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Re: Universal's Ken Graffeo Finally Speaks - "HD DVD is Here To Stay" - Detailed Interview

Posted by Lou van Wijhe on 01/22/08 09:58

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"Gravity" <spaceman@sucks.com> schreef in bericht
news:tRglj.3014$O07.2136@pd7urf2no...
> http://forums.highdefdigest.com/showthread.php?t=38252
>
> http://www.betanews.com/article/Interview_Universal_EVP_Ken_Graffeo_says_HD_DVD_is_here_to_stay/1200951636
>
> Universal and Paramount staying HD-DVD only. HD-DVD is here to Stay.
> Compromise might be in the works.
>
>
> In an exclusive interview with BetaNews, Ken Graffeo, executive vice
> president for Universal Studios and also the co-president of HD DVD,
> provided a behind-the-scenes look at the high-def industry and said that,
> despite the rumors, HD DVD is here to stay. But he does leave the door
> open to ending the format war by coming to some sort of an agreement with
> Blu-ray.
>
> Nate Mook: Let's start with a little background. You work for Universal,
> but you are also the co-president of the HD DVD Promotional Group. Does
> this create a conflict of interest?
>
> Ken Graffeo: I am the executive vice president of high-def strategic
> marketing. So my role at Universal is in the high-def format, and being
> that we're in HD DVD exclusively, that's where I'm concentrated. We setup
> the Promotional Group in the early summer of 2006, and board members
> include Microsoft, Toshiba, HP, Intel, Paramount, Universal and Warner
> Bros. It's very similar to the Blu-ray Disc Association -- we have
> committees and our goal is to work together educating the consumer and our
> retailers on the format.
>
> Nate Mook: How does it change things in the Promotional Group now that
> Warner Bros. has stated its intention to go Blu-ray exclusive once its
> contract obligations end?
>
> Ken Graffeo: Well, we heard about the whole move when everyone else did --
> when a lot of us were on planes flying to CES in Las Vegas. To be very
> honest with you, we have not addressed that yet -- Warner is still
> releasing HD DVD titles up until May. Warner has always been in two
> formats, and prior to Paramount's switch, they had been in two formats, so
> now that Warner is exclusive... we just haven't addressed it yet.
>
> NM: There was a lot of surprise when you canceled the CES press conference
> and meetings after Warner jumped ship. It appeared to many that you were
> simply giving up. Two weeks after the fact, do you regret canceling
> everything?
>
> KG: It's very easy to look back and say "I could have" because you always
> know the result. But at the time... imagine the orchestration of a press
> event with the presenters, the scripts, the entire presentation, videos
> that were produced -- everything. The crew was already setting up and we
> were on a plane on Friday, so not being able to get back to everyone to
> say "how do we make a change for Sunday" was very difficult. And what are
> the answers? We had no idea because we were reading and hearing about
> Warner's move the same time everyone else was.
>
> If we had our press event on Monday, it would have been different, but
> because it was right there on Sunday and we heard Friday afternoon we
> couldn't even get to everybody. If I had to go back, it was probably the
> right thing to do. The entire flow of the presentation would have had to
> been changed. When we found out at the last minute, we had to regroup and
> say "Toshiba, what are you doing?" and we didn't have any answers. I hate
> to stand in front of someone and say I don't have an answer, I don't know
> what's going on.
> At that time, not knowing and being so last minute, we had to make some
> changes. I will say that Toshiba went forward with their press event,
> which I applaud them for.
>
> NM: After Warner essentially stabbed you in the back, speculation was
> rampant that Universal and Paramount would do the same, effectively
> killing HD DVD. There was also a lot of talk about the phrase "current"
> being used in the statements. Where does Universal stand on this -- are
> you willing to say you have an ongoing, future commitment?
>
> KG: First of all, I want to say that none of those rumors were
> substantiated. Nobody ever talked to us. I know nobody talked to Paramount
> because Brenda, their PR person, sent out a statement immediately. This is
> business as usual for us and there are no plans to make any changes. We
> just made an announcement of our new HD DVD titles yesterday, with
> American Gangster. We also have a lot of other things planned. It's
> business as usual.
>
> NM: Sony claims that the PS3 has given Blu-ray the market lead -- is this
> just posturing so Blu-ray can tout higher sales numbers? Is the PS3 really
> seen in Hollywood as a device that sells movies?
>
> KG: I'll go back to what we've said over and over: the set-top player is
> the primary movie device. If you look at the attach rate of how many
> movies are bought for dedicated HD DVD players versus how many movies were
> sold for the PS3 and the Blu-ray set-top players combined, it's a 4 to 1
> gap. Which says that people who own game machines are not buying at the
> same rate as someone who owns a set-top. And on the DVD side, your primary
> player is a set-top.
