Happy Blu Year! Blu-ray to Become HD DVD Standard

Monday evening I stuffed myself into an absolutely standing-room only conference suite at the Venetian hotel, where executives of the top movie studios took a victory lap for what they described as the “inevitable” triumph of the Blu-ray high definition DVD format, which Sony (SNE) has championed in the face of Toshiba’s HD-DVD.

Time-Warner’s (TWX) Warner Brothers, the largest DVD content producer with over 18% of all product annually, helped push Blu-ray over the top with its announcement Friday it will publish movies on DVD exclusively in Blu-ray. The HD-DVD camp backed out of its planned Sunday event, and now it was time for Blu-ray to take an impassioned bow, though there was no gloating.

The panel of execs put up some fearsome statistics on their slides: 85% of hardware sold is Blu-ray at this point, versus 15% for HD-DVD. That includes some 3 million PS3 game machines, which include Blu-ray players, and only half a million actual standalone Blu-ray DVD players. PS3 did the trick, many a panelist conceded. Thanks Sony. As a consequence, 5.6 million Blu-ray titles were purchased last year, giving Blu-ray two-thirds share of “software,” meaning, movies.

In 2008, the group expects to sell 40 million titles, for a total haul of $1 billion in sales

The panel members include execs from Sony, News’s Corp.’s (NWS) Fox Pictures, Disney (DIS), and Lion’s Gate (LGF). But the man in the hot seat was Ron Sanders, president of Warner Brothers Home Entertainment. Why had he swung his support just before CES, everyone was waiting to ask. Was he paid by the Blu-ray group to cast in his lot? No, he said, “there was no amount of money that would have made it worth making the wrong choice” between formats. He also was not swayed by the opposing security formats for content encryption. “It was the consumer that decided it,” insisted Sanders, meaning, the overwhelming market share numbers I’ve just cited.

The mood was summed up by Lionsgate president Steve Beeks, who said “Blu-ray’s emergence as the single unified format [for hi-def DVDs] is now inevitable.” He paraphrased Walter Wriston, a former Fed chairman: “Markets reward, punish, and ultimately decide. The market has decided.” Time-Warner’s announcement “was just the latest step in a march toward a certain conclusion.”

And the future? It was touching, almost: with the format wars at an end, the Blu-ray camp now moves to two goals, interactivity and education.

On the first score, more and more movies will have to come not just with hi-definition video content, but also the snazzy new features that Blu-ray’s larger storage capacity allows, such as “picture-in-picture”. The first example is Sony Pictures’ release on DVD of the movie Resident Evil this past July. The group said that studios going forward will build such interactive features into their filming process for feature films.

There’s also something called “BD-Live,” which allows owners of the disc to connect to the Internet for things like downloading movie trailers of upcoming films. (Seems a bit scattershot to me.) Sony mentioned you can put a Blu-ray in your PS3 game machine and in less than two minutes, “rip” a copy of it that you can play on your PSP portable game machine. The Blu-ray disc becomes a source copy from which other uses can be had.

And education. Basically, 5.6 million titles means most people don’t really need or care about Blu-ray. Bob Chapek, president of Walt Disney Studios Home Entertainment observed that consumers didn’t know they weren’t maximizing the capabilities of their high definition television sets — and probably still don’t. So, the group last year used kiosks in retail locations and had bus tours to “educate” the consumer on why they should need and want it. “We will be extending the promo bus tour to more markets” this year, declared Chapek. “Happy Blu Year” he wished everyone in the room.

Happy Blu year, indeed.