Burning Questions: Why the Rush to Blue?

For more than a year now, those who follow the future of optical drive technology have heard blue-laser this, and blue-laser that. We've watched a new format war brew over these blue-laser based technologies, with both the Blu-ray Disc and HD-DVD camps battening down the hatches for a long, drawn-out conflict. At stake for the industry is who will control the market for delivering entertainment content in the future; that is, whose next-generation DVD format will win out. For those of us who'll be consuming that entertainment, the conflict is more about which technology to invest in for the long haul.

Contrary to popular belief, the consumer electronics industry knows all too well the risks of taking competing formats to market. We consumers aren't the only folks with memories of the decades-old VHS vs. Betamax debacle. (For more background on the Blu-ray Disc vs. HD-DVD struggle, read "Format Wars Redux: Blu-ray Disc vs. HD-DVD," "The Next-Generation Disc," and "HD-DVD Claims the Brand Advantage.")

The two camps did meet earlier this year in an effort to reach an agreement before products began shipping. Unfortunately, since the talks broke down in the summer, the situation has spiraled downhill. Members of each camp still talk bravely about coming to market with products this year: Pioneer says it's completing work on a Blu-ray Disc data recorder for the PC, while NEC is readying an HD-DVD player for the PC. At this writing, I've yet to see either product. Both could hit by year's end, but only if the AACS content protection controls adopted by both formats can be finalized in time to meet already-tight production schedules.

Toshiba, meanwhile, said earlier this year it would launch consumer HD-DVD players in 2005, but at this writing, the company is mum, beyond stating it's talking with its content partners.

Beyond Royalties

But there's more to this soap opera, beyond the battle for lucrative future licensing royalties. I hear from some insiders that the possible delay in HD-DVD's launch could leave the door open for renewed talks of détente between the two camps. (The original plan, announced by HD-DVD backers at the Consumer Electronics Show in January, called for HD-DVD products to be on store shelves by this fall.) I've also heard the situation likened to one where two proud competitors are backed into a corner, and neither is willing to give ground. There's a back story here, some of which is public (to wit: the original battles for the current DVD format), and some of which is not. As things stand, the winner takes it all.

What's going on behind closed doors in Japan may be anyone's guess, but the harsh reality is that a format war would be unwelcome to manufacturers and consumers alike: Each would face a complex web of choices if both formats go to market, and both could delay making decisions because of a format war.

Industry analysts rightly point out that the number of HDTV owners (who are the most likely buyers of next-generation optical drives) is too small to support a product launch. JupiterResearch's recent consumer survey found that only 11 percent of online households have TVs or set-top boxes capable of high-definition playback--and I believe this finding wholeheartedly (do you have your HDTV set yet?). So I also question why the industry began talking big about rushing to market this year--or even early next--to begin with, considering that high-def television adoption has been dragging.

IDC Research Director Wolfgang Schlichting says "it will be the year 2009 before we see [these] technologies making a significant impact on the market."

One reason for this delay is that consumers aren't motivated to graduate to the next level. "For must users, DVD will be good enough, for a long time--because [standard] DVD still looks quite stunning on 46-inch or 50-inch TV," Schlichting points out. His perspective is one that's quietly echoed by many in the industry, and even by savvy consumers. Because of this, Schlichting adds, "Price is going to be a really important factor [in the market's growth]."

What Our Readers Think

If you're counting on waiting for the big companies to duke out this format war, you're not alone. What follows below are excerpts from the deluge of e-mail and blog postings in response to my columns on Blu-ray Disc and HD-DVD. The general tenor of reader opinion does not bode well for the near-term prospects of high-def content delivery.

