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page created: 6/1/07
updated: 10/5/07

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[Editor's Note: Since we first posted this editorial back in June, there have been a number of interesting developments on both sides of the HD format war. The vast majority have increased the momentum for Blu-ray even further.

First, Blockbuster, Target and BJ's Wholesale Club have all decided to promote Blu-ray exclusively in their U.S. retail store locations this holiday season. In addition, the first Steven Spielberg title to appear in either high-definition format has been announced exclusively for Blu-ray: Close Encounters of the Third Kind from Sony on 11/3. 20th Century Fox and MGM have announced - and begun to release - a massive slate of new and catalog Blu-ray Discs, including such major titles as the Die Hard films and Independence Day. Disney has also announced that its first classic animated title, Sleeping Beauty, will be released on Blu-ray only in 2008. The BD 1.1 spec has been finalized and hardware is expected to arrive in November. Sony DADC has replicated its 10 millionth 50GB Blu-ray Disc. Blu-ray hardware prices are expected to be as low as $399 by Christmas (and possibly lower). The Home Theater Specialists of America (HTSA) - a national association of home theater experts, A/V specialty dealers and installers, representing 62 member retailers (and over 800 installers) with some $500 million in combined buying power - has officially selected Blu-ray Disc as its high-def format of choice after discovering that "92% of category sales by HTSA members were in Blu-ray players" in internal surveys. Finally, and perhaps most significantly, retailers across the country are reporting that Blu-ray player sales have begun to outpace HD-DVD player sales over the summer.

On the HD-DVD front, Toshiba has successfully paid both DreamWorks Animation and Paramount to drop Blu-ray and release titles only on HD-DVD. Significantly, however, this deal only lasts 18 months. It's also worth noting that, jointly, the two studios represent less than 13% of the total Hollywood market. A similar attempt to pay Warner to follow suit was rejected out of hand by the studio. As a result, the best that can be said of this deal is that it simply delays the inevitable. The HD-DVD camp will no doubt claim victory in the select few weeks that new HD-DVD only titles like Transformers outsell Blu-ray titles, but the overall sales trends will continue to strongly favor Blu-ray. Blu-ray is still the obvious choice for consumers, and we expect that choice to become even more clear in the months ahead.]

HD-DVD Buyers Beware (or... What Have You Done, Headgeek?!)

So here's the thing. We've gotten a few e-mails over the last couple days - okay, a lot more than a few - about Harry Knowles over at Ain't it Cool News going on the record saying that he's chosen HD-DVD and why, and how all his director friends tell him HD-DVD is the way to go, and how he "might be wrong" but has a knack for picking winning formats so there you go. Yeah. Well... look, we love Harry and the guys over at AICN. We love 'em a bunch. But flat out, we think Harry is wrong on this one. And since somebody needs to say it, we may as well step up to the plate.

It's funny, Doogan e-mailed yesterday about this: "I love the statement that his deciding factor was the reverse compatibility of HD-DVD. This is why people are afraid. Because people in power, who don't know s--t and shouldn't be talking s--t ARE talking. Harry should remove this post because it's flat out wrong." Todd... God bless him. All things considered, passion may have gotten the best of him there for a moment. But I understand his point. Like I said, Headgeek knows his movies and he is big-time plugged into the theatrical side of the business. He's entitled to his opinion, and I respect him for speaking his mind. But when it comes to the home video side, Harry's maybe a little out of his element. He seems to be rather new to the whole high-def disc thing. And unfortunately, he's got many of his facts wrong. [Editor's Note: The AICN post has since been edited, but the original comments are referenced here below.]

For the record, Harry says: "The kicker is... that it can play the 9000 or so DVDs I already have, as well as the HD DVDs. That Backwards compatibility feels right."

Well... a LOT of things feel right, and we agree, backwards compatibility is one of them. But Blu-ray is backwards compatible too. It is fully 100% capable of playing all your DVDs. Worth noting.

Later in the discussion thread, Harry claims: "Porn is HD DVD - it will win. I have faith in Porn."

