Home Media Magazine - December 9, 2007 - (Page 40) NEWS HD 2.0 Conference: War Hurting Adoption Continued from page 1 www.homemediamagazine.com Super Signing studios, together with CE manufacturers, felt a need to quickly unveil HD packaged media as a replacement for softening DVD sales. He said the pressure, compounded by rival format HD DVD’s drastic downward pricing on its players, has resulted in a commodity mentality directed at a largely indifferent consumer. Eklund was referring to the $99 Toshiba players unveiled over a weekend last month by Wal-Mart, Amazon.com and Circuit City. “I’m disappointed on behalf of CE companies that eliminated a reasonable amount of profitability out of the equation too early,” Eklund said. The executive was among a predominantly pro-Blu-ray slate of speakers at the conference. Other studio panelists included Lori MacPherson, GM, North America, Walt Disney Studios Home Entertainment; Simon Swart, EVP and GM, North America, 20th Century Fox Home Entertainment; Miguel Casillas, SVP, DVD production, Lionsgate; Andy Parsons, SVP, industrial solutions business group, Pioneer Electronics; and Eisuke Tsuyuzaki, with Panasonic, among others. Studio representatives backing HD DVD did not attend. MacPherson said 2007 has been a pivotal year for Blu-ray with increased momentum in hardware and software offerings, which she said will result in stronger spending as the holidays approach. “We feel like Blu-ray is doing exceptionally well,” she said. Panelists at a separate session on 1080p resolution said the ongoing Blu-ray Disc Mall Tour, coupled with retail participation and increased proliferation of HDTV sales, will help the format and HD media slowly turn the corner from early adopter to mass adoption in 2008. Parsons, who is also marketing director of the Blu-ray Disc Association, said the evolution of HD packaged media takes time and has been progressing faster than DVD in its infancy. “It takes time to get the word out,” Parsons said. “It takes time to get successful.” Sony’s Eklund said the key to convincing consumers about the merits of HD packaged media is exposing them to the format directly. “If the retail sales force believes in [Blu-ray], that is an important part of [consumer adoption],” he said. Fox’s Swart said sales of the Sony PlayStation 3 game system (with a Blu-ray drive) continue to push the format’s movie sales. He said 75% of Blu-ray movie sales are attributable to the PS3. Lionsgate’s Casillas said the minimajor Jan. 1 will, for the first time, «I’M DISAPPOINTED ON BEHALF OF CE COMPANIES THAT ELIMINATED A REASONABLE AMOUNT OF PROFITABILITY OUT OF THE EQUATION TOO EARLY.» DON EKLUND, SONY PICTURES HOME ENTERTAINMENT, ON THE RIVAL HD DVD FORMAT’S $99 PLAYERS distribute a networked (Web-enabled) title, War, starring Jet-Li. As with most political, societal and economic issues, there is no shortage of Internet bloggers weighing in on the format war. Bloggers for TheDigitalBits.com, DVDReview.com and HighDefDigest.com offered their thoughts during a panel discussion. “For the casual consumers, highdef isn’t even on their radar,” said Bill Hunt of The Digital Bits. “Most of those people are put off by the format war.” Guido Henkel, with DVD Review, said the studios only have themselves to blame for not meeting early high-def expectations. He said that because studios have released several versions of the same movie on DVD, consumers have less incentive to pick up the HD DVD or Blu-ray version of the same film they may already own. Henkel said studios are devaluing their product by making it available for digital downloading. “High-def adoption will happen gradually,” he said. “It’s unreasonable to expect people to just suddenly buy millions of players.” Hunt agreed, saying, “So many people have these DVD collections and they’re like, ‘You know, I didn’t even watch half of this stuff.’” The bloggers agreed that if the studios were to line up behind one format, consumer acceptance of high-def would be faster. Peter Bracke, of HighDefDigest. com, suggested studios “play hardball” and stop releasing DVDs in conjunction with a high-def release. Henkel said studios should lower the software price of high-def to meet the prices of DVD. They said the studios should divert dollars way from beating the other side and toward educating consumers. “I’d argue that [consumers are] deciding on neither of them,” Hunt said. Experts on high-def audio discussed their passion for sound, and representatives from leading PC companies discussed the high-def future for the home computer. The audio experts discussed how difficult it can be to fit new, improved audio tracks on high-def discs. “It just takes up an incredible amount of space,” said Dave Bales, VP of AV marketing and product planning