BluRay: Studios Benefit Not Consumers

[mas]

Analysts:
Studios will gain from HD DVD's exit, but consumers' won't

By J Emigh,
BetaNews February 20, 2008, 1:39 PM http://www.betanews.com/article/Analysts_Studios_will_gain_from_HD_DVDs_exit_but_consumers_wont/1203532784

Consumers would really have been
better off right now with Toshiba's HD DVD format for high definition video
than with Sony's Blu-ray approach, a principal analyst at ABI Research told
BetaNews today.

Big film studios will gain from
Toshiba's exit from the high definition (HD) disk market, although not as much
as they'd like -- and consumers won't benefit at all, at least initially,
according to analysts at market research firm ABI Research.

The format battle between Toshiba's
HD DVD format and Sony's Blu-ray approach was causing major problems for 20th
Century-Fox, Warner Bros., and other movie studios, noted ABI Principal Analyst
Steve Wilson.

"Consumers spent [only] about
$170 million on high-def DVD in 2007 and Fox, for one, is hoping that jumps to
$10 billion in 2008," Wilson said, in a Q&A today with BetaNews.

Still, even industry standardization
around Blu-ray won't boost sales as much as the movie studios want.

"They'll be lucky if they get
to two-thirds [of the $10 billion]," the analyst remarked.

Wilson also suggested that consumers
would really have been better off with the HD format than with Blu-ray.

"Storage capacity is the one
area [where Blu-ray] can claim an advantage," he elaborated. But the
outcome of the format war, which became official on Tuesday, "doesn't
benefit anyone today and it comes at a cost. [blu-ray] discs and players are
both more expensive to manufacture. The DVD format was less expensive to
implement and further along in its deployment. [blu-ray] is twelve months
behind in terms of its feature set."

To wrap a bit of historical
perspective around the reactions of ABI and other observers, only a year or two
ago, a lot of people would have been quite surprised by any notion that Blu-ray
would prevail over HD. Back then, an independent market research group called
Cymfony analyzed postings on message boards, blogs, and other Web pages to
gauge the opinions of early adopters of blue-laser consoles, mainly among
gamers and videophiles.

"Positive discussions about HD
DVD are 46 percent higher than for Blu-ray, with over twice as many post
authors being 'impressed with HD DVD' as 'impressed with Blu-ray,'"
according to the results. (PDF available as an attachment above) which covered
the period between October 1 and November 23, 2006. Cymfony describes itself as
"a market influence analytics company that sifts and interprets the millions
of voices at the intersection of traditional and social media."

The Cymfony researchers further
found that Sony and its Blu-ray format suffered from a "credibility
gap" due to Sony's past failures with technologies such as Betamax and
MiniDisc.

In addition, gamers at the time were
found to have been unhappy that the PS3 console comes with a Blu-ray player.
"Beyond the increased cost, they objected to Sony giving them no
choice," according to the report. Ironically, based on their analysis of
the Internet content studied, the Cymfony researchers posited "strong
dislike for Blu-ray" as the the main reason why users have been hesitant
to adopt HD drives.

"Mainstream media focus on the
high cost of Blu-ray and the 'format war' as reasons consumers may be slow to
embrace high definition video. But these aren't the biggest reasons currently
discussed in social media," according to the study. "Post authors
express a general dislike for Blu-ray, often based on doubt regarding Sony's
credibility as a technology innovator and ability to succeed with a new
platform."

In fairness, Blu-ray did suffer from
some technical issues in 2006 that no longer exist. Most notably, studios have
weaned themselves from MPEG-2 compression, which was often visibly noticeable
and not nearly as efficient as H.264-based codecs such as MPEG-4. As a result,
the first BD discs couldn't take full advantage of the huge space allotted for
them. And the first BD discs off the block suffered from film transfer problems
that early adopters initially attributed to faults with the format rather than
the process.

Plus, early Blu-ray players suffered
from bugs with noise cancellation and other features, resulting in disgruntled
customers. But that anger became very public, thanks to the Internet, and it
was that anger that may have helped taint the second wave of adopters -- those
contacted by the Cymfony study.

In the end, though, it wasn't
customers' likes or dislikes that powered the fatal blow in the format war,
according to ABI. It was Warner Bros.' decision to switch allegiance to
Blu-ray, along with subsequent moves to dump HD by major retailers such as
Wal-Mart, Netflix and Blockbuster, that served as the key catalysts in the
rather sudden industry migration to Blu-ray.

"Consumer spending on DVD sales
and rentals was pretty flat in 2005 and 2006 at about $22 billion. It dropped
last year for the first time, by about 3 percent," Wilson said today.

"The studios really need the
new high-def format to catch on so they can drive revenues back up," the
ABI analyst told BetaNews.

Blu-rayHDStudy.pdf

[mas]

"Consumers spent [only] about $170 million on high-def DVD in 2007 and
Fox, for one, is hoping that jumps to $10 billion in 2008,"

I've read some pretty unrealistic things in the past , but this comment just might be the most unrealistic yet!

