Tuesday, August 21, 2007

UPDATED: Paramount and HD-DVD

It's been widely reported that Paramount has joined the HD-DVD camp and I am almost gobsmacked by what a poor choice this is. On AICN someone from Paramount suggests that Blu-Ray is only "allegedly" winning the format war, mere weeks after sales of 300 skewed Blu-Ray by a great margin.

The most baffling thing about the decision is that there appears to be no upside for anyone. Blu-Ray customers who want Paramount movies will not switch to HD, they will merely be frustrated by the unavailable movies and will probably buy them in standard definition. Paramount doesn't exactly have a boatload of super blockbusters on slate aside from Transformers, and it sounds like the title may not end up exclusive after all (after hearing that Spielberg supports BR, I was prepared for this announcement and suspect there might be at least a couple more of them). Paramount may have netted in the range of $150 million to jump the Blu-Ray ship, but even if HD-DVD stays afloat, Paramount will probably end up losing a considerable portion of their revenue if nobody buys their HD titles (since it looks like they'll be able to get the good ones on BR and stuff like "Blades of Glory" isn't going to benefit from hi-def). Meanwhile, HD-DVD will sink further because they just blew a massive amount of cash on a deal with gaping holes in it. On top of all that, I'm sure word will spread that Spielberg is a Blu-Ray supporter and that might cause at least a handful of hardcore fans to adopt. And, of course, if HD-DVD fails during the Christmas season Paramount is just going to look really, really stupid.

Paramount suggests that the format is cheaper for consumers and is therefore better. This is ridiculous, although it has some ground in reality as I have heard several people state that they've gone for HD over Blu-Ray simply because HD players are cheaper. By Christmas, however, I expect PS3s to go on sale and Blu-Ray players to drop, and even if Blu-Ray fails to crush the competition, assuming their sales hold up that's still approximately a 70/30 margin in favor of Blu-Ray. It is again, puzzling that Paramount chose to make this decision now when in a mere four months we'll have a great idea of where the format war is going (not that we don't already).

In any case, I expect something big to happen very soon. It seems like people are beginning to sound off on the format war, as both Universal and Microsoft have made controversial statements to suggest they're keeping it alive for no reason. It would be particularly impressive (and probably deadly to HD-DVD) if Blu-Ray used a similar cash bid to buy Universal's format neutrality -- surely they see the negativity getting thrown at Paramount for making this decision (not to mention Universal owns at least a couple of Spielbergs), this is their opportunity to look like the good guy by finally buying their way out of being the last man standing.

So it seems that Michael Bay has retracted his statement about wanting Transfomers to go format neutral. We'll see. Again, this is based on the silly assumption that the cheaper player is undoubtedly what's best for the consumer. You can buy a lot of cheap standard-def DVD players at any old Wal-Mart, but that doesn't mean it's a good idea.

A few other notes worth making: Bill Hunt of The Digital Bits has lots to say here and here (both posts). Most intriguing are his suggestions about why Microsoft has jumped into the game, and the way Paramount staffers feel about this decision.

From forums I've surfed I hear a lot of negativity towards Hunt and The Bits about their decision to support Blu-Ray. Perhaps they're seen as one-sided. I do happen to agree with them, but if HD-DVD is willing to make a good play towards being competitive, then so be it. I don't think this Paramount deal is it, however. I'd also like to stress that I don't think the format war will be over after Christmas 2007, but I think it will be the writing on the wall. Certainly Paramount and Universal will continue to support and produce HD-DVDs for at least a couple years to come but should Sony move a million PS3s and Blu-Rays this Christmas and Toshiba and Microsoft sell a mere 20,000 units each, then it will be hard to argue that those numbers aren't indicative.

I'd also like to add that I work in retail and I don't think losing Transformers as an HD-DVD will mean a lot to consumers anyway. People will complain but in general I expect (as they often do) they will simply settle with the SD-DVD -- my point remains that no single title, no matter how big, is likely to sway someone into dropping down $300 to get a new technology (especially since you also need a hi-def television).