Format Wars: The First Six Weeks

August 16, 2006

Blu-ray and HD DVDFile this one under the no-real-shocker heading but some retailers are already reporting that in the first six weeks HD DVD and Blu-ray were available to consumers, neither set any new sales records. It’s a bit odd to even report on what everyone and their brother predicted as a given but there are some interesting comments and figures that came to light in a recent Video Business article.

During the fourth annual HDTV conference, Buying Group’s David Workman characterized the launch of both formats as “the worst execution that’s happened in the industry” and “There’s a format war going on, and we need correct software support. So it has been stacked up to create failure… It’s a race to see who can string the tightest noose [around their format].”

Ken Crane’s CEO Casey Crane and Bjorn’s president Bjorn Dybdahl went as far as stating: “employees were embarrassed delivering store demonstrations of the first batch of Blu-ray films.” and “Staffers could discern little distinction between the discs and their standard-definition counterparts”.

Again, at the risk of beating a dead horse, many insiders knew there would be technical difficulties surrounding the launch of both formats. As such handicapping a horse race that could potentially last for years by the first six weeks of sales for both formats, is an exercise in futility. However I did find one figure in the article particularly noteworthy.

Ross Young founder and president of DisplaySearch cited NPD Research which claims “in the first six weeks of sales for each technology, 33% more HD DVD players were sold than Blu-ray players”. And “At steeper pricing, Blu-ray players, however, churned out 42% more in revenue.”

Putting those two figures into perspective is important. The Samsung player at $999 generated more revenue than the Toshiba players at $499 and $799 respectively, which of course comes as no surprise; the more expensive product generated more revenue. The important part as well all know however is format penetration.

HD DVD (the HD-A1 and HD-XA1) launched on April 22nd where the Samsung BD-P1000 hit retail stores as early as June 15th even though the official launch was slated for 25th. So any way you slice it the HD DVD players had about a seven week head start with early adopters

And of course as we know, early adopters bought the players (to some degree) as evident in Amazon sales ranks. Now the interesting part is that HD DVD player sales in the first six weeks of launch outsold Blu-ray players in their comparative launch period by 33%. I would have expected Blu-ray’s launch to have attracted enough early adopters to minimize HD DVD’s head start, that doesn’t seem to have occurred.

Studios care about market penetration not revenue generated by player sales, so according to at least one independent research firm, HD DVD already has a 33% installed base advantage that studios could base future software sales on. Will they? Of course not, its way too early in the process for long term forecasts

The PS3 will undoubtedly play a part in the overall installed base of the Blu-ray format but we fully expect the HD DVD camp to counter with new players and incentives in the coming months. Just how attractive those new players and incentives are to consumers however, of course remains to be seen.

So what does the NPD Research really tell us? Not a whole lot in the grand scheme of things but I think it’s reasonable to assume poor Blu-ray transfers and the negative buzz surrounding the Samsung BD-P1000 played a large part in these numbers. The real question is how fast and to what degree can the BDA get things back on track before HD DVD reaches an installed-base tipping point that would make Blu-ray’s recovery unlikely, that my friends is the multi-billion dollar question.



Posted by Bryan Greenway | | Filed Under Blu-ray, HD-DVD


Comments

  • Adam Griffith

    Great article, I agree with all your thoughts and I appreciate being able to absorb yet another positive truth HD-DVD currently has on its side with that news about the 33% penetration difference.

    …And I’d also like to you ask this:

    Wouldn’t you agree with me in predicting that the sales figures taken since those first 6 weeks would show that HD-DVD is has only increased that 33% margin?

    Man, the figures since those first 6 weeks would be the most interesting! I assume since launch – that as more movies have been released, the A1 has gotten its firmware upgrades, and word-of-mouth for HD-DVD’s excellent PQ continues to build/spread – that these things have provided extra incentive for others to get off the fence, have provided significant sales every week for the format. Hoping to toss the idea that “well, everyone who would really want one would have bought one during the first six weeks…” – I can believe this for the above reasons.

    So I’d really like to see the figures since those six weeks. Cause, seriously, I’d have to believe that any human on earth who suscribes to the theory of buying whatever offers “the best picture quality for the lowest price” (i.e. everyone…hopefully) would have been enticed over to the HD-DVD bandwagon at this stage. Not to mention the fact, that the competition (BD) seems to be trapped in FUBAR neighborhood about half a block a way from the city of “No-Turn-Around-In-Sight”.