>
> If you go to a store -- let's say a Best Buy or a Circuit City -- and buy
> an HDTV and then you want to get your movies to look better, you go to the
> DVD section -- you don't go to the game section. We have always been
> believers, not only historically but looking at a lot of recent research
> that has been done, that for the consumer their preference is a set-top.
> The one thing that's different now compared with VHS is that when you
> bought a DVD player, you could not play your VHS on it. People didn't
> really have libraries in the days of VHS, because movies were really
> rented -- 80% of the business was rental. Today it's different because
> both Blu-ray and HD DVD are backwards compatible, so you have to take that
> into consideration. In turn, people want a set-top player that lets them
> play their current movies just as they do now, not on a game console.
>
> NM: Price seems to be the major leverage HD DVD has, even with less
> studios than Blu-ray. Do you still believe other studios will come around
> if you sell enough players? This was the belief when we spoke to
> Microsoft's Kevin Collins 8 months ago.
>
> KG: I can't speak for the other studios, because I don't know how they are
> thinking. But what was very encouraging is that when we were at CES we met
> with a lot of retailers. And the retailers openly said, that as much as
> they hate having two formats they are not making any changes, because they
> want to wait for what the consumer does. We've always said we want to
> follow the consumer.
>
> Consumers right now are buying upconverting players -- they are outselling
> the next-gen players combined by 10 to 1 every month. They are affordable
> because they are under $200 -- the average price is $85 -- and consumers
> want to see their movies better. So pricing is very important. We saw that
> on DVD: as soon as price point went under $200 and as soon as it started
> getting close to $100 players really started taking off because you're
> hitting very consumer-friendly prices. If you want to hit the mass market,
> you have to be consumer-friendly in price. If you want to be a niche
> electronic, you're going to be high priced.
>
> NM: From a strictly consumer standpoint, HD DVD seems to make the most
> sense: players are cheaper, combination discs are possible, which enables
> a smooth transition. Blu-ray players are still in flux and current models
> except the PS3 won't be upgradable to Profile 2.0. Blu-ray is pitching
> players that will be obsolete in a year, and discs that lack the
> interactivity found on HD DVD. Why hasn't there been more of a marketing
> message on this from HD DVD?
>
> KG: The consumer today is very confused about HD. Only 12% of all
> households are getting HD programming, but 35% of households have HDTVs.
> We have spent a lot of time, and will continue to try to educate the
> consumer because there's a lot of confusion on what this means. When
> you're watching a TV show and the logo says in high definition and you
> don't have your source for high definition, it further adds to the
> confusion. People don't understand this.
>
> People have a library of DVDs, people understand HD and know it looks
> better. But they're not thinking about it from a format perspective, they
> are thinking "I want my movies in high-def."
> I think education has been very important and is something we have to
> continue doing. In Toshiba's recent press release, they said they will
> have an aggressive marketing campaign that will be launched very soon that
> will complement their new pricing strategy.
>
> Nate Mook: Apple CEO Steve Jobs recently said that "clearly, Blu-ray won
> the format war," but noted that all next-generation physical media won't
> serve a purpose, because consumers will receive content digitally. What
> are your thoughts on this? NBC Universal is investing in online delivery
> of content and Hulu.com.
>
> Ken Graffeo: First off all, the technology today is not ready to provide
> that full experience of getting the high-quality video instantaneously to
> the home. You've got broadband issues and things like that. Will that
> technology be there? Yes. Can I tell you when? It's not next year. I think
> you're beginning to see a lot more open systems and more collaboration,
> because right now you have so many unique systems and nothing is
> compatible. That's been the biggest problem, but you're beginning to see
> the walls break down.
> I always look at VOD (video on demand) that goes right to the house, and
> DVD buy rates never change. I think what you have to do is look at the
> consumer today -- the younger consumer -- and say "where are they going,"
> because that's going to be the future. Today when you look at who is
> purchasing movies, it's those 35 and older -- and they're not as savvy
> with technology as the younger audience is. The younger audience is the
> one that would be more comfortable with digital delivery.
> The DVD player was the fastest selling electronics product ever. In 5
> years, you had over 50% of the market. The reason why is because it was
> plug-and-play. You put a disc in and you pressed play. With HD DVD, the
> DVD Forum was looking at the future -- that's why you have an Ethernet and
> USB port mandatory, because they are thinking of the transition to the
> next generation.
