High Definition DVD Format Turns Competitive

Two years ago, the looming format war for the next-generation DVD was looking like a cakewalk.

The DVD Forum, the trade group behind the original DVD specification, had thrown its backing behind the Toshiba/Warner Bros.-developed HD-DVD, but the Sony-backed Blu-ray DVD seemed to have all of the momentum.

Since then, the fortunes of Toshiba, Warner and their allies – most notably Microsoft – have swung in the opposite direction. HD-DVD was first to market while Blu-ray struggled with hardware problems.

The first HD-DVD discs looked beautiful, a compelling reason to upgrade. The first Blu-ray discs were singularly unimpressive. The only player on the market, from Samsung, was twice as expensive as the Toshiba HD-DVD player ($999 vs. $499).

Even more embarrassing, the Samsung cannot play dual layer, 50GB Blu-ray discs, which have twice the capacity of single layer 25GB discs.

The first HD-DVD player landed in retail stores in April, while the first Blu-ray deck showed up in June. For the first six weeks, high-definition disc players made up a scant 0.4 percent of overall hardware units sold and 3.6 percent of revenue, according to a report from market research firm The NPD Group.

So high-definition DVD is hardly eating anyone’s lunch, or setting the world on fire. DVD aficionados on boards like Home Theater Forum and AVS Forum made no secret of their dislike of the format war, with most promising to shun both formats until there was a clear winner.

One of the more vocal supporters of Blu-ray was Bill Hunt of The Digital Bits, one of the most widely-read DVD sites. Admitting that he was motivated by a desire to see this format war end quickly, Hunt said on his site “I was quick to sing the potential praises of Blu-ray Disc early on.”

Since then, he’s had his mind changed. The first Blu-ray discs were unimpressive visually, the Samsung player has been very poorly reviewed and many people feel the PlayStation 3, Sony’s next-generation console with a built-in Blu-ray drive, is too expensive.

HD-DVD has done far better in terms of quantity and quality of movies, and has the better player, he said.

“If the BD camp doesn’t do something dramatic and fast… they will have lost the hearts and minds of the early adopters to HD-DVD. To my thinking at least, HD-DVD is looking better and better all the time… and it seems to me it’s now the format to beat,” he wrote.

Still, Ross Rubin, director of industry analysis, consumer technology, at The NPD Group said the slow start is a natural reflection of a new product launch and not really a reflection of consumer boycott.

“I think at this point it’s because both formats are aimed at the videophile; it’s less about the format war at this point, which would be of greater concern to more mainstream consumers,” he said.

Most of the buyers at this point are high-end consumers with HDTV sets, which is growing but doesn’t have a large market penetration. Plus, there are only a few dozen titles available for both formats, which doesn’t make it compelling.

He attributes HD-DVD’s newfound momentum to shipping, but doesn’t count out Blu-ray as yet. “I think a lot of the strength of Blu-ray is the broad number of manufacturers that have committed to it, and we have yet to see a lot of them launch,” he said.

Wolfgang Schlichting, research director for IDC’s Storage and Enabling Technology, agreed.

“Blu-ray has done well on perception,” he said. “They have done a much better job in terms of marketing and PR even before people were shipping products.”

HD-DVD is a derivative of regular DVD, while Blu-ray is a whole new design. That meant HD-DVD was a cheaper transition and easier to migrate the technology, said Schlichting.

He attributes the poor quality of Blu-ray video to using the older MPEG-2 codec, used in standard DVD, instead of the newer VC-1 codec, which is designed for high definition and is used in HD-DVD. “It looks like Blu-ray went MPEG-2 because VC-1 was not as widely available,” he said.

That seems odd, since HD-DVD launched first. The fact that Microsoft developed VC-1 and is in the HD-DVD camp might or might not be a coincidence. “I wouldn’t say it had something to do with it, but wouldn’t rule it out either,” he chuckled.

For now, the wildcard this holiday is the PlayStation 3. There have been reports in DigiTimes, an Asian technology publication, that Nichia, which currently holds 80 percent of the global blue laser diode supply, can’t match the need.

Nichia’s yield rate for blue laser diodes is only around 30 percent, according to the report. This could impact driver makers and impact availability through at least the first quarter of 2007.

Only Pioneer and Plextor are currently able to maintain actual shipments, said DigiTimes. More importantly, it said the number of PlayStation 3 consoles available for Christmas would be cut in half, from four million to two million.

Kim Otzman, a spokesperson for Sony Computer Entertainment, would not confirm or deny any rumors and said Sony is still on track to deliver two million units at launch, two million more by Christmas and two million more by the following March.

Schlichting said Sony also manufactures blue laser diodes, so it would have the capacity to make its own, but a shortage from Nichia would be bad for other Blu-ray drive makers. He said some optical driver manufacturers were just plain skipping Blu-ray and HD-DVD for now due to shortages.

For now, he predicts the format war will last longer, since HD-DVD is putting up a respectable fight against Blu-ray, but adds that neither has a chance of knocking off DVD any time soon.

“It is a strong belief of mine that DVD will be around for a very long time and it’s an uphill struggle for both formats to make inroads against a popular and established technology,” said Schlichting.

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