To be or not to be, that is the question (posed so eloquently by Shakespeare so many moons ago). Be it the war of speeds for turntables, the frequency transmission war for broadcast radio, the tape war for recorded music, the VHS versus Betamax and so many other format- or platform-based disputes over the years, one was to be; the other not-so-much. The past few years yet again found the consumer squarely in the middle of such a war between rival camps supporting HD-DVD and Blu-ray.
The competing next generation video discs by rival camps founded by Toshiba and Sony have done battle since the turn of the millennium, courting consumers and content providers alike with boastful claims for their players and the disc’s capabilities. Both systems utilize a blue lazar reader allowing the content to be packed tighter on the disc and extracted in higher definition that the traditional DVD counterpart. However, the systems are not compatible (meaning Blu-ray will not play on HD-DVD players and vice versa) and furthermore, there is little backwards integration of traditional DVD to the players (meaning standard DVDs will not play on most HD-DVD on Blu-ray).
Reflecting Blue Lazer Lights
Sony and Pioneer introduced the first DVR-Blue format in the fall of 2000 in Japan. Over the next two years electronics companies began to further develop the blue lazar format, culminating with the 2002 announcement by Sony to spearhead Blu-ray and Sony, Panasonic, Sharp, Pioneer and JVC displaying prototypes by years end and production beginning early 2003. Additionally, Toshiba unveils its plans for HD-DVD, however the 2002 announcement is not followed up with production until 2004 when several industry heavyweights had begun taking sides. Hewlett-Packard and Dell along with several movie studios including Disney backed Sony’s Blu-ray coming on the heals of the announcement that Playstation 3 will come packaged with the reader. Meanwhile, Paramount Pictures, Universal Pictures, Warner Bros. (including WB Pictures, HBO and New Line Cinema) initially back HD-DVD as do several independent pornography studios.
During 2005 talks broke down between Sony and Toshiba to integrate the formats, despite Sony’s attempts to push the formats together. Both sides promise players and movies on the market by years end, however, this does not come to fruition as confusion over who is supporting which format continues. Throughout the year several manufacturers including HP and LG as well as several studios decide to back both formats, while Microsoft, Intel and others join the HD-DVD camp. By the time 2006 rolls around Toshiba finally releases their first player in the spring, followed closely by the fall release of Sony’s Playstation featuring Blu-ray. The division sees a brief reprise as an independent firm unveils a dual HD-DVD / Blu-ray disc eventually mirrored by Warner Brothers and LG unveils a dual HD-DVD / Blu-ray player.
Five years after the announcement of Blu-ray, defectors from the camp now include Paramount and Dreamworks, while continued pressure by Microsoft includes HD-DVD inclusion in X-Box and increased software for home computer players, along with Toshiba announcing the 100,000 unit milestone was reached. The number of dual supporting studios and distributors continued to rise, at times seeming to favor HD-DVD with price and positioning. By the end of 2007, Toshiba was initiating a price war with Blu-ray including $100 HD-DVD players, discounted movies and increased player features including computer tethering.
Toshiba’s apparent successes with HD-DVD ended abruptly earlier this year despite tremendous holiday sales success of the recorders and a hefty forth quarter profit from them. The first scratch in the surface came from Warner Brothers, who announced right before CES it would move to Blu-ray only high definition releases. That was promptly followed by disc-shattering news by retailers such as Wal-Mart and Best Buy as well as rental service Netflix to move to Blu-ray only as well. The 10.5 million Sony Playstation’s sold featuring Blu-ray along with the numerous stand-alone recorders put more players in the marketplace than Toshiba could hope to compete with.
Furthermore, something Sony was unable to do as successfully in past format wars was secure enough content early enough on to be convincing to consumer adoption. In the VHS –Betamax case, Sony made key flaws including its inability to secure pre-recorded content from studios due to a lack of run time on the initial cassettes. After the Sony v. Universal Supreme Court Case where home recording was deemed legal, Sony was unable to compete with the VHS four hour long play runtime and subsequent 10-hour adaptations, thus Sony failed on consumer adoption. The lack of industry licenses to build player-recorders hurt as well, as industry backlash from Sony’s attempt at dominating U-Matic recording earlier. Similar problems arose in the launch of the MiniDisc with content provisioning and payer-recorder licensing. This time around, Sony pre-empted the content woes by wooing the studios early to secure content and pre-packaged the format in generally acceptable ways to incur quicker consumer integration (bundled to computers and gaming consoles rather than depending on stand alone only models to lead sales).
Sony’s brand appeal along with a stronger distribution model was able to overcome the cost differential between the Toshiba led HD-DVD designs and the more expensive Blu-ray camp. Although neither was positioned well against the consumer, several studies of online chatter along with early usage polling pointed to greater adoptability of the HD-DVD, however, the sustainability of the perceived lead was unfounded. In the end, criticism were more from high-end users (techies and gamers who were skeptical of Sony’s past failures as well as beleaguered by the forced adoption distribution method) and not necessarily representative of the average consumer who frequently places Sony among the most purchased and trusted electronics name-brands. Sony’s continued forays into content and beyond simply delivering electronics technology provided a solid bridge for them to launch the platform as compared to Toshiba’s narrower manufacturer approach. It was Sony’s existing content that drew other content providers, in part due to the understanding by Sony that content providers wanted Copyright security encoding (which is in part why both replication and machines are both more expensive in the Blu-ray camp) and in part because of the wealth of existing content they had access to in the marketplace either themselves or through financial partnerships. Once that was levered the penduleum swang.
