Hollywood Insiders Second Guessing Blu-ray Support

October 18, 2006

Blu-ray - HD DVDVariety recently ran an article entitled “Pandora’s black box” which examines (among other things) how Sony and the ‘Blu-ray Disc Association’ pitched “millions of PS3’s” to the movie studios and ultimately won much of their support. The article goes on to examine some of those same executives expressing second thoughts on that support.

“While some of those studios are taking a wait-and-see approach on the impact of PS3, others are already starting to feel burned by the delays and pricing concerns.”

“PS3 was a huge deal in our coming aboard Blu-ray,” confirms one top home entertainment exec. “I’m not sure we would have signed on if we had known then what we know now.”

What I find interesting in all of this is the fail-safe approach used by the BDA, which seemingly lured many of those studios in the first place. Think about it, no matter how many stand-alone HD DVD or Blu-ray players are sold within the next 12 months, its likely (barring any other unforeseen delays) those sales will be dwarfed by the PS3, so from a pure numbers perspective I can see the allure.

However one could just as easily say the same about any number of potential scenarios, take SACD for example. The PS3 also supports SACD, are we to believe that PS3 owners will single handedly revive the failed high resolution audio format? Ok that’s a far-fetched premise but again from a pure numbers standpoint it illustrates my point.

I wholeheartedly agree the PS3’s installed base will quickly outnumber stand-alone HD DVD and Blu-ray players combined, but this may prove completely irrelevant within a few short months. It’s my understanding that Toshiba’s HD-A1 and HD-XA1 HD DVD players have been discontinued after having shipped through their initial combined production runs of 70k units, Toshiba’s replacement for the A,1 the cleverly named HD-A2 is scheduled for launch later this month with the HD-XA2 slated for later this year.

Add to this unannounced HD DVD players from other manufacturers and the up-coming Xbox 360 HD DVD player and it becomes apparent that dedicated, stand-alone HD DVD playback devices may very well eclipse the insert-number-here of PS3 owners who purchase Blu-ray movies.

That insert-number-here figure really is the big unknown and will likely remain so for several months after the PS3’s launch, I have to wonder is this by design? Could it be used to stave off critics who doubt the PS3’s impact on Blu-ray sales? It’s not hard to imagine a scenario with BDA executives staving off unhappy studio executives with ‘just wait, our base is at 1 million now, I’m sure within a few months we’ll see an upsurge in movie sales’.

My question is, when do we get back to the business of authoring titles and selling HD disc players in one format and one format only? This is what’s needed to assure the consumer at large their not about to buy into the wrong format. Enter Nielsen’s Video Scan.

On October 12th Nielsen’s VideoScan numbers for the month of August alone, revealed that HD DVD movies outsold all other high definition formats by a factor of nearly three to one. This is where the proverbial rubber meets the road folks, VideoScan numbers don’t lie, those numbers are sales not shipments and will factor heavily in future studio support decisions.

So will we see a reversal of this 3:1 margin in favor of Blu-ray, in the months following the PS3’s launch on November 17th? That’s hard to say in all honesty, in a vacuum yes 500K+ players would obviously create an up-surge in Blu-ray sales but of course the format war doesn’t exist in a vacuum.

The A2 and XA2 along with the Xbox add-on will put HD DVD into insert-number-here additional homes and from there who knows where this will go. One thing’s for certain however HD DVD has established a “beachhead” regardless of what Mike Dunn has to say on the subject. The net result of this may surprise even the most ardent Blu-ray supporters; I’m told to expect at least one Blu-ray exclusive studio to announce neutrality, before the end of the year.



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


Comments

  • Dave Mueller

    I guess I am still reluctant to buy into the PS3 owner = BD Movie buyer. I work for a custom integrator, and most of the people in my company couldn’t give two rats’ you-know-what’s about the high def formats. This is a company that sells and installs A/V systems.

    Could gamers really be all that different? I don’t buy into that logic anymore, and I would love to see one or two of the formerly exclusively Blu Ray studios to release in HD-DVD.

    I would love that, in fact.

  • Dave Mueller

    I guess I am still reluctant to buy into the PS3 owner = BD Movie buyer. I work for a custom integrator, and most of the people in my company couldn’t give two rats’ you-know-what’s about the high def formats. This is a company that sells and installs A/V systems.

    Could gamers really be all that different? I don’t buy into that logic anymore, and I would love to see one or two of the formerly exclusively Blu Ray studios to release in HD-DVD.

    I would love that, in fact.

  • Adam Griffith

    Good article. I fully agree with the scenario you stated where, with including the 360 HD DVD add-on, we will see “that dedicated, stand-alone HD DVD playback devices may very well eclipse the insert-number-here of PS3 owners who purchase Blu-ray movies.”

    There’s such a focus on hardware in these debates, especially as it comes from the BD groups and their dreaded “potential PS3 installed base,” but that’s not really what’s going to determine anything in the war. Especially that now and within a month there will be a solid handful of different/good players to use on both formats.

    No, this will be about software. How good is the picture quality, how good/popular are the titles, how many units of software are moved by someone who has an HD playback device, etc. And as it stands now BD is relying on a released catalog of basically no or very few “shock and awe” titles (a la Batman Begins, Kong, and everything else HD DVD is putting out), a catalog that has 1/3rd less titles out in general than HD DVD, a catalog who’s overall variety/content of movies is seen as generally inferior to HD DVD, and what they do have out is often poor or sub-par in the picture quality department, and then they are finally depending primarily on the PS3 to generate BD movie sales when all the PS3 will really do is sell games.