"I think the better question is "Now that the format war is over, how are the BR folks going to convince the mass market to adopt?" "

[erikill]

Yea 10 bil is a bit steep esp when the players still cost so much and profile/ updating issues.

I for one will still wait, but for now stock up on cheap HD-DVDs possibly cheaper than DVDs. Just because a format is dead doesn't mean my player won't keep playing the movies I'd actually want to buy.

[mas]

I just came back from stopping by WalMart and Virgin and spoke with a manager at both regarding their intent (or not) to discount the HD-DVD software - and was informed at both that in their meetings they were told they would not be discounting t media. both said that their heretofore sales of HD-DVD media had beed pretty good, so they were going to hold onto it at regular price and simply return what will utimately become cutouts to the distributor.

In fact they raqther anticipate those who own HD-DVD players to try to gather as many as they can before they become unavailable.

Unless things change or if you can find an exception, there will be no firesale.

And no price cutting by Sony either!

[garyrc]

Too bad that people who purportedly (and probably do) care about film didn't get in there and kick studio and manufacturer *** in the BluRay vs. HDDVD war, to uphold quality first .... people and institutions like AFI, The Academy, big name Directors [e.g. Scorsesee, who was active in the color preservation wars, or Woody Allen, who defended Black and White], restorers [like the guys who restored Vertigo, and Kevin B(something) who restored Abel Gance's Napoleon, and for that matter, Copolla, who sponsored the restoration ....

A one page add, signed by all, in everything from Home Theater to Variety to the New York Times, plus personal phone calls and open letters to studio heads and manufacturers' CEOs might have had some effect.

[jacksonbart]

I just brought some tp at walmart.

[erikill]

Well I know Amazon is currently selling HD-DVDs at 50% off. I'm suprised they won't firesale it since its just excess stock. My guess is I'll just keep eye out and pick up what I want as they go on sale.

[oldbuckster]

Relax, if the stock doesn't move, they discount it, Big Time, they always do. They will not eat a warehouse full of HD- DVD's, Marketing Deptartments have become pretty saavy about disposing of old product ...............

[IndyKlipschFan]

When we can download into a machine the same quality of a HD movie the same day it comes out on BLUE RAY DVD that is at or lower than going to our stores...We will be in an iPod generation for movies too.

Why do I feel were going this route? Comcast already has this technology at least to 720p- 1080i. But a computer connection with high speed certainly could do a 1080p movie too to your house? And to be honest, if it is set up properly, 720p looks pretty darn incredible!

I feel sorry for the Toshiba HD machine owners and it is a shame movies like Transformers will never be on Blue Ray too. It was/ is a very cool movie indeed.

[J.4knee]

http://www.msnbc.msn.com/id/23262620/

[el jopez]

Yes, lets plunge more consumers into debt with more frivelous spending. God how I love our economy right now.

[KungFuNat]

the reason people havent been buying the HD formats is because most people don't know the difference between SD and HD, and they really dont care. As an A/V technician I get calls from friends on a regular basis on what type of HDTV to buy. I give them the low-down and they usually end up with something very nice.

Then, the first time I go over to thier house, they are stretching SD content to fit the HD screen which looks like garbage. Then they hook up a 10 year old DVD player with a composite video connection and watch DVDs that look like garbage. I try to tell them the difference, and they simply dont care. it really boils my blood too.

Also, scaning posts on the internet is hardly a way to come up with a conclusion over which format is better. There is simply no difference in the viewed image of either blue-ray or HD-DVD.. We did direct comparissons in our lab here at work with identical 1080p projectors showing blue-ray and hd-dvd of the same title. Early on, when blue-ray was using high-bitrate MPEG2 and HDDVD was using VC-1, there was simply zero noticeable difference between the visible image. The only reason there were a lot of negative blue-ray posts on the internet was due to a whole lot of sony-hating and no other reason.

blue-ray won out because of the ps3 market penetration and blue-ray's superior storage size, no other reason. In-fact, the writing was on the wall from the moment ps3 was announced to include blue-ray playback, and anyone who thought otherwise(including these "researchers") havent the slightest idea how the market or technology in general works..

[mas]

Relax, if the stock doesn't move, they discount it, Big Time, they always do. They will not eat a warehouse full of HD- DVD's, Marketing Departments have become pretty saavy about disposing of old product ...............

Buck, retailers are not stuck with it. They simply return it to he distributor who returns it to the 'record' company.

What they chose to do with it afterwards is up to them.

There is no guarantee that they will discount anything - especially as they figure that they will simply sell a copy of the same product in another format. There is no need to undercut themselves, as they market the same product in all formats.

I feel sorry for the Toshiba HD machine
owners and it is a shame movies like Transformers will never be on Blue
Ray too. It was/ is a very cool movie indeed.

Sure they will. The studios are simply going to release all of their heretofore 'only HD DVD' material on BluRay now.