Not to sully the good reputation of the porn biz, but this argument is so six months ago. As we've said before, porn will not decide this format war. Yes, porn decided the VHS/Betamax format war... because at the time, the only way to watch adult films was to visit a seedy movie theater on the wrong side of town or to spool up a Super-8 or 16mm film. So when porn on videotape became available (largely on VHS) that you could watch in the privacy of your own home, people went nuts for it. Unfortunately for Harry's argument, not only are there literally hundreds of thousands of $10 adult DVDs available, free porn is EVERYWHERE on the Net. And that's what companies like Vivid see as the future - downloading high-def porn to your PC. Read my lips: Skin flicks WILL NOT decide this format war.

Later, Harry adds more: "and right now... there's something along the lines of 545 titles on HD DVD and only 62 for Blue Ray. That's nearly getting close to 10 to 1 in terms of selection."

Here's a MAJOR fact check: According to Ralph Tribbey's excellent and highly accurate DVD Release Report, here's the official U.S. title tally as of 5/31 for each format: HD-DVD - 207 titles released, plus 54 more announced. Blu-ray - 241 titles released with 40 more announced.

Maybe Harry meant adult titles? Yeah, not so much. Adult DVD Empire shows all of 9 actual HD-DVD adult titles available at the moment.

How are all those high-def titles selling? Let's see what Nielsen VideoScan says (click here and look at page one of this digital edition of Home Media): As of 5/27, Blu-ray leads HD-DVD in overall software sales, 58% to 42% since both formats launched. The more recent trends are more lopsided: Blu-ray is outselling HD-DVD 67% to 33% year-to-date for 2007. That's a 2 to 1 margin, DESPITE the fact that HD-DVD claims to have sold many more actual stand-alone players than Blu-ray Disc.

How about the most recent sales numbers? Okay... let's consider 5/22, when Disney debuted both Pirates of the Caribbean films on Blu-ray against Warner's dual Matrix box sets on HD-DVD. According to Home Media: "The two “Pirates” films sold a combined total of nearly 47,000 units, while the higher-priced “Matrix” sets sold about 13,900 units." So more people purchased BOTH Pirates BDs than purchased any Matrix box set - even the cheaper one. Warner's recent The Departed provides another case in point. By their own admission, the studio sold 58,300 copies on Blu-ray and just 35,300 on HD-DVD.

As for Harry's later comment in the Talk Back about "a lot of Reg DVDs are beginning to master in higher resolutions..."

Here's the thing... the Hollywood studios have been mastering their films in high-def for DVD release for YEARS now. Plus, lots of cheap standard DVD players already upconvert 480p DVDs to 1080 resolution via HDMI. Not just HD-DVD players. And yes, Blu-ray players do this too. It's pretty a common feature these days.

Look... like I said, we love Harry. But we think he's wrong on this one. It seems his DVD player broke, and when he saw that Toshiba had slashed their HD-DVD player prices to $299, he couldn't resist. For that, we can't blame him. But we CANNOT join him in recommending the HD-DVD format to ANYONE, no matter how cheap.

We've been involved with the home video industry for ten years now. Way back in 1997, when most people didn't even know what DVD was, we were telling people it was going to be the biggest thing since the CD. We were having conversations with the Hollywood studios that first year, where even the most senior studio executives were telling us we were crazy to think DVD was ever going to be anything more than a niche format. But we were right then. We gave the world it's first look at Circuit City's Divx format, and then said it was going to fail. We were right about that too. We were right about the need for the studios to support DVD's anamorphic widescreen capability, to ensure the highest video quality possible at the time, and we lobbied them hard to do so. Here at The Bits, we interact on a daily basis with studio personnel at all levels, with authoring/technical staffers, with DVD producers, with filmmakers and with hardware manufacturers. So we're pretty good at having our finger on the pulse of the home video industry, and knowing what the trends are. And anyone who has read The Bits since we started will know that, over the years, we've been right about a LOT more things than we've been wrong.

And all of that experience tells us this: HD-DVD is not going to win this format war. In fact, one of two things is possible right now: Either Blu-ray will win, or neither format will win. But the best HD-DVD can hope for is to just keep hanging in the game as long as possible.

Our readers trust us to give it to them straight, and to help guide them through the confusing home video landscape in such a way that they don't end up wasting their money. HD-DVD is a great format technically, but its business model is an utter and complete disaster from which it will not recover.

