The next-generation DVD format war was a costly one–for Sony (SNE). In addition to the untold funds the company spent on pro-Blu-ray propaganda, it also reportedly spent quite a bit to buy the allegiances of Hollywood.
The Toronto Globe and Mail reports that Sony paid Warner Bros. as much as $400 million to throw its support behind Blu-ray and abandon HD-DVD. An interesting little footnote to the DVD format war, since Warner’s decision all but sealed HD DVD’s fate.
So it was a reported $400 million well spent, then. For the time being, anyway. “People are saying Blu-ray won the war but who cares,” Seagate CEO Bill Watkins said last year. “The war is over physical distribution versus electrical distribution, and Blu-ray and HD lost that. In this, flash memory and hard drives are on the same side. The war is over and the physical guys lost.”
Amazon (AMZN) is so far ahead of the curve it’s actually behind it. Today, the online retailer declared its support for Sony’s Blu-ray DVD format–nearly a full 24 hours after Toshiba (6502.TO) officially discontinued its rival HD DVD.
“The high-definition landscape is rapidly changing, and consumers are looking for guidance on how to make the best high-definition buying decisions,” said Peter Faricy, vice president of movies and music at Amazon.com, who apparently didn’t receive Toshiba’s HD DVD press release until early this morning. “Our customers have clearly voiced their support for the Blu-ray format. … In order to best serve our customers, Amazon is recommending Blu-ray as the preferred digital format and will continue to carry the ‘Earth’s Largest Selection’ of Blu-ray products.”
The next generation DVD format war has become a format funeral. Toshiba (6502.TO) said today it is pulling out of the HD DVD business. The company will cease production of its HD DVD players and recorders immediately and shutter the business entirely by the end of March.
“This was a very difficult decision to make … but when we thought about the trouble we would cause to consumers and our partners, we decided it was not right for us to keep going with such a small presence,” Toshiba Chief Executive Atsutoshi Nishida told a news conference, adding that Warner Bros.’ decision to back Blu-ray had made the move inevitable. “That had tremendous impact,” he said. “If we had continued, that would have created problems for consumers, and we simply had no chance to win.”
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The markets are having their say about Toshiba’s rumored withdrawal from the next generation DVD format war and their message is clear: Get on with it, already.
Shares in Toshiba (6502.TO) moved sharply higher in early trading today as investors welcomed reports that the HD DVD champion is itself planning on abandoning the format and throwing its support behind Blu-ray. “We have entered the final stage of planning to make our exit from the next generation DVD business,” a nameless source inside Toshiba told Reuters over the weekend.
Publicly, however, Toshiba claims it’s still considering its options. “Toshiba has not made any announcement or decision,” a company representative told the BBC. “We are currently assessing our business strategies, but nothing has been decided at the moment.”
Well, perhaps not at this particular moment, but certainly at one in the near future. As Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments, notes, the consumer electronic industry has been echoing with HD DVD’s death rattles for quite a while. It’s time to put the old boy out of his misery: “It doesn’t make sense for Toshiba to continue putting effort into this,” said Ogawa, “It needs to cut its losses and focus its resources on promising businesses.”
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By June, Wal-Mart will only be carrying Blu-ray movies and hardware machines and, of course, standard-def movies, DVD players, and up-convert players.”
–Susan Chronister of Wal-Mart sticks a fork in HD DVD.
HD DVD may soon join Betamax in the consumer electronics industry’s Museum of Failed Formats. Though publicly HD DVD champion Toshiba professes its commitment to the next generation DVD standard, privately it’s plotting its demise. Sources close to the company tell the Hollywood Reporter that the continued marginalization of HD DVD by movie studios and big box retailers like Wal-Mart has driven Toshiba to concede defeat in the DVD format war. The company plans to pull the plug on HD DVD in a matter of weeks. “An announcement is coming soon,” said one source close to the HD DVD camp.
But not soon enough for some, who are finally seeing their predictions of an HD DVD rout borne out. “Blu-ray’s better, and I told everyone,” said film director Michael Bay. “I was very vocal about it. I knew HD [DVD] was not going to make it. Am I thrilled? It really wasn’t my fight, but remember what I said in the press? I was kind of saying HD [DVD]’s going to lose… No one believed me.”
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Best Buy (BBY) has added insult to the injury Netflix gave HD DVD this morning, announcing plans to endorse Blu-ray over HD DVD. “Best Buy will recommend Blu-ray as the preferred format,” said Brian Dunn, Best Buy’s president and chief operating officer. “Our decision to shine a spotlight on Blu-ray Disc players and other Blu-ray products is a strong signal to our customers that we believe Blu-ray is the right format choice for them.”
Lot of good that $2.7 million HD DVD Super Bowl ad did. This morning, online DVD rental pioneer Netflix, which has stocked both Blu-ray and HD DVD formats since they first came to market in early 2006, said it is dropping HD DVD. Quite a blow to the HD DVD camp–which, after a number of high-profile defections, is supported by just two major studios, Paramount Home Entertainment and Universal Studios Home Entertainment.
And not for much longer, says Ted Sarandos, Netflix’s chief content officer. “The prolonged period of competition between two formats has prevented clear communication to the consumer regarding the richness of the high-def experience versus standard definition,” Sarandos said. “We’re now at the point where the industry can pursue the migration to a single format, bring clarity to the consumer and accelerate the adoption of high-def.”
Posted at 10:13 AM PT
Sphere
Tagged: content, Universal Studios, format, Paramount Home Entertainment, John Paczkowski, Netflix, Blu-ray, DVD, HD DVD, high definition, Digital Daily | permalink
Woolworths has declared a winner in the next generation DVD format war and it’s not HD DVD. Yesterday, the British chain said it will stock only Blu-ray discs, becoming the first major retailer to drop HD DVD.
Woolworths’ decision came after it found Blu-ray movies outsold HD DVD by 10 to 1 in its 820 stores. “Sales figures clearly show that the market is moving toward one format of high-definition DVD,” said Woolworths’ DVD buyer Steven McGunigel. “The main reason is the success of Sony’s PlayStation 3 machine. Because it plays Blu-ray discs, there are over three-quarters of a million homes in the U.K. that can view the new high-definition format. There is no where near that number of HD DVD players around.”
Another nasty blow for the HD DVD, which appears to be fast losing the support of its initial backers. Last week, Warner Bros., New Line and HBO all abandoned HD DVD. And according to Variety, Universal’s exclusive commitment to HD DVD has expired. Toshiba, HD DVD’s, main backer, is soldiering on in spite of such setbacks. It’s even gone and purchased a 30-second TV spot during next week’s Super Bowl. But as Andy Parsons, senior vice president of the Blu-ray Disc Association points out, it’s no silver bullet. “I certainly admire [Toshiba’s] chutzpah,” Parsons told Home Media Magazine. “They can certainly choose to do as they please with their marketing. Running a Super Bowl ad is not likely to convince consumers that HD DVD will win the format war.”
And in the end, is this particular format war even worth worrying about? Isn’t physical media doomed? “People are saying Blu-ray won the war but who cares,” Seagate CEO Bill Watkins said earlier this year. “The war is over physical distribution versus electrical distribution, and Blu-ray and HD lost that. In this, flash memory and hard drives are on the same side. The war is over and the physical guys lost.”
Posted at 11:20 AM PT
Sphere
Tagged: John Paczkowski, Warner Bros., Woolworths, New Line, HBO, PlayStation, Sony, Blu-ray, HD DVD, Toshiba, Digital Daily | permalink
