RealTime IT News

HD DVD Down, But Still Not Out

Warner Bros.'s decision on Friday to support only Blu-ray disc as its high-definition DVD format of choice sent quite the shockwave through the home-theater community and among companies assembling in Las Vegas for CES.

Yet while many online outlets were quick to declare the rival HD DVD format dead in the water, some analysts aren't so sure.

The format war between Blu-ray and HD DVD had its origins several years before the two even came to market in 2006. Supporters of both formats had sought a way around the technical obstacles in original DVD format, which was introduced in 1997 and was rapidly approaching obsolescence.

Major industry vendors knew the 9.4GB of a dual-layer disc was simply not be enough capacity for some films, while DVDs offered resolutions only a fraction of that supported by. (High definition DVD, like HDTV, offers six times the resolution and clarity of DVD.)

Toshiba and Sony each came up with their own solutions, called AOD and Blu-ray, respectively, but the two sides could not reach an accord and ended up launching both. Toshiba renamed AOD to "HD DVD," and the format's first titles came to market in the spring of 2006. Blu-ray discs followed suit a few months later.

The split over formats divided major film studios. Sony Pictures, 20th Century Fox, Walt Disney Pictures and Lionsgate lined up behind Blu-ray, and Universal Pictures chose HD DVD.

Paramount Pictures and Warner Bros. split the difference and released films in both formats.

Neither could keep supporting multiple formats, however. That often meant releasing the same movie in three separate formats -- including standard DVD.

Warner, before it announced plans to standardize, had occasionally wobbled in its efforts to support both high-definition formats: The HD version of an early marquee title, "The Matrix," was only made available on HD DVD, for example.

Ultimately, Paramount also went exclusive, selecting HD DVD for its format in August.

"The studios are not just hedging their bets anymore, because that was a costly bet to support two formats," said Ben Bajarin of industry researcher Creative Strategies. "It costs a lot for a studio to be on three different formats, so they are going to want to scale those costs down.

"Not to say others won't jump on HD DVD, but the momentum is for Blu-ray, and I think that will continue," Bajarin said.

While the decision marks a win for Blu-ray's supporters, neither side yet appears to be gaining much headway in terms of actual sales, with consumers generally rejecting both due to the split in studio support.

Still, some fear the end may be looming for HD DVD. Paramount's decision to go exclusive struck a blow for the HD DVD camp, but the news now pales to the loss of Warner Bros., which boasts a far larger film library.

It didn't help that the HD DVD Promotion Group -- the industry association behind the format -- hastily canceled a press conference that had been scheduled to take place at CES.

"Everybody here agrees that was not the right thing to do," said Wolfgang Schlichting, vice president of optical research for IDC. "It looked like a panic reaction."

However, Van Baker, a research director for Gartner, thinks it had to be done.

"They knew instead of being an HD consortium event, it would be a press conference of 'Now what do you do?' and all the questions would be about Warner's defection," he told InternetNews.com. "That would not serve them well."

Schlichting also said the idea of Warner going exclusive to Blu-ray was not necessarily new.

"BusinessWeek wrote about it a month ago, so it's not like an insider rumor," he said. "This rumor has been going on for some time. [The HD DVD group] "should have been ready. I was more surprised about the lack of preparedness of HD DVD than the announcement itself."

While it looks bad, Ross Rubin, director of industry analysis for consumer technology at the NPD Group, said it's not over yet.

"There's been some feeling HD is toast," he said, told InternetNews.com via phone from the chaos of CES. "A lot of attendees and people in the industry think that this was the last straw -- HD DVD won't be able to come back from this significant loss."

"But in speaking to retailers, at the end of the day, all the movies are still not available on either format and that continues to create customer confusion and slow the adoption of high definition disc format," he said.

IDC's Schlichting said he believes that, at the end of the day, consumers don't want one format over another as much as they don't want to have to worry about formats at all.

"I think if consumers can buy a player that for $299 plays everything, that is what they would prefer," he said. "Once you have a dual-format player installed, [format] base-building it doesn't matter. Studios can use either format and it gives them more flexibility."

Baker said he's curious to see what the HD DVD camp does in response, beyond canceling its press conference. For now, he thinks the war of attrition between the two sides will continue into next year.

"Until all the studios are behind one format, this is going to drag on, and I don't see Universal flipping sides," he said. "There is no good story for HD DVD right now, but until everyone flips, the battle is not over."

Rubin said a clear signal of trouble would be if Toshiba, which makes hardware, starts shipping dual-format drives -- something Schlichting thinks is needed.

"If Toshiba starts shipping dual-format drives, that's a signal the war is winding down because there's little incentive for a studio to remain exclusive to HD DVD," he said.