for Pioneer Electronics. The new tracks — True HD, Dolby Digital Plus and DTS-HD — deliver “lossless” audio to consumers, which experts say is as close to the master recording as possible. In addition, these less-compressed audio files require increased disc capacity. “You kind of get into voodoo at one point [trying to fit higher-bitrate soundtracks on high-def],” said Adam Sosinsky, VP of new technology for Sony BMG. Sam Erickson with 44 Pictures, who produced and directed Dave Matthews & Tim Reynolds: Live at Radio City for Blu-ray, said HD audio exposes consumers to new listening experience. “It’s almost better than being [at the concert],” Erickson said. The panelists said HD audio has the ability to make music a less-passive experience in a world dominated by portable MP3 players and ringtones. “Music used to be the thing you’d actually sit down and listen to,” said Michael Giacchino, composer for the TV series “Lost” and Disney/ Pixar’s Ratatouille. “Now, you take it with you wherever you go.” Panelists said technological improvements have resulted in HD audio becoming a sensation that can be felt as much as heard. “Now we’ve got technology that brings it out,” Bales said. “The consumer will catch on. He or she has no choice.” Actor-writer-producer Seth Rogen (center) signed Superbad DVDs at Borders in Westwood, Calif., Dec. 4 — the day Sony Pictures Home Entertainment released the film on DVD. Pictured with Rogen is Allene Kim (left) and Jamie Fieldman of Sony Pictures Home Entertainment. Research: Content Key to HD Continued from page 1 DVD in 2007, and studios’ hopes that DVD will be supplanted by either HD DVD or Blu-ray right away seem far-fetched. “DVD completely transformed the way we relate to home entertainment. That will never happen again,” she said. Research from Screen Digest shows spending on DVD has been static since 2004. While more home media product has been sold year after year, the price for a DVD is dropping year after year. To counter this, high-def has emerged, but it’s been slow to catch on, Jayalath said. In 1998, the second year of DVD, those who owned a player were buying 8.9 DVDs each. In comparison, owners of Blu-ray and HD DVD set-top boxes are buying an average of 3.6 movies each. PlayStation 3 owners are buying only one movie. “The backward compatibility of DVDs and high-def means people won’t have to replace their libraries,” she explained. HD DVD dominates the standalone player market right now, but because of the PS3, Blu-ray by the end of the year will have an 8-to-1 overall advantage in terms of total worldwide players, she said. That may not matter, though, as Screen Digest forecasts that both formats are here to stay. “Both formats are well established … and we expect them to coexist,” Jayalath said. By 2012, HD DVD and Blu-ray could be seeing a 50-50 split in software sales, compared to the 2to-1 advantage Blu-ray has enjoyed most of this year, she added. DVD will slowly give way to high-def, with high-def accounting for half of home entertainment media sales by 2012, according to Screen Digest research. “Studio content is going to be key to mass-market adoption,” Jayalath said, adding that until studios “reassess their format allegiances,” neither high-def format will be able to claim victory. Judith McCourt, of research firm The Redhill Group, shared statistics that showed the news isn’t all bad for high-def. More than 7 million software units have been sold, and the dedicated hardware base is actually growing faster than that of DVD during its first two years, she said. In November, high-def software sales were past 1 million for the first time. And with 36% of U.S. households owning a high-def TV by the end of the year, the high-def software numbers will only go higher. Still, “consumers really just don’t get it,” McCourt said, pointing to their attitudes. “They don’t understand the value proposition … [they think] what they have is good enough.” She said better data collection should help studios understand what consumers are thinking when it comes to high-def. HOME MEDIA MAGAZINE (ISSN 1934-9882) is published weekly 51 times per year(weekly except for one week at the end of December ) by Questex Media Group, Inc., 306 West Michigan Street, Suite 200, Duluth, MN 55802. Subscription rates: $49.99 for one year in the United States and Possessions; $79.99 for one year in Canada and Mexico; all other countries $99.99 for one year (by surface mail). Add $75 annually for air-expedited service. Single copies (prepaid only): $6.99 in the United States, $8.99 in Canada and Mexico, $13.99 all other countries. Back issues, if available: $9.99 in the U.S.; $15.99 in Canada and Mexico; $26.99 for all other countries. 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