    Now don’t get me wrong, a PS3 already sitting in your house that you’ve paid off, might entice you to try out BD and high-def by buying a couple of titles. But then again why wouldn’t you just rent them, given all the uncertainty of BD quality so far? And isn’t the gamer who picks this up early planning to blow his wad on games not movies? I mean this same audience still owns these same movies on SD DVD and are generally satisfied with that, this same audience only has regular CRTs or basic first-gen HDTVs that they know really won’t work to display these formats very well. They’re probably the types who are sitting around renting SD DVDs while saving up to afford a new HDTV for general purpose use.

    Moreover, – if you are a gamer and so hardcore/rich that you’ve already purchased a sexy, newer high-end HDTV and are ready to drop the dough on the expensive PS3 and it’s games – aren’t you the same kind of person that has enough money or enthusiast-thinking that you already own a 360 as well, that you already would buy/own a stand-alone HD DVD player anyway?

    Isn’t it true that of all the things that can play HD movies that the PS3 is probably the least likely to have a strong movie attach rate? I mean the audience is either buying it for the games or are already rich/hardcore enough to own/buy either HD DVD or BD stand-alones.

    Anyway, that’s my 2 cents. The PS3 today is not the trojan horse execs imagined it would be, if it ever even could have been with circumstances being different. As it stands, the PS3 has just about every hurdle you can imagine to get over. An extreme shortage, a generally poor launch-lineup, the most expensive price for a game system ever, powerful competition from the 360/Wii, generally bad word of mouth due to all of Sony’s cocky press releases and disappointing announcments, etc, etc, etc.

    I expect the release of the PS3 to create a miniscule bump in BD movie sales that will almost immediately be eclipsed and shadowed over by HD DVD movie sales that will continue to be reported to sell at 3:1 (in conservative estimates) to as high as 16:1 (which we’ve already seen with certain higher estimates that compare HD DVD directly to BD instead of against “all high-def formats” as quoted in the VideoScan numbers above).

  • Adam Griffith

    Good article. I fully agree with the scenario you stated where, with including the 360 HD DVD add-on, we will see “that dedicated, stand-alone HD DVD playback devices may very well eclipse the insert-number-here of PS3 owners who purchase Blu-ray movies.”

    There’s such a focus on hardware in these debates, especially as it comes from the BD groups and their dreaded “potential PS3 installed base,” but that’s not really what’s going to determine anything in the war. Especially that now and within a month there will be a solid handful of different/good players to use on both formats.

    No, this will be about software. How good is the picture quality, how good/popular are the titles, how many units of software are moved by someone who has an HD playback device, etc. And as it stands now BD is relying on a released catalog of basically no or very few “shock and awe” titles (a la Batman Begins, Kong, and everything else HD DVD is putting out), a catalog that has 1/3rd less titles out in general than HD DVD, a catalog who’s overall variety/content of movies is seen as generally inferior to HD DVD, and what they do have out is often poor or sub-par in the picture quality department, and then they are finally depending primarily on the PS3 to generate BD movie sales when all the PS3 will really do is sell games.

    Now don’t get me wrong, a PS3 already sitting in your house that you’ve paid off, might entice you to try out BD and high-def by buying a couple of titles. But then again why wouldn’t you just rent them, given all the uncertainty of BD quality so far? And isn’t the gamer who picks this up early planning to blow his wad on games not movies? I mean this same audience still owns these same movies on SD DVD and are generally satisfied with that, this same audience only has regular CRTs or basic first-gen HDTVs that they know really won’t work to display these formats very well. They’re probably the types who are sitting around renting SD DVDs while saving up to afford a new HDTV for general purpose use.

    Moreover, – if you are a gamer and so hardcore/rich that you’ve already purchased a sexy, newer high-end HDTV and are ready to drop the dough on the expensive PS3 and it’s games – aren’t you the same kind of person that has enough money or enthusiast-thinking that you already own a 360 as well, that you already would buy/own a stand-alone HD DVD player anyway?

    Isn’t it true that of all the things that can play HD movies that the PS3 is probably the least likely to have a strong movie attach rate? I mean the audience is either buying it for the games or are already rich/hardcore enough to own/buy either HD DVD or BD stand-alones.

    Anyway, that’s my 2 cents. The PS3 today is not the trojan horse execs imagined it would be, if it ever even could have been with circumstances being different. As it stands, the PS3 has just about every hurdle you can imagine to get over. An extreme shortage, a generally poor launch-lineup, the most expensive price for a game system ever, powerful competition from the 360/Wii, generally bad word of mouth due to all of Sony’s cocky press releases and disappointing announcments, etc, etc, etc.

    I expect the release of the PS3 to create a miniscule bump in BD movie sales that will almost immediately be eclipsed and shadowed over by HD DVD movie sales that will continue to be reported to sell at 3:1 (in conservative estimates) to as high as 16:1 (which we’ve already seen with certain higher estimates that compare HD DVD directly to BD instead of against “all high-def formats” as quoted in the VideoScan numbers above).

  • Hoyty

    I am glad to see that some reality might be introduced into the Sony hype machine on the PS3 and Blu-Ray tie in. At this point it still seems to be a production problem. Who can get the most players in the pipe, Toshiba + Microsoft or Sony and who ever decideds to finally release a Blu-Ray player other than Samsung. My only fear is that we won’t be much farther in determining this mess a year from now than we are now. I just see the same Divx mess, with Disney and Fox on the wrong side as usual.

  • Hoyty

    I am glad to see that some reality might be introduced into the Sony hype machine on the PS3 and Blu-Ray tie in. At this point it still seems to be a production problem. Who can get the most players in the pipe, Toshiba + Microsoft or Sony and who ever decideds to finally release a Blu-Ray player other than Samsung. My only fear is that we won’t be much farther in determining this mess a year from now than we are now. I just see the same Divx mess, with Disney and Fox on the wrong side as usual.