A Blue Looking Future
Sony’s success with Blu-ray over its rival HD-DVD format is only a small portion of the battle at hand. Pre-recorded formats are in the decline overall. Music is the obvious large-scale struggle, however, as alternative options continue to proliferate into TV, film and other entertainment offerings and seamless entertainment offerings are generated through connectivity the need for pre-recorded formats in all forms of entertainment will diminish.
The slow process of market penetration may hurt high definition video in general as adoption is rarely a quick occurrence even without a format war. Convincing the consumer a new generation pre-recorded versions are worth investing in will take a lot. The consumer has a plethora of viewing options all of which already struggle against one another and Blu-ray will need to find a niche among them. Consumer adoption of new formats never happens overnight and many of the competing options to Blu-ray have a leg up in moving from the early-adopter phases and into the mainstream psyche. The integration of Blu-ray’s predecessor in that of DVD over VHS took several years and the right alignment of positioning and perception, content provisioning and distribution chain realignment in order to be considered a success. Even the consumer’s adoption of MP3s (and competing DRM-formats) over CDs took several years and is still widely considered incomplete despite the double digit year-over-year drops in physical CD sales.
The format war itself hindered not only consumer adoption of either format, it ultimately hurt the high definition platform itself. Had unity prevailed in the early days of the concept and the migration from traditional DVD to the next generation been more fluid the early-adoption cycle would probably have proceeded some of the competing offerings in the market place. Furthermore, those consumers who chose incorrectly now feel burned by their early adoption and are left with incompatible technology and may not adopt Blu-ray right away, and those who were rooting against Sony for their own personal reasons also may deflect adoption. Finally, due to the infighting between the two camps, consumer perception of the platform is confused and lacks in many ways a definition.
Blu-ray will not only be competing with DVD and the foes that faced DVD in conversion but new technology from any number of non-traditional places. Content providers, distribution channels, consumer patters and more all play a role in if and how the consumer is able to accept Blu-ray. Adoption will not necessarily be as fluid as it was to VHS or even from VHS to DVD, as the struggle will not only be to overcome the previous format, it will be to face real competition to the format itself from the internet and other storage devices for video formats.
Diving into the Deep Blue Competition
The DVD: It was easy to conceive the VHS to DVD changeover in the 1990s as not only was their near immediate unity in the manufacturing between the rival Toshiba and Phillips-Sony camps but it also patterned well with the previous consumer adoption of CDs from cassette tapes in the latter part of the 1980s. For content providers, the cost differential between production of VHS and DVD was no where near as substantial as that between DVD and Blu-ray which meant even short run or niche releases could be made available, thus allowing over a short period of time an enormous variety of cost-effective content to be made available to the consumer. The flexibility of DVD offerings keeps the format viable especially in the wake of the user-generated generation who can use the cheep permanent storage of DVD-ROM to save their own A/V works. Furthermore, so long as DVDs are sold through big box retail at loss-leader status and supported by rental companies at their present cost compared to new-format Blu-ray releases at full-price there will continue to be a consumer draw to them.
The substantial technological jump decreased storage space, increased picture and sound quality and included new features such as chapter jumping, bonus footage and even compatibility with computers. The cost of conversion was considered nominal by many consumers as compared to the benefits achieved and the DVD standard now leaves a lot from Blu-ray to overcome. The picture and sound enhancements require HD home A/V equipment beyond the player unlike that of DVD which could be taken complete advantage of while still utilizing standard home A/V equipment. Despite the home theater craze and increased HD-TV purchasing, fidelity is fleeting with the consumer (consider the average consumer listened to 128-bit compressed music though muted frequency rendering earbuds and believes it “sounds good”) and Blu-ray’s increased cost may be difficult to overcome with only nominal changes in fidelity over the existing DVD.
DVR: The advent of digital video recorders changed the face of home viewing greatly over the last decade. From stand-alone offerings such as TiVo to the cable company set-top integrations, DVR allows the recording and replaying of programming fluidly, thus replacing the final bastion of the VHS generations need to hold onto the bulky recorders. As more programming moves from standard signal to digital and more networks turn to true HD-TV formatting for their programming the quality of the available recordable content will increase. Furthermore, as the storage capacity of the recorders increases the ability to archive larger amounts of programming allows consumers to hold their content longer than near term. Next-generation DVR capability may also include integrations to other technology such as on-demand streamlining and internet download compatibility as well as greater indexing of the archives to create libraries similar to the way consumers currently build them with traditional DVDs.
If DVR capacity and options continue to migrate in those directions and integrations via similar products connecting live programming to storage and manipulation facilities it will erode the need for consumers to rely on pre-recorded material. This would not only sound the inevitable death bell to DVDs in the vein of what the CD is experiencing with the digital music revolution, it would present an ever-present challenge in even integrating the Blu-ray into the psyche of the consumer. This is especially true because of the DRM compatibility issues some consumers might face in attempting to fully utilize the format.