Meanwhile, Blu-ray is just as good technically and quality-wise, it has the support of EVERY HOLLYWOOD STUDIO BUT UNIVERSAL, it has the support of the MAJORITY OF HARDWARE MANUFACTURERS, and nearly the ENTIRE computer industry. There are lots of great titles coming out, many more titles are on the way, there are more models of stand-alone players available and they're getting cheaper all the time. Blu-ray Disc is by FAR the smarter choice. If you want spend the safe money, there's your best bet.

We've been following this stupid, cursed high-def format war since the beginning, and it's driving us crazy. But we'll admit that maybe one good thing HAS come of it: HD-DVD cutting their prices so quickly has forced Blu-ray to do the same. But that's a double-edged sword.

Let's get back to that business model problem I mentioned a moment ago. It should come as a surprise to no one that Toshiba has been losing money on their HD-DVD players (as is typical for hardware of any new format in the first few years - BD manufacturers deal with this as well). But in the last couple of weeks, the company has been slashing prices dramatically and offering $100 rebates, effectively bringing the cost of the HD-A2 to $299. That seems like a great deal, and Harry certainly jumped on it. Hell, we wouldn't be surprised to see Toshiba slash down to $199 or even less by the holidays at this rate. But it means that Toshiba is losing even MORE money on HD-DVD hardware than they were before, which can't have a positive impact on their overall business. I don't know if I'd go so far as to call this a fire sale, but it sure smacks of desperation on Toshiba's part. But there's another, bigger problem with this as well. What other major HD-DVD manufacturer wants to compete with that?

The HD-DVD camp has long touted cheaper players as its big trump card, even going so far as to promote future super-cheap, off-brand models at CES this past January. But all this does is basically ensure that FEW OTHER MAJOR MANUFACTURERS WILL JOIN THE HD-DVD CAMP. Where's the business incentive to do so? If you can't make a profit, there's no point. Sure, LG and Samsung are making pricey combo players available that will play both HD-DVD and Blu-ray, but that's only because they know that a small enthusiast market will be willing to pay $1200+ for one. Neither has announced cheaper HD-DVD-only players to compete with Toshiba's and we think they're unlikely to do so. RCA has dabbled in the format with one model, the price of which has been slashed to move at $299 (down from around $500). Meridian revealed at CES that they may release one in the fall (likely be a pricier high-end model, targeted towards audio/video enthusiasts). But that's hardly a landslide of hardware support.

When you look at the facts and trends, it seem to us here at The Bits that the ONLY thing the HD-DVD camp has to crow about right now is that they're the cheaper option. If that's all you have going for you, cheaper might win you a battle or two, but without more studio and industry support, it's never going to win you the war.

Meanwhile, on the Blu-ray side, Stan Glasgow (the president of Sony Electronics) has made recent press statements to the effect that the company's Blu-ray players could drop to as low as $299 by the holidays this year (click here). Sony's new BD-S300 second-generation Blu-ray player is about to hit stores at $499. Other BD manufacturers (including Pioneer, Panasonic, Philips and Samsung) will have cheaper players available by the end of the year as well, some of them in the $399 price range. But again, here's the difference: They'll play Blu-ray movies from EVERY MAJOR HOLLYWOOD STUDIO BUT UNIVERSAL and yes... all your standard DVDs too.

Let's look at the studio support side. HD-DVD has just one major exclusive studio supporter: Universal. Blu-ray has FIVE exclusive studios: Disney, Fox, MGM, Lionsgate and Sony. Which exclusive group do you think is more likely to go format neutral first? (FYI, the other major studios - Warner, Paramount, DreamWorks - already support both formats, and New Line has indicated that they'll likely do the same.) For better or worse, one of the reasons some of these studios sided with Blu-ray exclusively is because that format offers them an additional layer of content protection: BD+ (the details of which Sony is soon to finalize according to this story at Audioholics). By the way, that Audioholics story hints that Fox has a particular interest in BD+ protection for its high-def titles, which could be why they've delayed all those Fox and MGM catalog Blu-ray titles they talked about at CES. With AACS already smarting from a series of cracks, hacks and work-arounds that have exposed existing high-def titles (including The Matrix) to copying, does anyone really think those studios are going to start releasing their titles on HD-DVD format, especially when Blu-ray is already dominating software sales? Again, there's no incentive whatsoever.

