Tuesday, October 23, 2007

Gear: The HD Format War (plus: An Affordable Blu-ray Drive?)

(Note: I assume most people interested in this post already already have a basic understanding of the Blu-ray and HD-DVD formats. If not, I recommend checking out this wikipedia page on the topic.)

A lot has been written in the media about the HD format "war." I have to admit, talking about it right now is a little silly in the first place. Frankly, sales aren't going to reach anything near DVD for a long time for one simple reason: without an HDTV, the next-gen formats are useless. While HDTV sales are booming and prices dropping, market penetration simply isn't there yet (latest numbers are around 30% of US households). This is in contrast to DVD -- the day DVD came out, every household in the US with a TV was capable of using it. Your plain old TV was all you needed to enjoy the dramatically improved picture quality.

I had to laugh when Paramount recently gushed about achieving 190k sales of The Transformers on HD-DVD during its first week. That number is relatively impressive for HD movie sales, but it was obliterated by DVD sales of 8.5 million.

People frequently cite the $200/player price-point as the magical point where everyone will suddenly go out and buy a next-gen player. This belief is based on rapid DVD adoption once player prices dropped to that point. What's being glossed over is the fact that, for a lot of people, the price is $200 plus the cost of an HDTV, which still sets you back a minimum of about $500.

All of that aside, I have a blog and I want to talk about the HD format war! My hypothesis: both formats will be with us for a long time. I have three reasons to believe this:
  • The manufacturers and content producers are too entrenched: Sony and its 3 exclusive movie studios aren't backing down from Blu-ray anytime soon. In particular, Sony uses Blu-ray as its PS3 games format, so at the very least, the format will continue to exist for that use. Microsoft and Toshiba, the major backers of HD-DVD, certainly aren't backing down either, having recently added Paramount Studios as a second exclusive movie studio.
  • There's an installed base: as I said, the numbers aren't large, but people (including me) have jumped on board and picked a side, or perhaps both sides. The installed base of users will require support in some form.
  • The formats have identical dimensions: when discussing the HD format war, the commonly cited format war is Betamax vs. VHS, which VHS obviously won despite being the technically inferior format. Those media formats weren't physically compatible -- you couldn't put a Betamax tape into a VHS player or vice-versa -- but the two HD formats are perfectly compatible, being the exact same size as a DVD or CD. That, combined with the fact that the decoding process for both formats is virtually identical, means the only thing you really need in order to make a dual-format player is duplicate lasers and pickups to actually read the 1's and 0's off the different discs. A handful already exist.

I think the future is those dual-format players. In 5 years, I expect that you'll go buy an HD movie and not even think about the format of the disc -- your dual-format player at home will take care of it all for you. For now, those players are a bit cost prohibitive, though. You can buy the entry-level player for each format for less than the cost of a dual-format player.

All of this gets me back to my original point in creating this post. Since I believe both formats are going to continue to exist and I only have an HD-DVD drive for my HTPC, I'd like to be able to watch any new HD movie that comes out, not just those on HD-DVD. That means I need a Blu-ray drive for my computer.

Unfortunately, Blu-ray drives are quite expensive and there isn't much selection. In fact, if you want a drive that just reads Blu-ray discs (no burning) you only have one choice: the Pioneer BDC-202, which sets you back $260. At this point, there's no reason a bare Blu-ray drive should cost that much and there's no reason there should only be one player on the market (that second point probably drives the first). The HD-DVD equivalent, the Xbox 360 HD-DVD drive, only costs $180 these days and comes with 5 free HD-DVDs.

One of these days, I'll jump on board with Blu-ray as well, but its selection and price has to become more competitive before I do.

4 comments:

Indy Steve said...

While the identical physical formats allow for players that play both (and I agree, soon most players will play both), there are capacity and cost differences that could be important in deciding which gains dominance.
There are a few differences in the way interactive features are handled in the two formats, but I believe capacity is a bigger issue. Capacity is larger on blu-ray (50gb vs 30gb, though both sides are in an arms race to increase this), which means that barring some new recording format soon, blu-ray will be the highest capacity recordable format. Yet at the same time, the thinness of the blu-ray layers which allows them to have higher capacity also gives them a higher cost.
However, I believe most of the higher costs with blu-ray will eventually disappear. Much of the initial cost of blu-ray is due to the need for a new production line, while hd-dvd with layers similar to dvd can be produced with much of the same factory equipment. That is not an ongoing cost as it is a one-time switch.
The larger amount of manufacturers supporting blu-ray will help to further drive down the cost. Eventually I think this will give blu-ray a clear win in the recordable format war, and do a lot to drive them to dominance in the larger war for movie distribution.

CorrND said...

You bring up two very interesting points. One is the capacity issue. At present, it doesn't seem to make much difference in the movie quality. The few studios producing on both Blu-ray and HD-DVD seem to be releasing the same encoding for both formats. There's no direct comparison for the exclusive releases, but there doesn't seem to be much difference.

If I were Sony, I'd be encouraging to studios to release higher bit-rate movies as a nail-in-the-coffin strike. If there were a real quality difference between the formats, that's a really good reason for Blu-ray to win. The only thing I can think is that they may be waiting to release a second round of "Hi-Bit-Rate Transfers" (or something like that) later in the product cycle.

You also bring up good info with regard to the startup cost of Blu-ray vs. HD-DVD production. Again, though, I find it curious that HD-DVD isn't taking advantage of its production cost advantage. If it costs less to produce an HD-DVD, why don't they charge less? If the consumer doesn't see this cost difference in the price of the end product, doesn't that make the production differences irrelevant?

I wonder if the cost of Blu-ray discs will go down over time as the start-up costs are paid down? Again, that would be a damn good reason for them to win.

The Urbanophile said...

Right now Blue Ray has 2/3 of the market. The Paramount switch is overstated (doesn't apply to all movies and is limited in other ways) and only came because an increasingly desperate Microsoft paid them $150 million to do it.

If Blue Ray reaches 75% market share in the next year it is game over.

CorrND said...

I agree, the plays being made by the HD-DVD camp -- signing Paramount, driving player prices under $200, rumors of an Xbox360-like device with HD-DVD -- scream of desperation. It's pretty apparent that the only possible outcomes are Blu-ray as the standard or format duality. The odds of HD-DVD winning are near 0% so they're playing for the draw. HD-DVD doesn't need 50% market share to achieve that.

I just happen to think that a draw is more likely than a Blu-ray win.