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).


Matt said...

The HD disc war is only part of a much larger format confusion that clouds the entire industry.

HD television sets already suffer from convoluted standards. Many were sold as little as 2 years ago at 1080i without an HDMI port. One has to be a video enthusiast to know what to get. People buy them now because they want a large screen, as they bought "big screen" televisions in the 80s and 90s. HDTV programming still does not cover most cable channels.

When I buy a television I want it to last 10 years. I'm not going to upgrade in 1. I don't own an HDTV, though I might be inclined to when they reach a standard that I hope to be more like 4k and not 1080. Then I can have uncompressed films. This has much in connection with the problems faced by theatre owners and buying a digital projection system: a 12,000 dollar projector will last 20 years, a 30,000 dollar digital will last maybe 2.

The prosumer HD video camera market is also problematic. Canon recently released its prosumer HD camcorder in 1080i HD. The argument they made is that it "looks the same as 1080p." A stupid mistake, as many journalists have adopted 1080p HD prosumer cameras that they can use for video, audio, and can grab stills from the footage they collect for printing. Canon is a popular brand among journalists, and they really screwed up on that one as interlaced video will not suit their needs.

The Digital Bits brought up an excellent point in comparing the format war with the one between DVD Audio and SACD. CD was the winner there, as DVD will probably be the winner here. All the better for me as I don't feel like rebuying my collection.

This is all part of an even bigger problem: Clearly the movie industry is starting to go the way of the music industry. Cinema is a luxury, and they forget that if their films do not resonate with the public, the public will go to one of the other competing media forms.

We have 3D technology that can be easily implemented today, and filming 3D is better and probably cheaper than conversion, and yet they lack the foresight to shoot The Dark Knight in 3D.

The film industry is making huge mistakes, and they are already shouting "Pirates" as the music industry did half a decade ago.

droidguy1119 said...

The thing is, I don't think people understood what they needed and why SACD would be better than CDs. Since the Blu-Ray player was built into the PS3, people have already jumped on board this format in far greater numbers than SACD -- one of the hi-def formats seems almost undoubtedly the format of the future.

Matt said...

I do wonder how quickly a format has to "win" before the public just says "screw it."

Speaking of advantages, besides HD quality, that many consumers are afraid the reasons for this are above their heads, what other advantages does an HD disc carry?

Think of how DVDs were sold. "They're like movies... on CD!" "You need less shelf space!"

Should Blu-ray or HD-DVD adopt that strategy:
"With HD-DVD, you still don't have to rewind anymore!"

I still meet people that confuse DVD and CD, another form of disc might be very confusing to the public in general.

I don't expect a new disc to be the future for long if the war isn't over soon.

Matt said...

I'm surprised no one has yet compared the HD disc war to the Iraq war.

Both wars to make profit off the conflict of others...

Bill W. Gates.

droidguy1119 said...

Yeah but again, people already have this stuff, people have spent thousands of dollars on both the players and discs. It's not like if the public is slow to adopt, people who already bought it will just throw their stuff out. The formats have already gotten ahold of something, and unless the studios and retailers get bored (something I think probably contributed to the death of SACD) I don't see either of these formats just going away.

Matt said...

Don't most people own DVD players today? Wasn't DVD audio the competition of SACD? I know I have a DVD player, but I didn't buy those discs to play music with it. It's not like the people that bought PS3s won't have something else to do with what they bought. If we exclude the PS3 I wonder how many players are left.

Rickey Henderson said...

They need to wrap this awful little war up soon because I'm sick of it. The consumer is losing out big time.

droidguy1119 said...

Yeah, but I mean, it's not every 100th customer buying a Blu-Ray or HD, we're talking every ten customers. These are formats that have been widely adopted. The thing about how you didn't buy your DVD player to play CDs is actually a perfect argument because I hear from lots of customers that it was the game system that was the "bonus" because they picked it up as a cheap Blu-Ray player. For many, it's not a bonus, it's why they bought it. People who bought dedicated players or purchased the HD-DVD add on for the XBOX even moreso, since their players only do a single thing.