In an interview last month with Business Week, Sonys CEO Sir Howard Stringer acknowledged that the high-definition format war between Blu-ray and HD DVD has indeed been caught in a stalemate. While Stringer was merely confirming what had been obvious to most industry watchers for some time, his remarks caused quite a stir, given Sonys enormous investment to-date in the Blu-ray format.
For consumers who dislike choosing between two formats for their favorite movie content, the multibillion-dollar question is how much longer the stalemate between Blu-ray and HD DVD will last. While many potential buyers sit on the sidelines hoping for a clear victor, makers of the high-def players are doing their best to win them over with price cuts and exclusive content.
WAR COULD DRAG ON
In anticipation of the holiday shopping season, Toshiba (one of the main backers of the HD DVD format) launched a sub-$100 sale of its second-generation player, the HD-A2. According to some estimates, the resulting run on units at Wal-Mart and Best Buy brought nearly 100,000 consumers into the HD DVD camp.
But Russ Crupnick, vice president and senior industry analyst for entertainment at The NPD Group, questioned whether a short-term sale would be enough to resolve the format war.
"Im not sure were at the point where either camp is near declaring victory," Crupnick told us, at the time of the price cuts. "The lower price and potential for some hot deals on HD players does invigorate the HD side, but Blu-ray has some compelling content coming out, like Spiderman. We may be another year from seeing a victor, or the war could drag on."
Adding to consumer enthusiasm for the Toshiba sale was the fact that each unit came with a coupon for five free HD DVD movies, a value nearly equal to the sale price of the player itself.
FORCED TO CHOOSE SIDES
The offer of five free movies underscores the fact that, in any format war, content is still king. Indeed, the ongoing struggle over the industry standard for high definition has forced most movie producers to choose sides.
While Warner Brothers has demonstrated success in supplying content to both sides, the format war seems to be a lose-lose situation for many of the studios. Ultimately, studios run the risk of alienating a significant portion of their high-definition-watching customers, and movie fans either need two players (which is an unlikely scenario) or must forego content in the noncompatible format.
In the beginning, Sony and its Blu-ray format had the advantage with more movie studios on their side. But recently, Sony CEO Stringer said, the HD DVD coalition persuaded Paramount to issue content exclusively on the HD DVD format. Now, the major movie studios are roughly divided between the two formats, with only Warner Brothers successfully working both sides.
HIGH DEFINITION LIFE
Crupnick pointed out that another factor influencing both camps is the speed with which consumers are purchasing new high-definition televisions.
As high-def TVs become more mainstream, HD DVD and Blu-ray each have a better chance, he explained, "because without the TV, the player is of little use." The next step, he said, is that the people who buy HD TVs need to be connected to HD service so that they can "begin to experience the high definition life."
The real question, Crupnick suggested, is whether both HD DVD and Blu-ray will be overtaken by broadband delivery of content. That question, he said, will likely be answered over the next few years.