On-demand: Currently, the on-demand market is cornered by the cable providers, however, like DVR on-demand offers a high level of consumer flexibility in their viewing. The first step is home theater systems becoming further integrated technology so the home computer acts as the hub rather than a traditional receiver. Bridge products are currently available and competition is already linking up by the way of online providers such as Netflix and Apple providing movie and television content available through their sites. It will venture from the current cable option of simply selecting the programming you want from a pre-determined menu of temporary selections to a deeper library of works available for either short-term rental or long-term purchase in digital form. Provided access times continue to decrease, the quality of the transfer continues to increase and the storage capacity becomes larger and more stable on-demand would circumvent the need for a next generation pre-recorded disc like Blu-ray.
Theoretically, in the near future, consumers would be able to stream or download even greater catalogue offerings than that of any store’s stock with greater immediacy via on demand resources based on whatever method of connectivity they have (cable access, wired internet or even WiMax). The at-their-fingertips selection and impulse fulfillment plays against Blu-ray as consumers don’t receive instant entertainment gratification by having to go out and purchase a physical product and are limited by the Blu-ray selection currently in-stock or even carried by their retailer of choice.
Mobile integration: Why stop with the conception that a combination of elements from DVR and on-demand would not circumvent the need for Blu-ray? Consider the fact that Blu-ray itself is a four-inch disc, not including the packaging, and contains only one high definition selection, so transporting multiple selections requires carrying multiple discs. Then, take into account the player adds size and weight to what you are carrying and since the picture is high definition, the screen needs to be a rectangle, not the square that would seemingly easily fit over a circle object, thus potentially increasing the size. Next, the power application to run said device is pretty high as it needs to fuel the lazar, the motor to spin the disc and the screen. Finally, remember this is a Blu-ray player, it is not set up to necessarily do anything else yet, just replay the pre-recorded Blu-ray disc the way the walkman did for cassettes and CDs back in the day or the laptop DVD player attempted to do in the latter half of the last decade. The end result is not exactly the type of unit one can imagine easily transporting with them in terms of either functionality or portability.
However, despite the relatively low usage rate of mobile digital video players (typically packaged as part of MP3 players or cell phones) at present, they exist in early-adopter form in the market. Theoretically, they have a higher penetration rate in ownership than usage because of a lack of compelling mobile content and limitations in viewing. However, as both the content increases, the delivery becomes faster and more reliable, storage becomes greater and the notion becomes more integrated into life (probably initially via drivers such as YouTube and similar social video networks) mobile television and mobile feature film will eventually find their way into the consumers daily habits. If this happens in the near future the portability alone could be the undoing of Blu-ray.
The consumer wins out in the fact that one format for the high definition platform now exists in Blu-ray. However, the consumer looses in Blu-ray’s win due to the excessively high cost of players, higher cost of pre-recorded content and ultimately higher cost of blank discs and recorders for replication as the recorders replace CD- and DVD-Rom drives as permanent back up options for computers and other (consumer level) storage devices. Blu-ray also includes a great deal of encoding, most specifically Advanced Access Content System (AACS) as a DRM technology on the discs, BD+ or BD-j self-protecting DRM encoding (effects players and discs), and several proprietary Sony codes involved in de-encrypting the A/V signals. Although probably not immediately perceivable as problems, as the penetration rate becomes greater and usage expands beyond simple stand-alone player-to-television playback it will certainly effect the consumers ability to fully utilize the content, especially as compared to what they are accustomed to with pre-recorded works on CD and DVD already.
Both the film and electronics industry win in the fact there is a single format to support as well. Unfortunately, for them too, until they can significantly reduce the manufacturing overhead they are stuck with higher costs for both the players and the discs which either need to be subsidized (read: taken a loss on) or pass along to the consumers (which detracts from adoption). Also, the complexity of the DRM technology (AACS, BD-j and Sony’s proprietary encoding) and the associated licensing of those technologies both for the manufacturing of players and the creation of discs complicates the process and adds further costs. Furthermore, as is usually alluded to with Sony and technology, they are perceived by many as hindering technological progress as a cost saving, profit-taking measure which is in contrast to some of the more technologically leading manufactures in the industry and this could hurt the further technological progress of Blu-ray or any integration of parallel formats due to licensing issues designed to protect Sony’s investment in the format.
Where and how things progress for Blu-ray now is unknown. Some studios are hoping the paltry $170 million spent on hi-def recording last year will blossom with the single format to over $10 billion in 2008 and electronics companies hope the aprox. 15 million players in the market (including stand-alones and pre-tethered to computer and gaming console versions) will eclipse 50 million under the single format with a user rate of greater than the nominal percentage currently taking advantage of the platform. Realistically, however, there is probably more work to be done than simply winning the format war over HD-DVD for Blu-ray, including that of the final stage phase out of existing the HD-DVD players and catalogue to take place between now and Q4 2008 in retail assuming consumer sentiment for Blu-ray is able to buoy short-term interest in the platform.