Speaking of Sony... you know it's funny. Based on the e-mails we get here at The Bits, it seems like hatred of Sony is one of the biggest reasons those who side with HD-DVD give for doing so. "What about that whole root kit fiasco? Sony sucks! They're all about greed! F--- Sony!!"

Well... this might surprise some people, but this format war is about NOTHING but greed, as we've been saying for years now. But there's plenty of greed to go around, believe me. So what about the CD root kit thing? Yeah, that was stupid. Sony should have gotten spanked for that, and it seems to us that they did. But people tend to forget one thing about Sony. Back when it was time to negotiate the details of the DVD format between all the industry players, there were also two competing candidate formats. But Philips and Sony caved and abandoned their MultiMedia Compact Disc, and agreed to go along with Toshiba's SuperDensity Disc. The result was DVD - a single unified format from which we've all benefitted. What was the result of that? Toshiba made millions off the patents for the DVD disc structure, which Sony lost out on. At an industry conference last year, Warren Lieberfarb revealed during a panel that, right after standard DVD launched, Sony approached him about the need to start working on the high-def version (understandable given that HDTV broadcasting was already taking off in Japan and Europe), but the DVD Forum felt it was too early and wasn't interested. So Sony started working on their own high-def format. It's hard for us to fault Sony for not wanting to lose out on such massive royalty profits a second time. Certainly, Toshiba had no interest in sharing some of those royalty fees during the attempts to negotiate a single high-def standard. In any case, as a longtime manufacturer of video equipment, at least Sony has a legitimate reason to be in the game.

What we've found most puzzling about this format war, is why Microsoft - a company that makes neither movies and TV shows or home theater hardware, is arguably the single biggest corporate supporter of the HD-DVD format outside of Toshiba and Universal. And though no one will say it on the record (though many industry insiders admit, off the record, that they believe it), we'd be surprised if Microsoft wasn't subsidizing both Toshiba's hardware losses and Universal's exclusive commitment to HD-DVD in some way. That's just our gut feeling. We can't prove it. But even Warner, which has a significant financial stake in the disc structure patents for DVD (and thus HD-DVD) has opted to support both high-def formats. Meanwhile, Microsoft has an office of "HD-DVD Evangelism" in house.

So why would Microsoft do this? The are three reasons why it makes good business sense for the company. First, having HD-DVD playback capability on their Xbox 360 (via the add-on drive) is a smart strategic move to counter-balance Sony's having Blu-ray playback capability built into their PS3 system. Second, HD-DVD uses Microsoft's VC-1 video compression codec almost exclusively. For a variety of reasons - not the least of which is that it's a great codec - this has encouraged a number of Blu-ray Disc studios to adopt VC-1 as well, so more and more Blu-ray releases utilize it too. This again benefits Microsoft. But more importantly, Microsoft's real long-term goal is to dominate the content downloading arena - particularly the downloading of entertainment content to devices in living rooms. That's what many industry observers, including many in Hollywood, see as the ultimate future of the home video industry. Selling lots of Xbox 360s and having everyone adopt the VC-1 codec (not to mention their iHD interactivity spec) both work to further Microsoft's goals in this area by helping to drive the growth of Xbox Live. According to the company's own recent press releases, Xbox Live is already "the number one online distributor of television and feature film content in the living room where it's most easy for consumers to access." In addition, "the service has quickly become the number two online distributor of television and feature film content, second to iTunes." Finally, Xbox Live is currently "the ONLY online distributor of major feature films and television programming in high definition (HD) resolution."

Microsoft doesn't give a rip about HD-DVD, or movies on disc at all for that matter, except to the extent that backing HD-DVD for a while now both undermines Sony's efforts and leverages Microsoft's success in achieving their ultimate goal of dominating the future of online distribution of digital entertainment. And hey... if fueling a format war in the meantime creates consumer confusion that hastens the demise of discs and the advent of mainstream downloading, so much the better for Microsoft. That's how we see it.

