Blu-ray vs. HD DVD: War without end

UNIVERSAL CITY, Calif.--What if somebody started a format war and nobody came?

That was the question posed at the opening session of the DisplaySearch's 5th Annual HDTV Conference here. The much-hyped battle between opposing next-generation packaged media formats HD DVD and Blu-ray Disc still has no clear winner. Each of the panelists onhand to hash out the question of which side will prevail predictably had an agenda--to explain why his camp will win.

While there was no answer, several things became more clear: Studios have learned some lessons over the past year, and both sides are still essentially guessing as to what will be most compelling to consumers. Adoption of next-generation players and media is still low compared with standard-definition fare, though consumer recognition of all things high-definition is growing, which should benefit both sides.

Talk of this so-called war isn't new. But as more consumers buy high-definition television sets, and as the prices of next-generation set-top boxes and players come down and more people are exposed to the marketing push for high-definition discs from movie studios, retailers and hardware makers, they will be faced with a choice. Remaining neutral, though, is still what many are choosing.

Since this time last year, there's been some shift in the landscape of high-definition media. One of the most highly publicized changes was Paramount's decision to back off its Switzerland-like approach of offering its content on both formats and focus exclusively on HD DVD. The shift had a significant impact--at the very least on the perception of the format war, which up until that point appeared to be favoring Blu-ray.

"We can use HD discs to train consumers to move into digital, but it's a transition."

--Dan Silverberg, vice president of high-definition media development, Warner Bros.

For the record, Paramount Executive Vice President Allen Bell said the decision "didn't have much to do with the format war," but rather observations of the industry dynamics. (However, The New York Times reported that Paramount and Dreamworks Animation had both been paid off to choose HD DVD.)

"Up until (the) launch of two formats you could do an analysis and it was fundamentally a PowerPoint deck...more or less a white paper," Bell said. "We were the first company that went ahead and said, we're going to try both. A year later...does it become a good consumer proposition?" Compatibility, as well as consistency of the players from competing manufacturers and content availability led the studio to HD DVD, he said.

Though Paramount might think it has picked a winner, consumer polling by The NPD Group doesn't back up that decision. There are still plenty of factors holding up the next-generation packaged media industry as a whole.

Though NPD is forecasting that more than 1 million next-generation players will be sold and 400 movie titles released next year, there still doesn't appear to be a stated demand from consumers for high-definition DVDs. According to an NPD poll, 66 percent of respondents said they're not likely to buy a high-definition player in the next six months. "We've been seeing this over and over and over again," said Russ Crupnick, a senior industry analyst for NPD.

Besides intent to buy being low, standard-definition DVDs are just fine with most consumers. "Unfortunately, we developed the perfect product (with the DVD)," Crupnick said. "We've got to overcome the fact that we're competing against a wonderful product that's in 80 percent of households." Upconverting DVD players--players that translate standard-definition discs to output them in high-definition--cost significantly less (around $60) than HD DVD and Blu-ray players, which go for between $200 and $800.

But DVD wasn't a perfect product in the beginning, which several of the panelists were quick to point out. In fact, it was the one thing they could all agree on.

"When DVD first launched it was anything but the perfect product," recalled Andy Parsons, a Pioneer executive and chairman of the Blu-ray Disc Association. "There were many doubters that said there was little chance of overtaking VHS."

As HDTV adoption continues to creep up (8 out of 10 television purchases last month were high-definition sets, according to NPD), the number also represents potential consumers of next-generation players, because they have the displays to take advantage of high-definition content. But how to persuade consumers, first, to decide to buy a next-generation player and, second, to choose a side?

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