Who Is Drawing Out The High-Def DVD Stalemate? - Page 2

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Understanding the tech

However, consumers aren't quite up to speed on the technology. A recent survey by Leichtman Research Group found half of the 24 million households with HDTVs don't actually watch high-definition programs because they don't have an HDTV feed, either by cable or satellite. It also found a quarter of those surveyed didn't even realize they weren't watching non-HDTV transmissions.

If that many people haven't figured out they aren't getting HD transmissions, they aren't going to rush out for an HD player. Numbers are hard to come by; Toshiba estimated it sold around 70,000 units of its HD DVD players, with another 100,000 add-on HD DVD drives for the XBox 360. Microsoft would not say how many drives it has sold.

The Blu-ray installed base is considerably higher, thanks to the PlayStation 3. While the PS3 has been labeled stillborn by the press because of its poor launch, it still managed to pass the 1 million sold mark, and the PS3 has Blu-ray movie playback capabilities.

HD DVD got off to a solid start. For instance, consumers and reviewers took to Toshiba's HD-XA1 ($499) more so than Samsung's LG BH100 ($899) Blu-ray player. Plus, Microsoft came out with a $199 add-on HD DVD drive for the Xbox 360 that proved popular and earned kudos for good video playback and low price.

However, Blu-ray battled back. It had many more movie studios lined up, the PS3 launched -- however badly -- and more Blu-ray players hit the market, although they are not cheap. Toshiba's second-generation HD-XA2 sells for $399 and the XBox add-on drive is $199, while Sony's PlayStation runs for $599; Sony's Blu-ray deck is $999; the Panasonic player is $1,049; and the Pioneer Elite player costs a princely $1,899.

Both the HD DVD and Blu-ray camps are planning to release ROM drives for computing platforms. Dell and Apple are in the Blu-ray camp while HP is in the HD DVD camp with Microsoft. So far, Sony has a rewritable Blu-ray drive that sells for almost $1,000 while Toshiba has a HD DVD ROM drive only available in Japan for slightly more than $300.

Studio input

Universal Studios remains the sole major studio to produce movies only for HD DVD. Warner Bros., an initial backer of HD, now releases movies on both formats, as does Paramount Pictures.

But Sony Pictures, 20th Century Fox and perhaps most importantly, Walt Disney Pictures are exclusive to Blu-ray. This is starting to make a difference.

According to Nielsen VideoScan, Blu-ray discs outsold HD DVD by more than a 2 to 1 margin in January, and that was a slow month, with only two high-definition DVD releases. Also by January, Blu-ray had closed the gap of total discs sold by both formats.

A report from Sony released this week claims 549,730 Blu-ray discs have been sold in 2007 and 844,000 total since launch, compared to 249,451 HD DVD discs in 2007 and 708,600 total since launch. For the week ending March 18, nine of the top 10 high definition DVDs were Blu-ray.

Warner's decision to support both formats was considered surprising, since it was such a strong supporter of HD DVD in the beginning. It's the leader of the HD DVD market with 47 percent of the market and second in the Blu-ray market with 19 percent of the market. Sony leads the Blu-ray market with 32 percent.

Hunt said it was a pragmatic move. "I think Warner did not want a format war," he told internetnews.com. "They're not stupid. When they realized there's going to be two formats, it made sense to get into the game early on both formats so you're ready to go when one takes off."

Disney and Fox, on the other hand, have said the technical advantages of Blu-ray are just too great, said Hunt. Disney's forthcoming Blu-ray releases of Cars and Pirates of the Caribbean: Dead Man's Chest will be on two dual-layer discs, meaning 100GB of content. That's the equivalent of 10 standard DVDs, or four HD DVDs.

Two not always better than one?

Conspiracies aside, Rubin said the split is "eerily similar" to the split in high-end audio. The DVD Forum came up with a format called DVD-Audio, but Sony went its own way with Super Audio CD. In the end, neither format sold, digital distribution gained legitimacy and iTunes sent DVD-Audio, SACD and Tower Records to the grave.

"So if you want a conspiracy theory, there's one for you," Rubin joked. "Microsoft could want to hasten the demise of storage media so we can move to digital downloads via XBox Live."

Unreleased data from NPD shows Blu-ray picked up a lot of momentum in standalone players toward the end of last year, not counting the PS3. Part of the problem is that the Xbox add-on drive aside, the only OEM making HD DVD drives is Toshiba, while Sony, Philips, Matsushita, Samsung and Pioneer all have Blu-ray players out, with more to come.

As of now, the HDTV penetration is still too low for either to emerge as a mainstream successor to the DVD, said Rubin. He does not expect things to be decided by the marketplace until possibly the end of 2008. Until then, the two will limp along with marginal customer interest and bleeding money.