Blu-ray vs HD DVD: Are We Headed for Stalemate?
The format war between Blu-ray and HD DVD appears to be headed into a new phase, one in which consumers are waiting for a winner to be decided. If a winner does not emerge soon, a stalemate is possible, with both formats losing.
The first phase of the format war was the launch, when HD DVD appeared to be winning because of higher-quality titles and lower pricing. But HD DVD failed to close the deal last fall, leaving an opening for the Sony’s PS3 to work its magic.
The PS3 shipped in November and, while not a stunning success in the video game world, sold enough machines to change the dynamic of the format war. Blu-ray has been impressively ahead all year. But Blu-ray didn’t close the deal either.
We have moved into the beginnings of a price war. Toshiba reduced the price of its players for a month-long sale, and obviously saw some action. But the Videoscan disk sales numbers do not show a big move to HD DVD as a result. Sony and Panasonic are now shipping newer, cheaper players, with Sony’s BDP-S300 listing at $499.
The shipment of titles has evened out. Several months ago, Blu-ray was out-producing HD DVD by a factor of two on a monthly basis, but this has changed. HD DVD-exclusive Universal is blitzing the market with catalog titles, and Blu-ray exclusive studio Fox (along with MGM) has apparently withdrawn from the market until the BD+ encryption scheme is operational. We now see a rough parity in titles for the next several months.
But what is the impact of titles? A title like The Departed may sell 100,000 copies (both formats combined), but this is less than 2% of the overall sales for the title. More importantly, what do such titles do to increase adoption? There is no evidence that key titles like The Departed (or Casino Royale or The Matrix) actually sell machines.
The role of content in the format war is being questioned. All studios seem to be realizing that catalog titles, however inviting, do not sell very well on HD DVD or Blu-ray, and that new titles do much better. This contradicts the studios’ previous experience with VHS and DVD, but it makes sense. Twenty years of video formats have left most early adopters with large collections of LD’s, VHS’s, and most of all, DVD’s, so high-priced and unmotivated catalog titles do not have as much appeal as was expected. Even titles like The Matrix have not sold spectacularly well. Hence, studios are pulling catalog titles until a later period when adoption has increased.
