Posted by Ablang on 10/14/07 02:37

Why No One Wins in the High-Def Format War
What does Paramount's defection to HD DVD mean for consumers? Nothing
good.
Melissa J. Perenson, PC World
Wednesday, September 19, 2007 1:00 AM PDT

http://www.pcworld.com/article/id,137267/article.html?tk=nl_texcol



The ongoing tussle between backers of the two high-definition media
formats--Blu-ray Disc and HD DVD--took a dramatic turn with the news
that Paramount would release all future titles on HD DVD only. The
studio's statement last month set off a spate of announcements from
other parties as members of each camp tried to rally the troops and
stake out their positions heading into the holiday season.

The news couldn't come at a worse time, what with consumers revving up
to make a buying choice this holiday season--assuming they're ready to
jump into the high-def fray at all. Suddenly, what had been a fairly
clear advantage for Blu-ray became much more uncertain. And that's
actually not a good thing for either fledgling format.

Before Paramount's announcement, Blu-ray appeared to have an enviable
edge: Two Blu-ray discs were being sold for every HD-DVD disc, and the
format's studio backing was wider than HD DVD's. For a while, more--
and cooler--titles seemed to be coming out on Blu-ray (Pirates of the
Caribbean, anyone?) than on HD DVD. Even retailers appeared to be
voting for Blu-ray, with Blockbuster saying that it would stock HD DVD
in only 250 out of 1700 stores slated to carry high-def titles (all
will have Blu-ray), and with Target declaring that it would promote
Blu-ray players in its stores.
The Paramount Decision

The Paramount announcement caught the Blu-ray Disc Association and its
members off-guard. Even Andy Parsons, who heads the BDA's promotional
efforts in the United States, expressed surprise at Paramount's move.
Like many observers (myself included), Parsons would have understood
if Paramount had taken the step earlier this year, before Nielsen
sales data began showing stronger support for Blu-ray than HD DVD. But
now?

Paramount CTO Alan Bell made some valid points, though, in explaining
the reasons behind Paramount's decision. Many of the reasons he cited
were technical ones; he didn't get into the business side too much,
leaving that for other studio spokespeople. While I don't for a minute
believe that the decision was wholly based on technical reasons, I do
believe that Bell is right on one specific point: the Blu-ray specs
mess.

Right now the Blu-ray Disc format is in transition, as new minimum
requirements will go into effect come October 31. All players will
need to support up to 256MB of storage and secondary audio and video
decoding (which enables features such as picture-in-picture content).
Additionally, players supporting BD Live--the much-touted Internet-
connected interactivity that the Blu-ray Disc specification calls for--
must have 1GB of storage and an ethernet connection as well as the
secondary audio and video decoding.

The brewing confusion lies in the fact that the latest Blu-ray Disc
players don't have those features; furthermore, it's unclear as to
whether the manufacturers of the players announced at the giant CEDIA
home-theater trade show earlier this month (LG, Pioneer, Samsung, and
Sharp) will be able to offer firmware upgrades to those models to
enable what's being referred to as the Blu-ray 1.1 profile (which
encompasses all of the new specs that go into effect October 31).

I have no doubt that these new Blu-ray players, like the ones that
have preceded them, will play all movies and TV shows in gorgeous high-
def. But the players you can buy this holiday season most likely won't
be able to deliver the full Blu-ray entertainment experience as movie
discs ship with new interactive features. Next year, and the year
after next, greater features and interactivity will be coming,
assuming Blu-ray persists as an entertainment format. Do you really
want to have to buy yet another player just to handle the cool, extra
disc-playback features you read about in a review?

Following so far? If so, you're doing better than most folks I
describe this situation to. And you're probably ahead of the masses of
consumers who will converge on Best Buy and other retailers this
holiday season.

No wonder, then, that the player specs might be an issue for a movie
studio. How can studios author content without knowing the
capabilities of the player? How can they market the extras, knowing
that the early adopters who bought a player in the last two years
probably won't be able to view that content? This is a huge marketing
and educational hurdle that the Blu-ray camp must face as new players
and new features start to appear. In this respect, HD DVD holds an
advantage over Blu-ray: From day one, every HD DVD player has been
able to handle the same level of interactivity. As time goes on, that
could prove a winning strength of HD DVD.
Any Winners in the Room?

Maybe saying that no one wins here is too strong a statement.
Certainly, the Paramount announcement is a clear coup for the DVD
Forum and the backers of HD DVD (led by Toshiba, Microsoft, and NBC
Universal Studios). Aside from Toshiba's price drops in the spring and
summer, HD DVD had really had no momentum going. The Paramount
announcement reinvigorated the HD DVD movement.

