Parks Associates Blog

Friday, January 11, 2008

The Blu-ray, HD DVD war is nearing an end

For me, the most intriguing story of CES 2008 was the Warner Home Video announcement to support Blu-ray exclusively. This decision will likely put an end to the format war that has been waging over the last two years between Blu-ray and HD DVD.

This development is quite a shocker given the momentum HD DVD had in late 2007. With player prices at $98 dollars at some stores and Paramount’s exclusive support, it seemed HD DVD was regaining some traction in 2007. However, Warner’s decision puts a quick end to any gains HD DVD had.

The question is why Warner decided to choose Blu-ray? Warner has been a supporter of both formats. At last CES, Warner announced plans to develop a “Total Hi Def” disc that would be format agnostic. However, as the delivery date continued to be pushed back, questions came up about the disc’s feasibility and cost. Therefore, I believe the reason behind Warner’s decision is twofold. One, by choosing Blu-ray exclusively, the title share tips drastically in Blu-ray’s favor with almost 70% market share. Two, the Blu-ray format has the best option to provide additional features such as interactivity and increased storage for years to come. It is also assumed that Warner received some financial support from the Blu-ray group to support the format going forward.

Interestingly, comments from Kevin Tsujihara, President, Warner Bros. Home Entertainment Group echoes what Parks Associates has been saying about consumers’ attitudes regarding the format war.

“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. Consumers have clearly chosen Blu-ray, and we believe that recognizing this preference is the right step in making this great home entertainment experience accessible to the widest possible audience.”
(Source:
http://www.deadlinehollywooddaily.com/, Nikki Finke)

Who are the winners and losers of this decision? The biggest winner is Sony. They have made considerable investment in the Blu-ray format and that now seems to have paid off. The biggest loser is Toshiba. With the Blu-ray format now the dominant choice, this leading CE manufacturer will have to reevaluate their strategy and make considerable changes in providing next generation DVD players.

The other interesting note from CES didn’t have anything to do with technology. While waiting to get on the Monorail in Las Vegas with, what seemed like a million other people, I had a conversation with a security guard. He told me that the whole Las Vegas Convention Center is the equivalent of 61 football fields. Therefore, if you feel like you walked a lot at CES, you did!

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