Format War Over: Toshiba Drops HD DVD

It's official: Toshiba has discontinued HD DVD, reports Variety Asia. That's the end of the format -- Toshiba is the owner of the format -- and of the high-def DVD format war. The move follows a string of recent setbacks for HD DVD, and should give a boost to that format. It may also delay adoption of Internet downloads as a format, at least until there's a better way to get Internet content onto TV sets. Blu-ray wins - unless the Internet does.

Blu-ray Wins

In the presidential campaign, the battle between blue states and red states hasn't yet begun, but in the DVD format wars, there's finally a victor, reports the New York Times (although the LA Times is a little less certain), and it's blue. Blu-ray, that is.

HD DVD suffered a quick succession of body blows: Last year, Target stores dropped HD DVD (though Target still sells the players and discs online ). Then, in the last six weeks, Warner Brothers, Best Buy, Netflix, and yesterday Wal-mart, in a coup de grace, each abandoned the format.

A question worth asking - and neither article does - is why Blu-ray prevailed. Perhaps because the discs have greater capacity, perhaps because the format (my sources tell me) have better technology, or perhaps even because the name is cooler (never underestimate the power of branding).

The other question, for Blu-ray and its backers, is how much of a window of opportunity they have to push their wares. On the one hand, many consumers may see little reason to upgrade their players and libraries for only an incremental improvement in quality. And on the other hand, digital downloads are growing in popularity, albeit slowly. The Blu-ray hardware companies will have to reduce their prices, and the studios will have to do likewise with disc prices, if they want to overcome consumer resistance, and establish significant market share before downloads become a real threat.

And not to forget the just-settled writers strike, the battle between discs and downloads will have an effect on writers residuals. See my article on DVD residuals and my analysis of the WGA deal (note discussions of download residuals and DVD residuals).

Meanwhile, Toshiba, the primary backer (and owner) of the HD DVD technology, is apparently not expected to withdraw the technology anytime soon - Microsoft still supports it, as do three studios - but the format war is over. According to the NY Times, Toshiba execs wouldn't even return calls.

DVD + Hi Def = $20 billion in 2012

"By 2012, standard DVD discs will total $10 billion in U.S. consumer sales, HD DVD $5 billion and Blu-ray $5 billion," per Adams Media Research, as reported by Video Business.

This compares with 2006, in which DVD was a $16.5 billion business, according to the Entertainment Merchants Association trade org. (Unclear if this also includes hi def, but the difference is probably not great either way.)

That growth, even in the face of the continued hi def format war (Blu-ray vs. HD DVD), means that the WGA's failure to achieve an increase in the DVD residual (see WGA Strike - Negotiation Issues) will continue to represent a significant loss, as I previously predicted. See Slipped Disc: Why DVD Residuals Still Matter — and Always Will.

No End to DVD Format War In Sight, Report Says

The high def DVD format war will continue at least through 2011, predicts a report by Screen Digest, as reported in Video Business Magazine. The sales split between Blu-ray and HD DVD will be 50-50 at that point, and both formats will have widespread support from consumers, and probably from all studios. In other words, if the report's right, there probably won't ever be a single winner.

Blu-ray v. HD DVD

Recently, it looked like Blu-ray was winning the format war in high-def DVDs. Sales were 2-to-1 in Blu-ray's favor, several studios were Blu-ray only (HD DVD had only one exclusive studio partner), and retailers were beginning to line up in that direction as well.

Last week, though, Blu-ray suffered a major reverse: Paramount, and sister studio Dreamworks, announced that they were dropping Blu-ray and going HD DVD only. Suddenly, the high def war is back in high gear. And today, reports Video Business, Canada’s Venturer Electronics announced a $199 Chinese-manufactured HD DVD player for Q4.

But while the industry fiddles, consumers do a slow burn. A very slow burn: most consumers aren't interested in any of this, and smart ones will stay away until the battle ends and one format prevails.

Don't hold your breath though: there's so much money in licensing fees at stake that we may not see a resolution for another year or two, at best. At that rate, standard def DVD will live on for a long time to come, at least until download to TV becomes a reality. Maybe the upcoming Vudu box will make that happen (I've seen it and it's pretty sweet).