"What is disappointing is that we have to choose, or pay big money to have one of each. I suspect that decision will drive me to indecision and I will wait on the sidelines until the price drops enough where I can afford one of each or a combo unit. However, if enough of my favorite movies are available on one format or the other, then that might drive me to purchase one sooner."
--Brian Peterson, Cypress, California

"As one who has a HDTV, [...] I am sitting this war out until there is one format."
--John Le Marquand, Canada

"Since you asked what I plan to do about a high-def recorder, here is my answer: wait and see. Having lived through the VHS/Betamax disaster, I am quite happy to wait and see who will win. In fact, I'm still using VHS for recording (although I do watch prerecorded DVDs)."
--Mark A. Durham, Spartanburg, South Carolina

"I, or quite frankly, anyone I know, would never even consider getting on some bandwagon. Look at DVD burners already (DVD+R, DVD-R, DVD+RW, DVD-RW). It's silly and crazy. The normal public has no idea what those mean. [...] Luckily, DVD movies themselves never had this format problem. It's the only reason it became accepted so quickly."
--Dan Daily, Lockport, New York

"I know that I will not buy any HD players until they come out with the one that plays both formats, and is affordable. I already have an HDTV setup in my house, so I really want one. Maybe if enough people turn their backs on the next-generation formats, corporations will finally listen to consumers."
--Yevgeniy Kislov, Saddle Brook, New Jersey

"While I understand how high the stakes are for each competing format, with all the delays and confusion it seems to me that everyone is a loser. [...] Now, I'm about as big a gadget freak as anyone, but I'm not stupid. When the time arrives that I can actually go down to Blockbuster and rent a high-definition DVD, I will almost certainly buy not only a new DVD player, but that 70-inch rear projection HDTV monitor also. But with prices continually dropping, better technology [coming] with time, and nothing for me to watch on it in HDTV format anyway, what's the rush to replace what is working fine right now?"
--Robert Merrill, Post Falls, Idaho

"I'm happy to wait until the dust settles. In the meantime I'll keep enjoying my dual-layer DVD [recorder]."
--Andy Weysham, Luanda, Angola

"I don't have much of a preference between the two formats, but I will not buy either until a standard has emerged."
--Brent Harger (location withheld)

These comments from consumers educated on the issues--although not necessarily the industry's infighting--suggest that people are quite ready to wait until a clear winner emerges. If I were in the consumer electronics industry, I'd be worried to hear perspectives like this. Consumers won't stay away forever; but if we have a format war, it will take time for them to become less wary and take the plunge.

Getting HD Out There

Market pundits forecast the surge in demand and potential growth for high-def content delivery to still be three or four years out. After all, we still need to get the high-def televisions out to the masses, and convince those who aren't couch potatoes, movie aficionados, or sports fans that yes, high-def content is worth the extra dough. These issues go hand in hand.

One caveat: I have not thus far mentioned how Sony's PlayStation 3 ups the ante considerably in Blu-ray Disc's favor. This is obvious, given that the PS3 will have a Blu-ray Disc drive inside, and the PS3, due next year, is expected to do wildly well in sales. That said, not all PS3 buyers will have an HDTV--and those who don't are unlikely to be very motivated to buy the high-def Hollywood movies that are widely expected to be the strongest drivers behind the adoption of a high-def optical format.

I suspect that if a format war were averted, demand for high-def playback and recording could outstrip current expectations. Unlike with previous format wars, savvy users are watching this unfold play by play on the Internet, on news and tech gossip sites. I think it's safe to assume that all of this talk, and cross-talk, is lowering users' expectations as to what they might want, and by when. But with the right content, and the right circumstances--no format war, lower-than-expected prices--high-def optical could get more of a running start than anyone is anticipating.

Personally, I have not bought an HDTV yet; my 6-year-old 27-inch CRT is working just fine, thank-you-very-much. But with HDTV prices dropping, I might just consider upgrading sooner than I planned--if I had the chance to view both The Lord of the Rings trilogy and Star Wars saga off high-def discs.

The way things stand, though, I know that won't happen any time soon: The Lord of the Rings is a New Line Cinema title, and New Line is backing HD-DVD; and Star Wars is at Twentieth Century Fox, which is backing Blu-ray Disc.

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