The only downside to having invested in HD-DVD is that now these people will have to buy another BluRay player. And it seems to me that the only smart BluRay buy is to simply get a PS3 system.

blue-ray won out because of the ps3 market penetration and blue-ray's superior storage size

The notion that the capacity has had an impact is moot. It may sound good on paper, but it has no practical impact in the market as it exists. That's like saying that Porsche GT3s will dominate the market because they go faster than Toyota Corollas.

There are no viable BluRay burners that have had ANY impact on the market. So essentially no one is buying it to record greater capacity. Additionally, there are cheaper eways to do that. BluRay has been bypassed in the IT world. And anyone buying pre-recorded content doesn't care if they could fit the space shuttle on the disk - its a moot discussion.

And the notion that standard DVDs look bad is simply nonsense. And upscaled DVDs look fine as well.

The problem with HD is that while it is higher resolution, there is little compelling reason to move to it. I don't care if I can see if a running back has shaved. Its meaningless to what I want to see if I watch sports on TV. Heck, I would be happietr if they simply pulled back in the field of view and let me see the defensive backfields (that a resonable person could almost make a case that they don't even take the field on half of the plays based upon what you see!). Nor does seeing the tattoos on some woman on Jerry Springer more clearly provide a compelling reason to upgrade - especially when upconvertng DVD players do it for $50 and require no additional expense for commodity priced DVDs.

The notion that you need to see everything in HD is akin to listening to Ted Turner announce that they had to colorize the old B&W films INTENTIONALLY shot in B&W!

The fact remains that the move to HD has not been driven by market demand. And for the majority of programming, SD is just fine. Especially as so many were so happy with it before the advent of HD. And the only thing driving so many to buy new TVs is not HD, but the need to replace their analog sets that were just fine as the govt wanted to reallocate and sell the spectrum. I never heard anyone saying - "wow, existing video standards are terrible".

[Catharsis147]

.......Have to agree with MAS here, though I hope for all our sakes he is wrong. HD technology, while fantastic, definitley has some fundamental problems before it turly penetrates the market. To truly appreciate HD requires an HDTV, which I can tell you right now is still not in most peoples homes, no matter what statistics are thrown out. The CD penetrated the market because it was a QUANTUM LEAP above cassettes and records, similar to how DVD was a quantum leap above VHS. Now, though Blu Ray and HD-DVD are a siginificant leap above SD TV, I think that leap is more like the leap of SACD to CDs (which again required five speakers to truly appreciate, hopefully they matched). Certianly an improvement, but not one to justify jumping into a new technology.

[Bill H.]

I saw an interesting article today - stating that the HD/Blu ray war was started and supported by Microsoft.................can anyone say conspiracy theory?

[KungFuNat]

The notion that the capacity has had an impact is moot. It may sound good on paper, but it has no practical impact in the market as it exists. That's like saying that Porsche GT3s will dominate the market because they go faster than Toyota Corollas.

Yet there are blue-rays which max out the available space on the disc.. The pixar movie Cars is an incredible sight to behold on blue-ray and part of that reason is because they used every last bit of the space on the blue-ray combined with AVC to create an incredible transfer. While the average user may not care one way or another, some studios and early adopters do. I was not argueing this is why consumers prefer the format.. Take your porsche/corolla analogy and put it into a race setting where only one can win, and i will leave it up to you to figure out what happens..

[mas]

Take your porsche/corolla analogy and put it into a race setting where only one can win, and i will leave it up to you to figure out what happens..

It's easy to figure out. You sell one Porsche GT3 to a niche market for every couple of million+ Corollas sold to the mass market.

No one is debating the fact that a very small niche can find a use for something.

But the MASS MARKET is that of MUCH greater concern to both the studios and the public, and this is the real focus of an industry that is a business first and foremost. A fact that the fanboys and those promoting characteristics is interest only to the niche market consistently miss.

That was and remains the primary point. Niche needs don't drive the mass market.

[jzoz01]

ue-ray won out because of the ps3 market penetration and blue-ray's superior storage size, no other reason. In-fact, the writing was on the wall from the moment ps3 was announced to include blue-ray playback, and anyone who thought otherwise(including these "researchers") havent the slightest idea how the market or technology in general works..

Bluray won out because of studio support (due to more copy protection and region coding) and CE support (due to migher margins on players). It had nothing to do with the higher storage capacity.

[KungFuNat]

studio support stemmed from the massive market penetration of PS3 period. both blue-ray and hd-dvd copy protections have been cracked at this point, copy protection has absolutely nothing to do with it.

Toshiba made and sold HD-DVD players at unbeleiveably low prices, who cares about what other devices are available when you can get a perfectly good unit at significantly lower prices than any competing blue-ray player.. The number, quality, and price of players had zero to do with it, in fact if you take out the ps3, HD-DVD players were outselling blue-ray by a large margin.

[KungFuNat]

Mas: niche devices absolutely do affect the market. it is the early adopters that drive the market, and this was certainly the case with blue-ray..