With Toshiba’s decision to abandon HD-DVD, the HD disc war ends with a victory for Blu-Ray. Lost in the “horse race” style reporting, however, is the fascinating truth behind the breakthroughs that led to this endgame.
The little-reported problem is that sales of regular DVDs actually declined in 2007, and are expected to fall further in 2008. Warner cited that as a reason for picking Blu-Ray, with an eye to ending the format war.
â€œWe saw evidence that the format war was actually hurting standard definition,â€ [Warner Home Entertainment president Kevin] Tsujihara said. â€œThe industry had very high expectations for the fourth quarter. The summer was the highest box office quarter in history. We ended up the year somewhere down 2 percent or a little bit more than 2 percent. That was a little disappointing, given the summer we had.â€
As FORTUNE summarizes, “Consumers who bought HDTVs were so afraid of backing the wrong high-definition movie format that they decided not to buy movies at all.” And isn’t that a fascinating side-effect?
As a curious and highly debatable aside, Warner’s also claims high gas prices drove down DVD sales.
The other factor that seemingly has to come into effect here is that the studios have now released most of their back catalog, at least the viable parts of it, on DVD already. It’s genuinely hard to come up with a movie that’s not on DVD, harder still if it’s something that could actually make money (no fair saying The Day The Clown Cried). The Disney animated features, Star Wars, the Godfathers, and everything else that matters is already out, and you only get to make that money once, absurd repackaging notwithstanding. DVD also created a new market in television box sets, something that wasn’t practical with VHS (I once had two grocery sacks that contained episodes 1-60 of Robotech, two episodes per tape). But from here on out, the revenue potential for DVD seems to be limited to just the new movies that get home versions a few months after their theatrical runs.
Now here’s what I’m waiting to see. What’s the appetite going to be for buying all those movies again, in high-def? Particularly with upconverting players making standard-def discs look “pretty nice” on HDTV? Even though Blu-Ray’s quality is undeniably better than DVD, will it be enough to get people to buy entirely new players and software just a few years after adopting DVD? Blu-Ray offers more opportunities for extras, particularly given the capabilities of BD-J and the presence of internet connectivity in newer players, but is any software making genuine use of those features yet?
Maybe Blu-Ray’s competition was never HD-DVD, or even digital downloads (though those may take off… it’s just too early to tell). The real rival is actually the old DVD.