Crunch-Time in High-Definition Format War

Christmas 2007 could be the deciding joust for the fortunes of competing high-definition disc standards, Blu-Ray and HD DVD in the U.S., analysts at Understanding & Solutions claim.

Performance of both Blu-ray and HD DVD during this second holiday season is crucial in establishing the new generation of optical discs, and may bring the market closer to resolving the war between the competing formats.

"Blu-ray and HD DVD player prices have been falling since the summer, culminating in Toshiba's loss-leading sub-$100 HD DVD player, available in the USA last month for a limited time," said Jeremy Wills, consultant at Understanding & Solutions. "Price reductions in the US have continued into December, with Blu-ray players dropping below $300 for the first time, and HD DVD players below $200."

The analysts observe that drive, chipset and other system component prices are now falling as demand increases, speculating that manufacturers will be able to put together players for either format for under $150 at some point next year. This should translate into cheaper devices and wider adoption of them, with analysts expecting players to cost under $100 by 2011, should both formats remain,

"Blu-ray benefits from stronger Hollywood studio support and represents a greater proportion of High Definition disc production volumes and disc sales. To date, Paramount's move to sole support of HD DVD has failed to turn the market," Wills observes.

"As demand grows and manufacturing volumes build, we're going to see the costs of releasing on two different formats really start to bite. There may be surprises just around the corner, and we could see a lot more format clarity in 2008."

Despite all this action in the disc market, consumer confusion still persists. The importance of providing a coherent message through strong retailer support is essential, as many buyers still don't know what additional inputs are required in order to view High Definition content on a High Definition TV.