High-Def DVD Standards War Intensifies

The high-definition DVD war shifted into high gear this holiday season, with both sides slashing prices. The cuts have Sony's (SNE) Blue-ray players selling for under $300, while Toshiba's (TOSBF.PK) HD-DVD player is available for $200. The cost of key manufacturing parts of the companies' players will fall below $150 in early 2008, analysts at Understanding & Solutions, an entertainment consultancy, forecast. A price war could produce a winner from the formats, as the battle intensifies and profits are sacrificed to stay competitive. The edge right now seems to be on Blu-ray's side; since Thanksgiving in the U.S., Blu-ray discs account for 72.0% of the high-definition discs sold, while HD-DVD has 27.4% of the marketshare in that time.

Right now, Walt Disney (DIS), 20th Century Fox and Metro Goldwyn Mayer support Blu-ray DVDs, while Universal (GE) has sided with HD-DVD. Warner Bros. supports both players and might decide a winner if it chose one exclusively. Studios hope the new format will provide a spark in the market for DVDs, which are their biggest sources of profit, but whose sales have started to slide. They are cautious however, as the market could be overtaken by downloads or video-on-demand. "There is a very reasonable chance this market may not take off at all," said JP Gownder, principal analyst at Forrester Research, referring to high-definition DVDs. For now, the two HD formats must battle it out, because it will be tough for either to survive long term while the other exists.

Sources: Financial Times

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Comments

[Tom B:]

Blu Ray, clearly . More players out there; MUCH better technology. Prices on players dropping. Better support from computer makers.

Not surprised NBS/Universal picked HD DVD. Zucker's dumber than a brick. Picked a pointless cat fight with iTunes earlier this year which is causing red ink for NBC.

2007 Dec 21 01:01 AM

[jswede:]

au contraire, the tide has already started to turn towards HD-DVD... Fox is wavering on BluRay and Disney may soon offer HD-DVD alongside BR... the HD-DVD players are cheaper and they play standard DVDs.

2007 Dec 21 11:20 AM

[argosy:]

jswede,

Blu Ray (BR) plays standard DVDs as well. Why would you suggest they do not?

Since Steve Jobs is on Disney's board and it's largest shareholder, I think he will do his best to prevent the HD-DVD format from being one which Disney offers.

Besides, with the all those Sony PS3s out there, I think it is only a matter of time before we see BR purchases and rentals follow.

Personally, I think this is a format war which will be won by some sort of digital download rental service (even at the lower resolution 720p) with BR and/or HD-DVD becoming less important. As much as the studios would hate this, people just don't buy that many DVD's priced over $10-$15.

2007 Dec 21 01:13 PM

[jswede:]

Pointe, I stand corrected. Don't know where I picked up that misinformation.

6mos ago, I'd have said Blu-Ray was going to win this.... not so anymore.

While still lagging, HD-DVD sales are accelerating vs BR - in both players and titles. Many dual format titles are in favor of HD-DVD already, and the ones they lag in are 1:1.5 ratios or less, and shrinking.

PS3 is disappointing in sales (being nice) and the brunt of its effect on the "war" is in the rearview - the fact that HD-DVD is gaining even with the seeming head-wind from PS3 is telling.

XBox sells a HD-DVD add-on, and the new XBox will have a built-in HD-DVD.

The low low HD-DVD player prices vs the relatively expensive BR this hoiliday season should close the gap further, then comes 2008.... when the Chinese players hit:

The Chinese have HD-DVD making technology, not Blu-Ray.... when the $100 Chinese HD-DVD players hit next year, the sales trends will accelerate further in HD-DVDs favor.

I agree HD will be a digital file format in the future, and we'll not be using discs for anything in a few years.

2007 Dec 21 04:28 PM