This week Las Vegas was the Mecca of the home video industry as the VSDA held its annual Home Entertainment Expo. For me it was particularly interesting to go there and gauge sentiments within the industry regarding high definition video formats. The results were quite interesting and I wanted to tell you a bit about it.
For more than 8 years now DVD has established itself as the premier home video platform and has substantially increased revenues for studios as they released their catalogs on the shiny little disc. As the country turned into a society of movie collectors studios reaped the rewards and released more content on DVD than they ever did on any other home video platform. However, in recent months it has become abundantly evident that the gravy train is slowing down. Revenues from DVD sales are down and a slight panic is circulating in the industry whether the DVD-apocalypse has arrived or not. Certainly things are not that bad, but I think not even the most eloquent studio executive can deny any longer that DVD is not the money maker any more that it used to be. Interestingly, it is arguably the studios' own fault because they devalued so many of their properties by releasing them and re-releasing them over and over again, truly milking every cent out of it, and of course, by over-producing and over-shipping DVDs. The result of that was that they had their warehouses full of unsold inventory, which in turn they began liquidating at reduced prices, which in turn resulted in the $5 bargain bins at Walmart and other stores. Neither practice helped to keep DVD pricing stable or giving people incentives to buy product at a premium price. Nice for consumers, but bad for business.
With that in mind one would expect the studios to be eager to get high definition formats off the ground with all flags flying. After all, these new high definition formats will give studios the chance to re-release titles once again. Pricing-wise there is clearly a dilemma, though, because on the one hand high definition releases have to made attractive. High definition video is a hard sell because most people currently do not even know they exist and even more people are pretty happy with the quality DVD delivers. So, if a high definition release is priced significantly above a DVD, chances are, people will stick with the DVD instead because in their minds it is good enough. Given, however, that the DVD pricing structure is as broken as it is, studios should certainly take some measures to fix things and will hopefully learn from their past mistakes. It is a sticky situation that deserves some forethought but nonetheless, studios should be ecstatic about the availability of a new high definition format. And yet, they are not… or maybe I should say, not really.
The thing that is striking about both, HD-DVD and Blu-Ray is that there is a perceptible lack of excitement and enthusiasm on behalf of the studios. I have yet to have a single studio rep call me up and tell me about their exciting new hot-shit version of a movie on high definition. These days, HD-DVD releases are a mere byline in the flood of other press releases and title announcements. In other instances, studios do not even send out announcements to the press and simply announce upcoming releases to retailers only. What a way of creating excitement. Instead of trying to build excitement for these titles, studios seem to have them float along with a laissez faire attitude as if it were just another DVD SKU that needs to get off their desks. That does not bode well for either format and screams "Shuffleware."
I am not as gloomy as many other people and analysts, but for argument's sake I will put my analyst-hat on for a minute and just because I can, I hereby officially predict that HD-DVD and Blu-Ray will coexist side-by-side in the future. Yes, you read that right. I do not see either format winning or losing for that matter and I do not see either camp giving up. And quite frankly I no longer care because here is my prediction as to what will happen in more detail.
The focus of the hardware industry will shift away from single-format players and by Christmas of 2007 the market will be most likely dominated by combo players that are able to play just about anything. Players that can play Blu-Ray, HD-DVD, DVD, CD, DVD-Audio, SACD, MP3, Kodak Picture discs and whatnot else. By the end of 2008 the adoption of these players will be higher than that of single-format players and by Christmas 2009 you will not be able to buy a stand-alone HD-DVD player because price points of combo players will be so low to drive them out of the market.
In this scenario people will not care whether a movie is released on HD-DVD or Blu-Ray because they know, no matter what format it is going to be, with their combo player they will be able to play it, and it will look impeccable. That is all a consumer cares about and needs to know.
While some people want to make you believe that HD-DVD and Blu-Ray are worlds apart, the fact of the matter is, that they are not. From a purely technical standpoint they are, in fact, closer to each other than an audio CD and a DVD, and yet every DVD player will play your audio CD just fine. This whole format war is not about better formats, it is about egos and patents, and it is carried out on the backs of consumers. That however, may turn out to be a good thing. I hear a lot of people comparing this format war to VHS and Beta, which it has not a lot in common with. Those were two formats so unlike each other that it was not possible at the time to offer combo players because the underlying technology was too different and cost prohibitive. With today's optical formats that is no longer true. Just the way the disc looks the same for CD, DVD, HD-DVD and Blu-Ray, so do many of the specs and pieces of the hardware required to run them. While they may be using different lasers and different focal lengths, they are not intrinsically excluding each other. They can easily be operated side by side and the design of a HD-DVD disc tray is the same it was for a CD player 15 years ago and it's still using the same stepper motor.
With all that in mind there is no need for one format to win. They can easily coexist and the good thing for consumers is that it will help make things cheaper and it will help make things cheaper faster. For content providers it will come down to the question of which one is cheaper to produce, which will mean that HD-DVD and Blu-Ray facilities will get into bidding wars driving down prices, just to get the studios' business. For consumers it will also mean that in many instances they will have the opportunity to pick the format that fits them and their wallet better. So, as I said before, it may not be all bad - apart from the fact that this war is stupid and unnecessary in the first place, but it is here, so let's deal with it.
But let me get back to VSDA again where I tried to get confirmation on my perception. Currently the industry consist of two groups, those studios who do support and release high definition content, and those sitting on the fences trying to see how this war will fall out. Those who are releasing on HD-DVD or Blu-Ray are currently not in a position to make any truly viable comments because they do have a vested interested in either one of the competing formats, so the scenario I just predicted is nothing they will find too agreeable for understandable reasons.
On the other hand many of the independent studios who are waiting to see what happens tend to agree with my observations and while most are definitely interested in offering their films in a high definition format they simply cannot afford putting their money on the wrong horse, which is understandable, of course.
