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Friday, January 11, 2008

High-definition TVs are this year’s must-have item. So, you'd expect movie fans to rush out and replace their DVDs with new super-sharp high-def discs. Besides containing incredible resolution and surround-sound, they even offer cool Web-based interactive features.

But consumers are holding back. They don't want to be on the losing side of the war between the two competing high-def formats – namely, Toshiba’s, called HD-DVD, and Sony’s, known as Blu-ray.

Consumers may soon be opening their wallets, though, because last week Warner Brothers surprised the industry by announcing that it will be using only Blu-ray for its high-def releases. And this week, HBO and New Line announced they will follow Warner’s lead. Cutting exclusive deals with movie studios has been the key to winning the war, and now with 70 percent of the market going with Blu-ray it seems the hostilities have ended.

Shane Buettner of Home Theater Magazine is in Las Vegas covering the Consumer Electronics Show where everyone is buzzing about Blu-ray. So, Shane, has Sony won?
I think that the widely held perception here in Las Vegas is that that is indeed the case. And let me back up for you and describe the events that transpired after Warner’s announcement last Friday.

Within a number of hours, the HD-DVD group canceled its Sunday gala event at which we expected to get its slew of new release announcements. And Toshiba still held on and did their press conference on Sunday, but I don't think I'm exaggerating in saying that it was an almost emotional announcement stating that they were surprised that Warner had made this decision; that they really felt that the momentum they'd picked up in the fourth quarter last year was very strong.

And while HD-DVD’s current supporters, which are now reduced to Universal Studios and Paramount, while they haven't officially backed away from HD-DVD, Paramount’s exclusivity with HD-DVD does have an out clause that apparently could be triggered by something like Warner’s defection.

And it’s been reported by The L.A. Times that Paramount is going to make a decision within a month. And while Universal hasn't said anything, the fact is, is that that silence is rather deafening.
There’s no room for two formats to coexist?
It’s not a secret that consumers, for the most part, have been confused by this. They've been reticent to make an investment in either format while the format war was raging and making that picture unclear. And I think the perception of many was that neither format would take hold unless there was one format.

In the Beta/VHS battle back in the, I guess, '70s, Sony lost in part because Beta, while a higher-quality format, was also significantly more expensive. But Blu-ray is also more expensive than HD-DVD. Why isn't that an issue this time around?
The most salient fact in the last couple of months is that Blu-ray disc prices, while not reaching the low levels of Toshiba’s HD-DVD players, have been steadily dropping.

And the PlayStation 3, which is by far and away the most prevalent next-generation disc player on either format, you know, recently hit the 399 price point. They sold a lot of those over the holidays. And Samsung and Sony both had players that were selling for $299, or slightly less, over the holidays.
Yeah. I was actually out at Christmastime shopping for a DVD player, and I was stunned to see it begin at $300, while ordinary DVD players I think you can get, you know, for like 89 cents a dozen.
And maybe I'm exaggerating a little bit. But can we expect that now that it has become the dominant format, Blu-ray costs will actually, you know, come down a lot?
[LAUGHS] You know, I'm not sure that that’s typically how supply and demand works. In fact, I've already heard rumors that one of the lower-priced Sony players already went back up in price slightly.

You know, one of the not-so-well-kept secrets of this entire format war is that both sides have allegedly been selling these players at a loss in order to gain market share. So it wouldn't surprise me if we see a little bit of a slowdown on the price drops.
Bill Gates was at the Consumer Electronics Show, and he was asked about the Blu-ray/HD-DVD battle. And he said it [LAUGHS] doesn't matter because soon enough we're going to be getting our content from the Internet anyway. Is all this commotion over what is fundamentally just an interim technology?
Yeah, I think that’s the perception of most. What people have a harder time with is determining just how long that’s going to take. You know, the perception of many, including myself, is that we just don't have a vast broadband infrastructure out there that can make the download model, particularly with high-definition over the Internet, a really practical venture for at least several years to come.

And I think the perception of most of the Hollywood studios is, you know, that while we certainly consume media in a number of different ways, from downloads to mobile phones to the iPod, I know that the studios in Hollywood are certainly looking forward to trying to sell their catalog on a physical media at least one more time.

And Blu-ray disc and both HD-DVD offered a really improved image and sound capability that I don't believe the Internet will be ready to deliver for some time.
All right, Shane. Thank you so much.
Thank you.
Shane Buettner is editor of Home Theater Magazine.