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DVD Format War Hype

Godzilla_DVDAs Godzilla thunders across Japan, the guardian monsters move to stop him. Baragon is the first to challenge Godzilla. Though he struggles valiantly, the burrowing reptile is no match for the overwhelming power of Godzilla. When Godzilla marches on Tokyo, the two remaining guardians, Mothra and King Ghidorah, combine their power in a final battle against the unstoppable juggernaut. Will Admiral Tachibana and the military be able to tip the scales in favor of the guardian monsters? Can Yuri stay alive long enough to tell the story? Can anything stop Godzilla?

Does anyone really care?

With all of the hype surrounding Blu-Ray and HD-DVD, you would think that Hollywood was trying to write a new Japanese B-movie script.

First, we get the trash talk from Matsushita (Panasonic) indicating that reconcilliation is impossible, and “The market will decide the winner.” Then, rumors abound that Sony (SNE) plans to ship the Playstation 3 in November, complete with Blu-Ray drive and $399 price tag – never mind that no working Blu-Ray player is on the market right now. It isn’t clear how $399 is economically feasible given Toshiba is wrapping $100 bills around every HD-DVD player it ships out at a $500 ASP. And even this is shocking given their HD-DVD player is commodtiy IDE PC drive disguised as home electronics.

I’m still sticking with the opinion that both formats win in different applications. This opinion appears to be echoed by Reed Hastings, CEO of Netflix Inc. (NFLX), during their latest quarterly conference call.

In Q2, both HD DVD and Blu-ray are soft launching, in preparation for a larger retail push in Q4. We believe Microsoft (MSFT) sees studio support of HD DVD as very important to their game format battle with Sony (SNE). We also believe that X-box and Vista will support HD DVD more directly with every one of their product updates.

Therefore, since neither Sony nor Microsoft will concede nor win in this format war for at least several years, there will be a protracted competition which will hurt the adoption of high-definition DVD, despite everyone’s best intentions to avoid a format war.

There is, however, a practical solution. If all studios were to embrace both formats agnostically, consumers would be reasonably comfortable buying either format and presumably making their purchase decisions based on hardware, price and features.

Studios have supported VHS and DVD for years, so supporting two formats is not something new.

Embracing both formats is exactly what studios will do, and they will use the formats to price differentiate their product.

The reality is that 10 years from now getting your media on a silly plastic disk will seem as ridiculous as…. watching a Godzilla movie marathon. Movies are going to be downloaded to your set-top-box/DVR/home theater PC.

Discussion

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  1. This would be a better piece if it was not just two public quotes from the companies that anyone can get off the internet pulled together with some modest speculation about what it means.

    Posted by douglas mcintyre | April 28, 2006, 10:00 AM
  2. “Studios have supported VHS and DVD for years, so supporting two formats is not something new.”

    They are missing the point. Those are not two different formats those are two differnt media types. Mark my words, this may start with two formats but within less than a year there will be a single dominant format. Two different formats that do the same thing won’t cut it. Why? Because nobody cares what format it is, it just has to be one standard format. Will the Sony PS3 choice play into this. Not really. Game systems have always had unique formats for their media. It really doesn’t matter much to the consumer except that you don’t want to buy an HD DVD player for your home theater that supports one format and the stores sell mostly the other. People will gravitate to one format for MOVIES and the other format will die except for the niche areas (PS3, Xbox, etc) where it might live on. Bank on multi-format players for computers that will allow you to read both formats for compatibility with the dead format but one WILL dominate.

    “The reality is that 10 years from now getting your media on a silly plastic disk will seem as ridiculous as…. watching a Godzilla movie marathon. Movies are going to be downloaded to your set-top-box/DVR/home theater PC.”

    I totally disagree. You have been able to download music for years now and look at all the store shelves filled with CD’s 20+ years after the media was released. Why? The sound quality is far better and consumers prefer to get something tangible for their money. I have a few iPods in my family and 99.99% of the music is from CD’s I have purchased. When I do download music the first thing I do is make a CD for backup purposes. iPod’s and music downloads have not replaced my CD collection but gave me whole new way to transport and listen to music.

    HD DVD will be no different. I remember people telling me DVD’s will never replace VHS tape. If you remember few consumers purchased VHS tapes. DVD sales have been astronomical due to people who want to collect their favorite movies. Yes you will be able to download video to your set top device but replace a tangble media that people enjoy collecting in 10 years, give me a break. Wipe out the video rental stores and Netflixs of the world. You bet.

    Posted by Ray Stahl | April 28, 2006, 11:50 AM