VSDA opened with a press conference by the HD-DVD group, and may I say that it was rather embarrassing. I've seen a lot of self-serving attitude in my days, but I am very tempted to apply the words "deluded" to the HD-DVD press conference, and I was close to publicly asking if they actually believed all the stuff they just said.
It all started with some aggravatingly self-serving announcements by Ken Graffeo of Universal, who announced that the HD-DVD group was working hard to bring HD-DVD to the masses and in order to do that they had designed a new message as well as new aggressive advertising. "The Look And Sound Of Perfect" is the new message of the marketing campaign, and if you think it is a bit of a poor choice, bear with me. It gets worse.
After talking about the plans to have road shows that will convert people to HD-DVD a bouncy Harold Sogard took the stage. Sogard is from the agency who designed the new campaign, and that's when things took a major turn for the worse. He opened with enthusiastic remarks how excited he is about doing the HD-DVD campaign and continued to the extend of how easy it will be to sell HD-DVD, because people will be so utterly impressed with its quality. I'm not sure which universe Sogard is hailing from but here on Earth things look a little different. HD-DVD and Blu-Ray both are an incredibly tough sell. Anyone who believes introducing a new technology like this that not only has a steep entry price from $500 upwards but also threatens to devalue people's movie collections and invites them to repurchase their movies is an easy sell, has got another thing coming. He then continued presenting some of the billboard ads for HD-DVD. I don't know about you but an ad that uses the word "Explosion-y" does not get a lot of credit from me. Trying to play up the improvements of the experience, the ads focus how much bloodier gorefests will be, and how "Explosions will be more explosion-y" among other things. To me, it sounded like they are trying to sell the format to a bunch of retards. The marketing campaign couldn't be any more "dumberer." The rest of the press conference was more self-congratulatory talk and I thought it was indicative that there were practically no audience questions following the conference, as everyone in the audience was simply scratching their heads in disbelief.
Things didn't look much better in the "Blu-Ray Café." Great name for very little. If you would want to promote your hottest new technology that will supposedly revolutionize the industry and the way people watch movies at home, how would you do it? Well, after a visit to the "Blu-Ray Café" you would definitely know how not to do it. Perched in a tiny little room the Café featured exactly three high definition TVs, each of them about 40" or smaller. Presentations for Blu-Ray anyone to wow and blow you away? Sorry, not here. Presentations are only every hour on the hour, and only on a 40" display for a select group of 4 viewers or so which is about all the sofa in front of the display can hold. Then you're fed some clips from the ultimate show-off movie - "50 First Dates!" Yeah, let it rip, man! Let's look at a baby penguin and Adam Sandler to impress people and make sure they will throw out their lame-o DVDs. It was followed by a clip from "Terminator 2" in order to show off the sonic capabilities of Blu-Ray. If ever there has been a poor choice for an audio showcase, the motorcycle chase sequence from T2 is it. It's a great movie, sure. But the problem is that all the explosive sound effects in the sequence were distorted in their original elements already. Every explosion is audibly clipped and distorted and that is what the Blu-Ray group is using to impress you. Note to Blu-Ray Group: "Loud" does not equal "good".
Next up in the Café was a rep from Samsung who was clearly there just to repeat pre-fabricated company slogans because he had no clue about what's really going on and had never even heard of the HDMI problems the Samsung Blu-Ray player exhibits.
The final of the three displays was used as an ambient display to simply play some flashy clips of "Ultraviolet" and other movies, all of them horribly riddled with banding artifacts. Yikes! Let's try that again, next time, with a bit more panache, shall we?
If there was anything impressive to experience about high definition, it was at the DTS suite where the company presented audio clips, accompanied by some video, in their uncompressed DTS HD surround format, which really blew your mind. It was so engaging and cool that I really didn't want the clips to end and our news editor Bill Binder, who was with me, felt the same way.
Other than that high definition was pretty low key, and while it was a conversation topic everywhere, there was little to no real push that would help retailers, media or consumers to get excited about either one of the formats.
Clearly it seems that everyone involved with these high def formats is overly optimistic. Whether it is Graffeo in who's book the HD DVD library grew from 30 available titles to 40 in only 5 minutes during his talk, the ad agency with literacy issues, or the HD DVD Promotion Group touting that there will be "hundreds of HD DVD titles on store shelves by year-end 2006" all the way to Sony who really believe "Hitch" is a great launch title for Blu-Ray no matter how misguided it may be. Everyone seems to believe that they can simply start shoving high definition content into the market and it will boom. That will backfire, I can guarantee it. People have no incentive to upgrade their hardware and movie libraries at this point and unless the proponents of the high definition formats will get their act together and actually begin educating people and focusing on good reasons why people should upgrade, the adoption of these formats will be extremely slow - and by extremely I mean extremely slow. A better picture will not do the job and neither will menus that are overlayed on the running movie, or improved audio formats for which no hardware exists. Focus, people! Create a message that does make sense and does truly create an incentive instead of self-serving nonsense that no one cares about. I love high definition formats. Both, HD DVD and Blu-Ray, and I want to see them succeed, and perhaps that is why this slacker attitude aggravates me so much.
I mean, you should see some of the comments that are put out there with absolutely straight faces… like from the FAQ of the HD-DVD press conference, this little gem.
Where can I buy HD-DVD product? "The look and sound of perfect" is available at major retailers including Best buy, Fry's, Walmart…"
No, you can not. The guys at Walmart don't even know what HD-DVD is - try and ask their electronics employees if you don't believe me - and virtually all the mentioned retailers are out of hardware stock and Toshiba is not able to fill the channels… and so is Samsung from what I hear.
Time to take off the pink glasses and stop fooling yourself. It is time to get to work and sell these formats!