    It’s true that there has been a drought of better releases in HD-DVD for a couple weeks now but still…

    The amount of HD-DVD titles available has/is steadily increasing (whether you personally like them or not – somebody out there must) and it seems HD-DVD is starting to have a slow turn-around on this front within the next several weeks. Disregarding a lot of what Warner hasn’t given a date yet that still could be released in the interim – the last weeks of Sept and Oct seem set to be solid peaks in the HD-DVD release schedule.

    Sept 26th:
    2 Fast 2 Furious (Universal)
    Dazed and Confused (Universal) <- COMBO
    End of Days (Universal)
    The Fast and the Furious (Universal)
    Fear and Loathing in Las Vegas (Universal)
    Lake House (Warner) <- COMBO
    Land of the Dead, George A. Romero’s (Universal) <- COMBO
    The New Orleans Concert (Concert Hot Spot)
    Tokyo Drift, The Fast and the Furious <- COMBO

    Oct 24th:
    Interpreter (Universal)
    Slither (Universal) <- COMBO
    12 Monkeys (Universal)
    Out of Sight (Universal)
    Spartacus (Universal)
    The Thing (Universal)

    Of course, this doesn’t include probably some extra, good, unannounced stuff from Warner Bros. who is always so helter-skelter with their release schedule/announcements. Obviously, anytime either Matrix, Batman Begins, or Harry Potter 4 (all titles promised to be released during summer) come out that will be another peak right there as well.

    And, of course, I expect Novemember/December to deliver the bounty of GOD with things like King Kong, Braveheart, etc.

    At this stage, it’s really getting to where I would be shocked if anybody was still willing to jump aboard the BD ship, shocked if BD is able to gain the upper-hand anytime soon. I mean, they have so many difficult hurdles to overcome just to be able to start to deliver the AV quality amd tangible advantages HD-DVD ALREADY HAS, much less start to surpass them.

    In fact, I think they’ve proven that no matter what they do – essentially they will never really be able to surpass HD-DVD where it counts with PQ, AQ, and pricing.

    I challenge anybody to come up with any convincing argument with why you still currently think BD will win the day. I don’t believe one exists anymore. Not only does BD have numerous problems it’s needs to solve to compete, but there are few (if any) signs that they will be EVER solved – and, in fact, thera are instead many signs that with several of the issues, Sony doesn’t even care.

    The only strengths Sony/BD seems to have left are the PS3 and manufacturer/studio support. And I believe the PS3 to be an overpriced, overhyped, George Foreman grill-looking thing that faces some of the toughest compeition ever (360 & Wii) with a weak launch line-up and a stigma of already having a ton of backlash going against it (…at least with the American consumer – & this surprisingly includes Sony fanboys even). Oh, and did I forget to mention the absolute truth that most everybody buying a PS3 will be doing so to play games – and not poorly-transferred, poorly-received BD titles?

    And I also believe that studio/manufacturer support is flimsy, that it is destined to not last, that the exclusive studios won’t be releasing very many (if any) triple-A titles anyway, and that’s if they even release very many titles at all…which it seems they probably won’t.

    Alright, well, that’s all I have to say for now. I didn’t really mean for this to become a pro-HD-DVD rant – I mean, I’m not un-objective – I’m just stating what I see and read with my own two eyes. If anybody is still listening and wants to answer either of those two questions I posed – that’d be cool…

    Alright, see you, and thanks.

  • Adam Griffith

    Great article, I agree with all your thoughts and I appreciate being able to absorb yet another positive truth HD-DVD currently has on its side with that news about the 33% penetration difference.

    …And I’d also like to you ask this:

    Wouldn’t you agree with me in predicting that the sales figures taken since those first 6 weeks would show that HD-DVD is has only increased that 33% margin?

    Man, the figures since those first 6 weeks would be the most interesting! I assume since launch – that as more movies have been released, the A1 has gotten its firmware upgrades, and word-of-mouth for HD-DVD’s excellent PQ continues to build/spread – that these things have provided extra incentive for others to get off the fence, have provided significant sales every week for the format. Hoping to toss the idea that “well, everyone who would really want one would have bought one during the first six weeks…” – I can believe this for the above reasons.

