Blu-ray Wins The Dvd Format War

The Age

Thursday February 28, 2008

Asher Moses

As the dust settles, HD-DVD concedes its loss, writes Asher Moses

THE short, sharp war over the next generation of high definition DVD players has ended with Toshiba's announcement that it will cease all of its HD DVD player and recorder shipments next month.

The decision to drop the HD DVD format effectively hands victory to Sony's rival Blu-ray format.

Universal Pictures, one of only two major movie studios still supporting HD DVD, has already announced it would now drop the format and produce its HD films on Blu-ray disc.

The other studio, Paramount, also came onboard. "We are pleased that the industry is moving to a single high-definition format, as we believe it is in the best interest of the consumer," a statement read.

The move will mean consumers won't have to worry about choosing a format that could eventually become obsolete.

But the reduced competition could eliminate incentives for the rival Blu-ray camp to keep prices low.

Craig Kornblau, president of Universal Studios Home Entertainment and Universal Pictures Digital Platforms, said the death of HD DVD meant the path for widespread adoption of the next-generation platform had finally become clear.

"The emergence of a single, high-definition format is cause for consumers, as well as the entire entertainment industry, to celebrate. While Universal values the close partnership we have shared with Toshiba, it is time to turn our focus to releasing new and catalogue titles on Blu-ray," he said.

Around the world consumers have generally steered clear of both formats due to uncertainty around which format would be victorious.

Even so, Blu-ray has eclipsed HD DVD in sales in Australia since the launch of the formats, despite aggressive price cuts from the HD DVD side.

This month Microsoft cut the price of its HD DVD player add-on for the Xbox 360 by half to $129.95, while in January Toshiba almost halved the price of three of its players.

According to market watcher GfK, Blu-ray accounted for 81% of all high-definition player sales in December. This was consistent with sales results throughout the year.

But that figure doesn't include Playstation 3, which has a built in Blu-ray player and, according to GfK analyst Sharane Lewis, accounts for 95% of all high-definition players sold to date.

A Sony spokesman said about 155,000 PS3s were sold in Australia last year. The console debuted locally in March.

The success of the PS3 has done wonders for Blu-ray's market share and this has translated into superior software sales.

Last year, 83% of high-definition movies sold were in the Blu-ray format, with HD DVD making up the remaining 17%. In January Blu-ray's lead dropped slightly to 80%.

The losers in this war are the early adopters who jumped on the HD DVD bandwagon.

Toshiba is refusing to give any refunds or sweeteners to HD DVD player buyers who will lose out, saying the players still have "inherent value".

Toshiba has promised to provide full product support and after-sales service for all existing HD DVD owners now left with obsolete home entertainment systems. But it has also ruled out taking unsold stock back from retailers.

"There is nothing wrong with the products so we aren't accepting returns from customers," Toshiba Australia general manager Mark Whittard said in a press conference announcing the discontinuation of HD DVD.

"They (customers) understood that there were two competing formats and understood that one of them would probably prevail . . . so they made the decision to go with HD DVD."

Mr Whittard said HD DVD players can still be used to play CDs and DVDs, which can be upscaled to near high-definition quality. He said despite the death of the format there were still 1000 HD DVD movies worldwide that consumers can buy.

Despite denying the players were obsolete, Mr Whittard said he believed that from as early as next year next-generation DVD technology would be leapfrogged by online movie downloads.

JB Hi-Fi spokesman Scott Browning said he believed Toshiba would work quickly with retailers to formulate exit strategies and make good on its commitment to provide support for existing players.

"The HD format battle was always going to be about the movies not the product," Mr Browning said. "HD DVD started from way behind with movie company support and its hopes would have been devastated by the recent Warner decision to back Blu-ray exclusively."

It is understood retailers will be able to return all unsold HD DVD discs to suppliers.

The HD DVD camp had suffered a series of defections since Warner Bros announced in January it was dropping its support for the format.

In the US, Wal-Mart, Best Buy and Netflix recently announced they would stock Blu-ray discs exclusively.

Wal-Mart's move was seen as the final nail in the coffin because its stores sell four out of every 10 video discs in the US.

Universal Pictures Australia managing director Liz van Hooven said those recent retailer defections "pretty much made (last week's) announcement inevitable".

But even before movie studios and retailers started ditching HD DVD, Microsoft's decision to sell its HD DVD player as an add-on to the Xbox 360 rather than building it into the console by default could have doomed the format from the start.

The PlayStation 3, which has a built-in Blu-ray player, gave the format a boost by installing it in more than 200,000 Australian homes. Market watcher GfK said the PS3 accounted for 95 per cent of all high-definition players sold in Australia.

Last week Microsoft announced it would stop making HD DVD players for its Xbox 360 video game system.

© 2008 The Age

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