A CES Eulogy: Warner Brother’s slays HD DVD
In 1970 the Video Cassette recorder was launched at the Consumer Electronics Show. In 1996, the DVD was revealed. 2003 was the year Blu Ray launched. This year, Toshiba had big plans for their HD DVD format. That is, they had big plans until Friday when Warner Brother’s pulled the rug out from under their planned party. Now, instead of a celebration it’s looking more like a funeral.
For the last year, Sony’s Blu Ray and Toshiba’s HD DVD had been fighting an open, and hostile, battle to claim the title of approved standard for high definition DVD. Money and incentives were being offered and sides being taken. In one corner there was Sony backing Blu Ray. In the other, Toshiba, sponsor of HD DVD. Movie studios, rental companies and gaming companies were forming alliances.
Lions Gate, Fox, Disney and MGM had sided with Blu Ray. Blockbuster was also pushing the disks in its stores. Microsoft, on the other side, was stumping for HD DVD with the Xbox platform. So too was Intel. Warner Brother’s and Paramount were Switzerland. They remained Neutral.
Through August Blu Ray had the advantage. The Sony backed format was outselling HD DVD by nearly 2:1. It was “winning on the merits” according to Sony’s chief. Then Paramount and DreamWorks changed up and sided with HD DVD. A rumored $150m incentive package along with lower production costs for HD DVD tipped their scale.
With no clear winner, nor end in sight, there’s been little incentive to buy an expensive player and gamble on a format. Not even insiders wanted to take a risk and call the race. Warner Brother’s was even exploring the possibility of issuing dual sided discs called Total HD that had HD DVD on one side and Blu Ray on the other. Consumer confusion, and indifference, has followed. Sony’s CEO Howard Stringer called the battle a stalemate in November.
Citing that as a concern, Warner Brother’s dropped their bomb. Effective in June, they’ll issue their high definition movies exclusively on Blu Ray. Consequence of the decision, five of Hollywood’s seven largest studios have thrown the weight of their content behind Blu Ray.
The president of Warner’s home entertainment group Kevin Tsujihara said in a statement that “a two format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry.”
Warner’s chairman Barry Meyer echoed the sentiment saying that “the window of opportunity for high definition DVD could be missed if the format confusion continues to linger. [Warner Brother’s] believes that exclusively distributing in Blu-ray will further the potential for mass market success and ultimately benefit retailers, producers and most importantly, consumers.”
Total DVD sales were down 4.5 percent for 2007 (Adams Media). Sales were off 4.8% to $15.7b.
Toshiba said they were surprised by Warner’s decision. They and Warner Brother’s have existing agreements. The timing couldn’t have been appreciated either.
HD DVD had big plans for CES. There was trade show schwag, giveaways, even high profile ads scattered around Las Vegas. There was also an HD DVD press event originally scheduled for Sunday night’s opening of the CES. That was canceled.
The HD DVD camp said they’ll assess the impact of the news and “evaluate potential next steps.” They claim the fight is not over.
The truth is, they’re probably wrong. What will determine which wins the high definition DVD standards war isn’t going to be technology. It’s not even likely to be manufacturing costs (prices will drop with increased production). What will likely define the standard that wins is content availability and distribution. The determining factor is going to be: which standard provides the consumer with the best choices. Warner Brother’s decision tips that scale away from HD DVD.
Maybe HD DVD can find a second life as recordable media for home computing. Maybe they’ll come up with incentives to change the ranks again. Maybe. Maybe the two standards will find a way to combine and play nice in the same sandbox. Maybe. But if the bulk of Hollywood Studios backing Blu-Ray stick to their current positions, if the vast majority of movies are issued exclusively on Blu Ray as that would entail, it’s time to write a eulogy to HD DVD’s effort. Instead of celebrating at CES, it’s time to raise a glass to a good effort, and then scour the trade show floor for the next new thing. Either that or head over to Sony’s section. They’ll be celebrating there.
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