The executives at Toshiba must be shaking their heads right now as their fortunes in the high definition DVD market turned decidedly sour last week.
It makes no sense — their HD DVD product was based on existing manufacturing technology, keeping production costs low for manufacturers, and resulting in lower priced players and disks. The capacity of the HD DVD disks was less than Blu Ray, their chief competitor, but still more than ample to hold high definition movies and television shows. Toshiba also recently found a way to increase density on their disks, bringing the technology closer to Blu Ray limits.
Not to mention the fact that Toshiba was first to market, and had the support of some major players in the electronics industry including Warner Bros., Paramount and Microsoft.
Imagine their surprise last week when Warner Bros./New Line studios, one of the largest entertainment empires in Hollywood, switched allegiances to Blu Ray. They were followed closely by HBO, and by the announcement that Universal Studios — once exclusively HD DVD — will also sell movies in Blu Ray. Paramount, the other HD DVD exclusive studio, is expected to follow suit.
Blu Ray supporters already included Disney/Buena Vista, Sony/Columbia, 20 th Century Fox, Lionsgate, MGM/UA and Apple. Now they have Universal, Warner Bros./New Line, and maybe Paramount.
So how did Blu Ray do it?
The technology is apparently superior, but that didn’t stop inferior VHS from beating the Beta format in the 1980s. Vinyl records still sound better than CDs, but that didn’t stop CDs from taking over. CDs sound better than MP3s, but MP3s and other compressed formats are now the dominant media for most people. Price also doesn’t seem to matter much, when you consider that Blu Ray players are far more expensive than HD DVD.
The most obvious answer is distribution. In the last year Blu Ray managed to lock up both Blockbuster as an exclusive renter and Target as an exclusive retailer, which represents a huge share of the market. Sony is itself a massive entertainment empire, while Toshiba is purely a high tech company.
And then there’s the Playstation 3. The PS3 may be a distant third when it comes to next generation gaming consoles with only about six million sold worldwide (compared to almost 18 million Xbox 360s, and 22 million Nintendo Wii’s), but every PS3 came with a built-in Blu Ray player.
The Xbox 360 does have an add-on HD DVD player that cost $199 at launch, but it’s expensive and is selling poorly at best. More than 10 times more PS3 units have sold than HD DVD add-ons for the Xbox 360.
Responding to questions at the most recent Consumer Electronics Show, it even appeared that Microsoft was prepared to ditch the HD DVD format if Blu Ray won the battle — they quickly retracted that statement to appease Toshiba, but are on record saying it’s at least technically feasible to add a Blu Ray player to the 360.
The latest developments in the HD DVD-versus-Blu Ray format wars are expected to spur the sale of PS3 units, which suddenly seem like a pretty good deal with the Blu Ray player built-in. If you’re ready to invest in a Blu Ray player for your home, the PS3 — with the ability to play games, surf the Internet, and save music and other files to the hard drive — is actually a phenomenal deal.
You can get a PS3 with a 40 GB hard drive for $400 these days. In comparison, the cheapest you can get an Xbox 360 with a 20 GB hard drive is $600.
Looking at the cost of stand-alone players, the cheapest Blu Ray player is about $450, and that’s without a hard drive, internet, or the ability to play games. By way of comparison, the cheapest standalone HD DVD player was reduced to $150 to win people over, but the lower price won’t matter for long if nobody is making disks.
The good news for all of us is that any victory for Blu Ray is still pretty much academic at this point. High definition television sets still only account for about 10 per cent of the market which means DVDs still have quite a few more years to dominate the market.
If you want to watch high definition movies now — which are about a third more expensive to buy than DVDs, with an extremely limited library to choose from — then the PS3 is not a bad way to go. At least buyers can be reassured at this point that Blu Ray, with all its new supporters, is not going the way of Betamax.