It’s finally official…
Toshiba announced last week that it’s throwing in the towel on HD-DVD. It will cease making players or promoting the standard, effectively ceding the high-definition media format war to it’s rival BluRay.
This didn’t really come as a surprise to anyone that was paying attention…
Things just started to pile up against the format. Warner Bros. dropped support for HD-DVD – a major blow on the content side. Both Blockbuster Video and NetFlix decided to back rentals of BluRay exclusively – killing the rental market opportunity for the standard. Both Best Buy and Walmart – probably the two biggest sales channels for media players and content – decided to opt for BluRay only. It was just a string of bad news that became overwhelming.
When Toshiba’s last ditch radical price cuts failed to stimulate sales, the only thing left to do was pull the plug and turn out the lights.
This left BluRay the winner by default.
So is it time for a BluRay victory lap?…
Not Quite.
All that BluRay has proven is that it was able to get more traction than HD DVD. Truth be told, that doesn’t mean a whole lot. There were probably less than 1.5 Million standalone HD players sold since the launch of both formats. There are probably an additional 9 million BluRay drives/players already in homes thanks to their inclusion in the PS3, but as of last month, less than 5 million total BluRay movies had been sold since the launch of the format!
To put that number in perspective, about 5 million copies of the movie 300 were sold in DVD format in it’s first week of release.
BluRay may be the big HD fish, but it’s still swimming in a tiny HD pond…
To be successful BluRay will need to become truly mainstream. And to do that, it will need to seriously compete on two significant fronts:
Front #1. The Status Quo:
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The death of HD DVD has taken away any excuses the BluRay camp may have used in the past for slow adoption. BluRay is the only physical HD format in the marketplace. It will need to start demonstrating success in attracting buyers that are currently opting to buy upscaling DVD players (players that take standard definition video from a DVD and use signal processing to upconvert it into pseudo-high definition image.)
That is no small task. Good quality upscaling DVD players are available for less than $100 dollars – compared to a starting price of about $350 for a BluRay player. Compounding that marketplace challenge is the limited selection and high price of BluRay movies. There are only about 350 BluRay titles currently available, and each costs between one and a half to two times as much as it’s DVD version. Without a significant adjustment to both pricing and selection – for both movies and players – BluRay will continue to remain a niche format. Simply put, the longer a significant price gap remains, the slower mainstream adoption will be.
And the more likely BluRay will be challenged on a second front…
Front #2. HD Video Downloads:
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First off, lets forget the ‘Quality will win out’ argument. If that were the case, we’d all be walking around with SACD players instead of iPods. Quality is important – especially when it comes to video – but we shouldn’t overstate the case for it. Does the HD video downloaded off of my Apple TV look as good as the same movie on BluRay? No, it doesn’t. But does look good? Yes – it is clearly better than DVD quality. Downloaded video today is true HD even if it is at a lower resolution and reduced bit rate compared to BluRay. It looks good now, and as bandwidth improves, the quality of these downloads will just keep getting better.
When it comes to convenience – especially for rentals – downloads rule. It won’t be long before Apple, Amazon, Microsoft, and every cable major company will be saturating the market with ‘on-demand’ HD content. If you combine that convenience with a basic level of HD quality that you can get today, BluRay may find itself struggling to define itself on this second front.
So what does this all mean?…
There is a limited window for BluRay to establish itself in the mainstream before it simply becomes yet another irrelevant format in the marketplace. It might have two years, maybe less, to gain widespread adoption before it gets discounted as yet another failed media format.
It has a long way to go before it can claim victory.
Beating HD DVD was probably the easy part…
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Bluray has definitely won out and will give Sony huge profits over the next few years. As long as they are able to lower the price of their dvd players, they will make big profits. People really want hd-dvds and currently digital format is not the way most people want their dvds. In the future, movies will all be in digital format, but that is not in the near future.
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