So how do we foresee this format war playing out? Our prediction is that by this time next year, Universal will have gone format neutral, agreeing to support Blu-ray Disc in addition to HD-DVD. It could happen at CES in January 2008, it could even happen sooner. When that happens, and we do believe it's a matter of when and not if, this format war will effectively be over. Which matters not to Microsoft, because VC-1, the 360 and Xbox Live will do just fine either way. If Blu-ray begins to dominate this thing, Microsoft will simply announce a Blu-ray add-on drive for the 360 and continue on their merry way.

That doesn't mean that HD-DVD is going to die or disappear. We'd bet that most, if not all, of the studios that currently support HD-DVD will continue to do so, at least for a while. And I'll remind you (though I know many HD-DVD fans will continue to claim otherwise) that none of what we've said is intended to disparage the HD-DVD format itself. It's a great high-def format, capable of excellent video and sound quality and extras. We enjoy HD-DVD ourselves, and we'll continue to do so. But HD-DVD is just not going to win this format war. We just don't see any circumstance in which HD-DVD can best Blu-ray and dominate the HD disc market and, believe me, we agonize over this stuff every day.

The bottom line remains the same: Any way we slice it, when we look at ALL the facts, we think Blu-ray Disc remains the best bet in this format war, and the safer bet for consumers. That's just the way we see it.

We simply CANNOT and WILL NOT recommend to our readers that they adopt a format that only has the full support of just a HANDFUL of major hardware manufacturers and ONLY A HANDFUL of the Hollywood studios - no matter how cheap the price - when a format of EQUAL quality and FAR GREATER studio and manufacturer support exists.

Unlike those who hate Microsoft or hate Sony, our position isn't personal or emotional. Unlike those who work for HD-DVD and Blu-ray connected companies, we are not getting paid for our opinions or to generate media spin. Our opinions as expressed here are simply our own logical, common sense conclusions, based on our own research and experience. (For the record, regarding our advertising: We generally accept advertising from all interested parties within certain guidelines of good taste, and our advertising arrangements have NEVER and WILL NEVER influence our editorial opinions.)

We'll continue to enjoy HD-DVD discs and review them too, for those who may be interested. But if you want our opinion as to which HD format you should buy, unless circumstances change DRAMATICALLY, in all good conscience we simply can't recommend HD-DVD.

Simply put: If you're still not quite ready to get into high-def discs, then sit tight a little longer. The prices, selection and features of both hardware and software will all improve in the months ahead. On the other hand, if and when you ARE ready to get into high-def discs... we say Go Blu. It's really a no brainer, folks.

So yes... Blu-ray Disc is now officially the high-def format of choice for The Digital Bits. In the same way that we recommended everyone chose anamorphic widescreen DVDs over the alternative, we think you'll come to appreciate this advice in the months and years ahead as well.

To those of you who happen to disagree with us, favoring HD-DVD instead, more power to you and we respect your decision. We raise our glasses to you. (Skol, friends!)

It would be nice to think that we could just stay neutral in this thing, as some would rather we do indefinitely, but we just care too much about our readers, and about all the great things that have come about as a result of having a single, unified video disc standard for the last decade: DVD. But when the industry decided to spit in the face of that success, stubbornly taking opposing sides when it came time to launch high-def movies on disc (and to both HD camps, shame on all of you for it), they basically forced everyone else who really cares about this stuff to choose sides as well. We've tried to sit on the sidelines as long as we could, offering our carefully and logically reasoned opinions and advice whenever we felt it necessary or appropriate. But this stupid war has just dragged on too damn long. We're getting way too many frustrated e-mails from confused readers, who want to make the upgrade to high-def but are afraid to spend their hard-earned money on the wrong format. So it's time we made our choice, and we've decided to line-up with the overwhelming majority of studios and manufacturers behind Blu-ray.

It's a tough call for us, having to take sides. But it's time. Sometimes you just have to have the strength of your convictions and the balls to stand by them... and so we do and have.

Bill Hunt, Editor
(along with Todd, Adam, Barrie, Greg, Matt, Sarah and all the rest)
The Digital Bits
[email protected]
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