, people like their discs. They’re used to discs. It’s much easier to buy, bring home and watch a disc than it is to set up an ethernet connection and a download service. What’s more, consumers assign greater value to a physical product, which they can hold in their hand, than they do to a digital file. People who would gladly pay $24.99 for a movie on disc would never pay that much for a download. So not only is the potential audience for downloading smaller than it is for packaged media, it’s likely much less profitable as well, even when you factor in the costs of replication, marketing and distribution. Consider that more than 30 years after the debut of the compact disc, and despite all the hype about iTunes, Rhapsody, Napster and Xbox Live, the vast majority of consumers still get their music on CDs. And that’s in spite of the fact that music consumers generally are driven by single songs, a parallel that simply doesn’t exist in the movie business. However you look at it, downloading has a long way to go. I don’t think any packaged-media format will ever surpass the success of DVD. That was a unique phenomenon due to many factors (convenience, value, quality) converging at exactly the right time. But I’ve always believed that eventually there would be a receptive audience for high-definition video discs. For a time, during the height of the format war, I feared that high-def discs would remain a niche market. Now, I’m not so sure. I’ve noticed an interesting trend recently: Even those people who have been most adamant that DVD is good enough for them have started changing their tune. As they purchase new HDTVs and start watching a lot of actual 1080p high-def video, they get hooked. Suddenly, upconverted DVDs aren’t enough anymore. Like all addicts, they start chasing a bigger and better high-def fix. Nothing is poised to deliver that fix better than Blu-ray Disc — not satellite, not cable, not broadcast, and certainly not downloading. And with the FCC-mandated transition to all digital broadcasting looming next year, there are going to be more high-def addicts out there than ever. So I think Blu-ray is poised to become yet another packagedmedia success story. That’s a good thing because Hollywood, the consumer electronics industry and retailers all need a new success story, now more than ever. Bill Hunt is editor of TheDigitalBits.com 16 IT’S BLU February 2008 http://TheDigitalBits.com
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