Assuming the rumors of a $150 million payoff are true, Paramount is
likely the only other party that doesn't lose. Although Paramount's
Bell told me that the studio's HD DVD exclusivity deal doesn't have a
timeline attached to it, I've heard through the grapevine that the
agreement may be limited to just two years. If so, my guess is that
the payoff--whatever form it took (reports say that it wasn't a cash
payment, but Paramount is officially mum on the terms of this
arrangement)--more than offsets any of Paramount's potential losses
from not having its movies and TV shows available in both HD DVD and
Blu-ray.

Sure, consumers will get angry, but in the long run, if Star Trek fans
buy Paramount-produced Star Trek titles on HD DVD, and if they
ultimately need to buy them again in Blu-ray because Blu-ray becomes
the industry's format of choice in the future, then they're going to
end up buying the titles again. End of story.

Toshiba will likely see some uptick in player sales thanks to
Paramount. And because the company's players are relatively
inexpensive (the new HD-A3, due out in October, will retail for $300),
it won't surprise me if some consumers end up opting for HD DVD just
because they can afford it.

The Consumer Quandary

Meanwhile, consumers remain caught in the middle. Forget the specs
battle for a moment. Take away all the minutiae that the average
consumer doesn't want to bother with (and, frankly, shouldn't be
bothered with). Why buy a Blu-ray player today when you know something
better (Profile 1.1) is coming along? The answer is, of course, that
you want to see Blu-ray content today, not tomorrow or (more likely)
next year or even further into the future.

As more and more high-def TVs enter homes, consumers clearly will want
high-def content to play. If all you care about is picture quality,
and you want the movies coming out on Blu-ray, you'll want to buy a
player this holiday season. But you'll be buying a piece of equipment
that will be almost instantly obsolete.

Ultimately, which format you'll buy will depend on the movies you
want. You may never have noticed which studio produced (or
distributed) your favorite films and TV shows, but given the current
state of affairs, now you'll have to. Paramount and Universal are
exclusively HD DVD; Disney, Fox, Lionsgate, MGM, and Sony are
exclusively Blu-ray. Warner Bros. is format agnostic, and says it
plans to continue offering its content in both formats (though the
rumor mill is saying that both HD DVD and Blu-ray backers are actively
courting Warner to go exclusive to one format).
What Should a Buyer Do?

You could solve the problem by opting for a dual-format player such as
the upcoming LG BH200 or the Samsung BD-UP5000. Even though neither
model, as it is, supports the Blu-ray Profile 1.1 spec, they both can,
at least, play Blu-ray and HD DVD titles. That alone is a boon for
consumers faced with choosing between the two formats. But you'll be
paying a hefty premium for such convenience: For the price of one of
these devices, you could buy a pair of stand-alone players, one in
each format. That's a sad commentary on the state of these
technologies and this format war, if you ask me.

Many in the industry seem to think that this holiday season will be a
decisive moment in the format war, and I have to agree. The format
that enjoys more traction in hardware and software sales during this
season will be the one that has momentum going into next year and
beyond. This year has been the grace period for the two formats to
work out the kinks, get their acts together. Analysts have been
predicting that 2008 will be the year Blu-ray and HD DVD expand into
the mainstream, as prices fall and the production of discs and players
increases.

But for 2008 to be a year of growth, consumers will need to feel a
modicum of confidence about the format they're buying. Or, they'll
need to resign themselves to the possibility that whatever they buy
may become obsolete fairly soon--but at least they'll have some
immediate gratification.

I recommend skipping this holiday buying season entirely. Neither
format feels mature enough for anyone but gamblers willing to risk
buying a player and media that might not be around a decade from now:
Blu-ray's specs are in transition, and HD DVD just doesn't have wide
enough studio support, even with Paramount on board. HD DVD needs at
least two more studios to tip the scales fully in its favor.

Blu-ray will be ready for the masses once the next generation of
players hits sometime in 2008. But regardless of which format you go
with, if you're patient and wait another six to eight months before
buying a player, you'll likely be rewarded twofold: first, by saving
bucks on your hardware purchase, and second, by having more confidence
in whichever format you end up buying.

If I were a betting person--and assuming the status quo, with no other
business deals cropping up to sway a studio from its current
allegiance--I'd still lean toward Blu-ray as the winner in the long
haul, in large part because of the studio support it carries. But the
Paramount deal makes that call less clear-cut, and confuses matters
for the time being.

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