I’ve written before here about how HD-DVD may get the jump
on Blu-Ray and win the format war.
I’ve changed my mind.
What got me thinking was this article, titled, appropriately
enough: “And the Winner is …No One”
What jumped out at me was the table at the end and the
PC companies that support Blu-Ray. Then it hit me.
http://www.hdtvmagazine.com/articles/2006/08/hd_dvd_vs_blu-r.php
1. Customers in the HDTV market remain confused. Even though
surveys show that they believe HD-DVD is the better value and
are more likely to buy an HD-DVD instead of a Blu-Ray player
and movies, the survey I saw didn’t ask if they intended to
throw away all their DVDs and replace them with HD-DVDs.
Of course not. Indeed, they will probably, for $28 to $35,
only buy HD-DVDs of their very favorite movies. After all, a
DVD at 480p scaled to 720p looks pretty decent.
2. The Data Industry. Compare the reluctance of consumers to
spend huge amounts of money upgrading their video collection
with the unquenchable thirst for data storage in the PC
industry. Even though a blank 50 GB Blu-Ray disc now costs
$48, that price will come down rapidly, just as the DVD-R
prices did.
The result will be that at some point, likely mid to late
2007, when the number of blank Blu-Rays for data storage
(supported by the PC makers who sell the vast majority of PCs:
HP, Dell, Sony and Apple) may surpass the sales of HD-DVD
movies.
—
Once the movie studios behind Blu-Ray, and that’s most of
them, see the prices of Blu-Ray discs plummet (due to the PC
industry usage), they’ll think about how much more money
they’ll make on each movie: Artificially inflated price minus
lower media cost = more profit. (After amortizing the more
expensive Blu-Ray production equipment.)
Also, by next year, we’ll likely see players that will play
both formats, so customers will likely select the format that
they think is best in the long run — if the prices are the
same. A look at release prices for movies in the two formats
shows that the studios aren’t positioning HD-DVDs as cheaper
alternatives — knowing that most customers can’t afford
Blu-Ray players right now — and cashing in while they can.
That will create the illusion that HD-DVD is “just as good” as
Blu-Ray for now, but it’ll kill them when the dual-mode
players come out. Why?
Because — independent of player costs – consumers will be
aware that Blu-Ray is a superior physical format and all the
businesses they know are using Blu-Ray for business storage.
So they’ll hedge their bets. (Note – both formats use the same
compression algorithms.)
Throw in the fact that, inevitably consumers will jump on the
iTunes movie bandwagin, and you have a lot of people
downloading movies to a hard disk instead of buying them on
HD-DVD. That’s probably why the studios have delayed all
through 2006 working a deal with Apple. They want the optical
formats to get a firm footing in the market place. I predict
that effort will fail.
Given the optical format sales that do occur, I also predict
that HD-DVD will appear to get the jump on Blu-Ray in the
short term, but in the long run HD-DVD will be seen as a low volume,
expensive, compromise format whose price to performance ratio
isn’t justified.
The Blu-Ray camp has to work hard to drive down media prices
with their PC manufacturer partners — Xbox360 sales
notwithstanding. Then, in the long-run, Blu-Ray wins.
I think I understand better why neither camp will compromise and
why each camp is optimistic.
What have I missed?
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