    So I’d really like to see the figures since those six weeks. Cause, seriously, I’d have to believe that any human on earth who suscribes to the theory of buying whatever offers “the best picture quality for the lowest price” (i.e. everyone…hopefully) would have been enticed over to the HD-DVD bandwagon at this stage. Not to mention the fact, that the competition (BD) seems to be trapped in FUBAR neighborhood about half a block a way from the city of “No-Turn-Around-In-Sight”.

    It’s true that there has been a drought of better releases in HD-DVD for a couple weeks now but still…

    The amount of HD-DVD titles available has/is steadily increasing (whether you personally like them or not – somebody out there must) and it seems HD-DVD is starting to have a slow turn-around on this front within the next several weeks. Disregarding a lot of what Warner hasn’t given a date yet that still could be released in the interim – the last weeks of Sept and Oct seem set to be solid peaks in the HD-DVD release schedule.

    Sept 26th:
    2 Fast 2 Furious (Universal)
    Dazed and Confused (Universal) <- COMBO
    End of Days (Universal)
    The Fast and the Furious (Universal)
    Fear and Loathing in Las Vegas (Universal)
    Lake House (Warner) <- COMBO
    Land of the Dead, George A. Romero’s (Universal) <- COMBO
    The New Orleans Concert (Concert Hot Spot)
    Tokyo Drift, The Fast and the Furious <- COMBO

    Oct 24th:
    Interpreter (Universal)
    Slither (Universal) <- COMBO
    12 Monkeys (Universal)
    Out of Sight (Universal)
    Spartacus (Universal)
    The Thing (Universal)

    Of course, this doesn’t include probably some extra, good, unannounced stuff from Warner Bros. who is always so helter-skelter with their release schedule/announcements. Obviously, anytime either Matrix, Batman Begins, or Harry Potter 4 (all titles promised to be released during summer) come out that will be another peak right there as well.

    And, of course, I expect Novemember/December to deliver the bounty of GOD with things like King Kong, Braveheart, etc.

    At this stage, it’s really getting to where I would be shocked if anybody was still willing to jump aboard the BD ship, shocked if BD is able to gain the upper-hand anytime soon. I mean, they have so many difficult hurdles to overcome just to be able to start to deliver the AV quality amd tangible advantages HD-DVD ALREADY HAS, much less start to surpass them.

    In fact, I think they’ve proven that no matter what they do – essentially they will never really be able to surpass HD-DVD where it counts with PQ, AQ, and pricing.

    I challenge anybody to come up with any convincing argument with why you still currently think BD will win the day. I don’t believe one exists anymore. Not only does BD have numerous problems it’s needs to solve to compete, but there are few (if any) signs that they will be EVER solved – and, in fact, thera are instead many signs that with several of the issues, Sony doesn’t even care.

    The only strengths Sony/BD seems to have left are the PS3 and manufacturer/studio support. And I believe the PS3 to be an overpriced, overhyped, George Foreman grill-looking thing that faces some of the toughest compeition ever (360 & Wii) with a weak launch line-up and a stigma of already having a ton of backlash going against it (…at least with the American consumer – & this surprisingly includes Sony fanboys even). Oh, and did I forget to mention the absolute truth that most everybody buying a PS3 will be doing so to play games – and not poorly-transferred, poorly-received BD titles?

    And I also believe that studio/manufacturer support is flimsy, that it is destined to not last, that the exclusive studios won’t be releasing very many (if any) triple-A titles anyway, and that’s if they even release very many titles at all…which it seems they probably won’t.

    Alright, well, that’s all I have to say for now. I didn’t really mean for this to become a pro-HD-DVD rant – I mean, I’m not un-objective – I’m just stating what I see and read with my own two eyes. If anybody is still listening and wants to answer either of those two questions I posed – that’d be cool…

    Alright, see you, and thanks.

  • energy_guru

    Maybe it’s the screens of the average consumer but I can definitely see a difference on my HDVD. The picture is worlds better than an upsampled standard DVD.

  • energy_guru

    Maybe it’s the screens of the average consumer but I can definitely see a difference on my HDVD. The picture is worlds better than an upsampled standard DVD.