>
> But people collect movies like they did records, and share movies, which
> isn't possible in digital. And today, in order for the digital world to
> take off, it has to be very consumer friendly -- like plug and plug. As
> soon as you get complicated, you can't go after the mass market. Once it
> gets to being plug-and-play, you could see a shift. People once thought
> rental would always be the king, and now you have sell-through.
>
> Over the course of the upcoming years -- the next 5, 8, 10 years --
> physical media is still going to be dominant. That's not to say you're not
> going to have digital, because it's going to come, but it won't reach the
> masses very quickly.
>
> Nate Mook: Is this format war going to be decided by the Hollywood studios
> and the manufacturers, or can the consumers have a voice? Over 1 million
> HD DVD owners is not a small number, and those consumers clearly don't
> want the format to go anywhere.
>
> Ken Graffeo: Where the consumer has a say is what they do and what they
> purchase. That's probably the biggest statement that could be made. Word
> of mouth is the most powerful way to communicate. If you walk into
> someone's house and watch a football game on their HDTV, you'll want one.
> Most people are very happy with their DVD, but when they see a 1080p
> movie, it blows them away.
>
> 1 million units starts word of mouth -- people get exposed, people see it.
> When you're dealing with 200,000, you're at the early adopters and that's
> not really going to spread. That's why HDTVs finally started taking off,
> because consumers walked into their neighbors' houses and said "Look at
> that flat thing on the wall, that's great." You saw in November and
> December, everyone was aggressive with pricing. You could see how
> consumers are willing to buy HD movies when you get to an affordable
> price.
>
> We released American Gangster and put it on combo disc (with DVD format on
> one side and HD DVD format on the other), because if there was confusion
> about the future, you don't lose an investment because you have both an HD
> DVD and a DVD. Look at how many machines exist with DVD. We don't want to
> limit our customers; we want to be as consumer-friendly as possible. It's
> hard to communicate everything, but once you start getting into the mass
> world, word of mouth is also very important.
>
> NM: Is there any possibility of coming together with Blu-ray to unify the
> standards at this point, perhaps with hybrid players?
>
> KG: Well, I'm never going to say it never can be done. I think everyone
> would like to see things work out, and I don't think anyone has any ill
> intention in this. It was a year and a half ago when we tried to put
> things together and it was unfortunate when it fell apart before. I think
> anything is possible, and again it comes back to the consumer who has the
> final voice.
>
> NM: A recent report showed Blu-ray with 90% of the DVD recorder market in
> Japan. Does HD DVD plan to invest in this market? It seems there is little
> demand for DVD recorders in the States.
>
> KG: DVD recorders are very big in Japan. In fact, I think the majority of
> DVD hardware in Japan is DVD recorders. There has never been a market here
> in the US, even though DVD recorders have been available. HD DVD does have
> recorders in Japan, but not in the United States, where most people have
> digital video recorders instead.
>
> NM: What's the next step for HD DVD?
>
> KG: I think Toshiba has put a very aggressive program in place not only
> with price, but also with marketing. We have been talking to the consumer,
> letting them make choices. We also had our big new release yesterday
> announcing American Gangster. The film has all of the interactivity and
> Internet features, and we're continuing to release titles. When I say
> business as usual, it's business as usual in releasing. But Toshiba has
> really stepped up with their campaign to the consumer.
>
> NM: Where do things stand on CH-DVD, the Chinese format that's based on HD
> DVD. It seems to me that is a huge market with 2 billion people, and it's
> compatible with HD DVD. If studios want to sell in CH-DVD in China,
> wouldn't it make sense to also sell HD DVDs in the Unites States?
>
> KG: Well, I know that CH-DVD players are in production and their date is
> in time for the Beijing Olympics. They are forecasting sales of somewhere
> around 8 million HDTVs because the Olympics are broadcast in high-def and
> the CH-DVD players are going to be launched in conjunction with that.
> When you look at the Chinese market form a studio distribution standpoint,
> because of a lot of the past piracy issues it's not a developed market
> like most of Europe and US for the studios selling movies. Everybody is
> working to try to move forward with that, but I think it's further down
> the road. The more important issue than high-def in China right now is how
> to distribute without a fear of piracy.
>
> NM: Will all future Universal HD DVD releases be combination discs?
>
> KG: All of our new releases that Universal has made since last September
> have been combo discs [with standard DVD on one side]. We have no plans to
> change that, and our retail partners are saying if you want to go to the
> mass market, you don't want to limit consumers into only being able to
> play it on one device.
>
> NM: Thank you for taking the time to speak with us today, Ken. We, and our
> readers, appreciate it.
>

 

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