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.

Vudu Works Its Magic, Releases HD Movies Day-and-Date With HD DVD and Blu-ray

For the first time, a movie will be available (legally) in electronic form on the same day it's released on physical media, the LA Times/AP reports.

The movie is The Bourne Ultimatum, and it will be available this Tuesday in high-def on the Vudu box - a hybrid download/streaming device - the same day as the DVD is released. The film industry term for this is a "day-and-date" release.

Usually, electronic releases are not available until the pay-per-view or pay-TV window, which is usually a month or so after the DVD release. Most such releases are in download or streaming form via the Internet, whereas Vudu is a somewhat unique device that attaches to the television set.

Still, if the experiment is successful, it could lead the way to accelerated online delivery of more films - a development that the big DVD retailers (Wal-mart, Best Buy and Target) might strenuously resist, but that might be favored by download vendors such as Apple (iTunes) and Amazon.

This development will contribute to the debate over release windows - the film industry practice of releasing a movie in phases via different media - first theatrically, then DVD, then pay cable, basic cable, and finally syndication. The industry maintains that this approach maximizes revenue, while critics suggest that refusing to make films immediately available via some form of home media encourages piracy and frustrates consumers.

Interestingly, there has been some collapse of windows related to foreign release patterns. In the past, foreign theatrical releases followed domestic. Today, due to the Internet's effect on both piracy and worldwide publicity, many large "event" films ("tentpoles") are released in some international territories day-and-date with domestic.

Feel the Burn

Retailers and individuals will now be able to burn copy-protected DVDs using the same copy protection technology, called CSS, that's used on commercial DVDs, reports Variety.

The announcement, which came after years of negotiation between studios and consumer electronics companies, opens the way for burn-while-you-wait kiosks at Wal-mart, for example, which plans to deploy such a system. Also possible: download-to-burn at home, though this requires a new DVD burner for your PC, and special blank discs.

The technology will especially benefit indies and niche libraries unable to attract shelf space. Approval was required from the DVD Forum, which controls the DVD format, and the DVD Copy Control Association (DVD CCA), which controls CSS.

What's unclear is how much effect the new systems will have on illegal download-to-burn, which works with existing DVD burners and discs, has no copy protection, and is, obviously, free.

ABC Entertainment and Warner Bros. TV in Innovative Digital Deal

ABC and WBTV have entered into a complicated deal relating to rights in shows that WBTV produces for ABC, Variety reports.

Digression - essential facts for those not in the TV biz:

Many network shows are produced by outside producers. All of the networks are owned by studios, or vice versa, or by conglomerates that own both networks and studios.

Thus, the conglomerates are frenemies - they sometimes produce content for their own networks, and sometimes for their competitors' networks. Co-ownership of studios and networks was prohibited for many years by the FinSyn (Financial Interest and Syndication rules), but those were eliminated in the mid-90s.

There's a third set of corporate players in the TV business: the affiliates. Most network TV stations are not O&Os (Owned and Operated stations, e.g., owned by the networks themselves). Rather, they are network affiliates -- standalone entities or part of station groups owned by other media companies such as Hearst.

Back to the story:

The deal apparently allows ABC to stream the shows on ABC.com in year 1 (non-permanent) for up to 4 weeks from initial broadcast, then allows WBTV in year 2 to distribute the same shows via permanent downloads, DVD box sets and non-permanent streams. Each party keeps ad revenue from its own 1-year window.

WBTV has to brand the shows as ABC offerings. This is not surprising, since consumer perception of TV show brand is the network, not the producer. WBTV has not decided where to distribute the shows.

Last year, on "The Nine," the deal was different: ABC had streaming rights and WBTV had download. Contracts with its affiliates limit the number of shows ABC is permitted to offer via download to 25%.

Slow Growth for Movie Downloads

A study by Screen Digest Magazine predicts that the aggregate U.S. and European movie download biz will be $1.3 billion by 2011, reports Variety -- only 3% of the total home vid market.

Why so low? Lack of a "single download model," the trade paper reports. Presumably this refers to the diversity of formats and websites. In other words, the only one-stop shopping for movies will probably continue to be pirate services such as BitTorrent servers. :(

Terminology refresher:

Electronic Sell Through (EST) = download-to-own = customer downloads the movie and gets to play it forever on the proprietary player corresponding to the format of the file - analogous to home-video sell-through (sale).

Broadband video-on-demand = download or streaming that is playable for a limited time only - analogous to home-video rental.