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Saturday, 05 January 2008 23:52

Warner & New Line to go Blu-ray exclusive

Written by David Stellmack

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Has the format war ended on the eve of CES?


Someone once told me that if you want to steal a company’s thunder prior to a big show, make a big announcement that will divert attention away from whatever they have planned just before their show. It seems that this is the strategy that was employed by Warner Brothers on Friday with the announcement that they will change from a format neutral stance to a Blu-ray exclusive stance starting later this year. While the news was leaked a few weeks back and denied by Warner, it was really just a preview of the news to come. No news could be worse for the HD DVD camp, as well as all of the consumers that plunked down money this holiday season for an HD DVD player, no matter whether it is a standalone unit or one of the external units that connect to the Xbox 360.

To start at the beginning of why we had this format war in the first place would be a waste of time. No matter where you turn, the HD movie format war has been covered to death by just about every media outlet, and every possible comparison between has been written. To say that most consumers simply didn’t care, would most likely be accurate. Of course, many sat on the sidelines and waited for the format war to be settled because they had been burned before by buying into a format (such as Beta or MiniDisc) that didn’t survive, even though these non-winning formats had advantages over the winning formats. (Does it come as any surprise that both of the formats I used as an example came from Sony?)

Let’s face it: right now the people who are watching movies in either of the HD formats fall into one of two groups. The first is what I like to call “Home Theater Enthusiasts,” who are passionate about any technology that has anything to do with improving the quality of the movies that they are able to watch in their home theaters. The second group are “early adopters,” who either were sucked into one format or the other by purchasing a console system that supported that format, or the low price stand alone units that finally made the purchase sufficiently palatable to justify the expense. Most of the consumers in the second group were more curious than anything else, which makes them more early adopters who perhaps made their buying choice based on loyalty to one console system or the other, or strictly based on price. We suspect that the second group was not really leading the charge in buying movies and that the majority of HD movies that have been sold to date in either format have been sold to consumers in the first group.

So, with the announcement that Warner and New Line (which is distributed by Warner) will go Blu-ray exclusive, this gives Blu-ray access to 70% of the films that are out there. Warner, as most are aware, has a vast vault of titles and with this announcement it effectively tips the scales in Blu-ray’s favor. While it does look like it is “game over” for HD DVD, what is really sad is the fact that HD DVD was not a bad technology at all, and far more cost effective to produce than Blu-ray.

According to reports that we have read Blu-ray required new pressing equipment to make the discs, whereas HD DVD discs can be produced in current DVD pressing plants with modifications to existing equipment. In addition, Toshiba was able to drive the price down more quickly to get down to the $149 to $199 price point where the standalone players needed to be to gain mass market acceptance. Blu-ray is more expensive to produce, and you can be sure that with Sony firmly in control of the technology, the royalties are going to continue to be higher. Also, we have to wonder when Blu-ray takes over the format war, what kind of editorial control will be made over the kind of content released on Blu-ray? Will Sony embrace the adult video industry and allow all kinds of adult subject matter to be distributed on Blu-ray?

Is there any possible way that the HD DVD camp could make a come back? Well, that depends on who you ask. Most analysts are saying that HD DVD is dead as dead can get. I would agree that unless HD DVD can convince one of the big studios to switch sides from the Blu-ray camp over to the HD DVD camp, then I would have to agree that it is pretty much over. In order for the switch to have the necessary impact, it would have to be a studio that has a large enough base of movie titles in their library to matter. Only two studios could really switch over that would make a difference, and that would be Fox or Disney. We know that Disney will not switch, and that only leaves Fox. If Toshiba and perhaps Microsoft would write one hell of a big check, they could convince Fox, but it is doubtful at this point. Microsoft has to be stinging intensely at the thought of having to put a Blu-ray drive into the Xbox 360 and paying rival Sony for the privilege of doing so.

Warner did indicate that it will continue to ship HD DVDs until May of 2008, and titles that have already been announced as coming to HD DVD will be released. (This is good news for me, as will get my copy of Twister in HD DVD that I have been wanting!) New titles will be given priority to Blu-ray prior to release on HD DVD. We suspect that Warner will provide more details and a complete list of what titles they still intend to release on HD DVD during CES. According to various reports, Warner has an agreement in place to deliver titles on HD DVD until May 2008, at which time the agreement expires.

With the Warner and New Line announcements, the HD DVD promotion group has canceled its press conference for Sunday night at CES, as well as all of the one-on-one media briefings that it planned to have at CES. This alone signals that the Warner announcement was somewhat unexpected to the HD DVD promotions group, and they need more time to respond to this announcement, if they are going to respond at all. We have to say that this is somewhat of a bad move on the part of the HD DVD promotions group, as consumers who have bought into this technology want answers and they are looking for the HD DVD promotions group to provide those answers. That said, in all fairness… they likely need some time to think this out before they start speaking publicly on where they plan to go from here.

We predict that the studios left holding the bag in the HD DVD camp, the biggest of which is Universal, will announce a move to a format neutral stance later this year, followed by a format exclusive Blu-ray announcement before the 2008 holiday season. As for Paramount and DreamWorks, we suspect that they have some sort of an “out” clause in their exclusive support agreement that will likely let them do the same thing later on this year, as well. So, unless Fox switches sides, we suspect that the HD format war is over.

We have not even hit the road and left for CES yet, and we already suspect that the biggest announcement and news of the show has already been made. Unless HD DVD has some sort of big trick up its sleeve and can pull off the biggest technology rebound in history, the HD movie format war will go down in history as nothing more than a footnote in technology history. In the end, the format war was about money and control, and it once again goes to show that both sides should have come to an agreement in advance rather than putting consumers on the losing side. Those who did buy into HD DVD will likely be reduced to watching standard DVDs on their HD DVD players, and it just goes to show once again that early adoption of any technology isn’t without risks.

Last modified on Monday, 07 January 2008 04:11

David Stellmack

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