< Getting Turned On

Transcript

Friday, January 19, 2007

BETH FERTIG:
Last week in Las Vegas, high-powered executives unveiled their vision for the future, where increasingly personal entertainment meets technological innovation. I'm not talking about the crowd at the consumer electronics show. The adult film industry also convened in Sin City for its annual get-together, and what happened there made media news too.

The next generation of DVDs will be produced in high definition, but there were two incompatible formats squaring off for control of the business, and big players lining up on either side. The head of a large porn studio announced in Vegas that his company would produce films on Toshiba's format, which is called HD-DVD, as opposed to Sony's, which is known as Blu-ray. This caught the attention of people monitoring the tech sector, because where porn goes, technology often follows – or so that's the thinking.

Joining us is Shane Buettner, who writes for Ultimateavmag.com. Shane, welcome to the show.

SHANE BUETTNER:
Thank you very much for having me.

BETH FERTIG:
So explain for us, what are the two competing high-definition DVD formats and what are their respective advantages?

SHANE BUETTNER:
The two formats are the HD-DVD format that you just mentioned, which is backed primarily by Toshiba, and the competing format is the Blu-ray Disc format, which was developed by Sony in conjunction with several other major CE manufacturers.

Blu-ray's main advantage is in storage space. A dual-layer Blu-ray Disc can hold 50 gigabytes of information, whereas currently the HD-DVD format, in a dual-layer disc, supports only 30 gigabytes of information.

BETH FERTIG:
Isn't this a lot like the battle between VHS and Betamax back in the 1980s? Beta was considered the higher-quality format, but VHS won out because it was cheaper, and each tape could hold a lot more content. So what role did porn play back then in helping consumers make up their minds?

SHANE BUETTNER:
Porn did side with VHS, and that was the deciding factor in that format. I'm not sure that that is going to be the case now, and I personally don't believe that we are ever going to see a physical media that is as ubiquitous as the DVD became. There are far too many other ways that people can get and consume this media.

I'll give you an indicator. Vivid Entertainment, which is a very large content provider in the adult entertainment space, at this point in time, 40 percent of their business is on DVD discs, and that's down from 80 percent five years before that. Most of their business seems to be shifting to cable and satellite TV, Internet and wireless applications.

So I'm not convinced that one or the other of this hi-def formats is going to be influenced that heavily by what the porn industry does or doesn't do.

BETH FERTIG:
Shane, what's the difference in the prices between the two different formats?

SHANE BUETTNER:
Currently, in terms of software, the prices are very, very similar. The bigger price has been in players. Buying an HD-DVD player has been something that you could do for 500 dollars since the spring of '06, whereas the first Blu-ray Disc players that were introduced were 1,000 dollars or more.

The one thing that has changed the entire landscape of this format war, however, is the introduction of Sony's PlayStation 3 game console, which is an integrated Blu-ray Disc player. And the two versions of the PlayStation 3 that are available are only 500 dollars and 600 dollars respectively.

BETH FERTIG:
When we talk about this battle between the competing forms of high-definition technology, historically it seems like Sony has been on the losing side. They did gamble on Beta. They also flunked with a successor to the compact disc and a product to compete with the now-dominant MP3 music file. If they lose another technological battle, what does that mean for Sony?

SHANE BUETTNER:
Obviously, it doesn't mean anything good. They've invested an incredible amount of money in developing this format. They are losing, by some estimates, hundreds of dollars on each PlayStation 3 in order to try to get that market share.

What it is offering Sony is an enormous beachhead in the format war. They have millions of PlayStation 3s that are capable of playing Blu-ray Discs out there. Sony has polled over ten thousand PlayStation 3 owners. Seventy-five percent of the people who own a PlayStation 3 say that the PlayStation 3 is going to be the main movie-playing device in their household.

Given that Sony is looking to having over six million Blu-ray Disc players out in the world market by the end of March of '07, that indicates a huge success for the Blu-ray Disc format.

BETH FERTIG:
So that's the best outcome for Sony, then. If they're going to win this battle, it's going to hinge on the PlayStation 3.

SHANE BUETTNER:
PlayStation 3 is certainly a huge part of it. And this is something that swayed studios that were formerly exclusive supporters of the HD-DVD format to supporting Blu-ray Discs. There were over a hundred million PlayStation 2s sold, and looking at that, there are several important studios, including Sony/Columbia, MGM, Fox and Buena Vista, which is Disney's home entertainment arm, and Lion's Gate – all of those studios are exclusive to the Blu-ray Disc format. And they're going to be releasing significant titles in 2007 that simply won't be available on the HD-DVD format, including both Pirates of the Caribbean movies. And this summer Disney's going to be releasing the first Pixar movie to high-definition, which will be Cars.

And essentially, they believe that people are going to go where the titles that they want to watch are. And when you think of things in those terms, do you want to be on the side that doesn't have the Pixar movies?

BETH FERTIG:
Well, it's quite a technology war to be watching, with Hollywood studios, PlayStation and pornography studios all taking sides in the battle over the next phase of high-definition technology.

Shane Buettner, thanks so much for joining us.

SHANE BUETTNER:
Thank you. I really enjoyed it.

BETH FERTIG:
Shane Buettner is technical editor for Ultimateavgmag.com.