What Are the Lessons of the Blu-Ray/HD-DVD Battle? A Freakonomics Quorum

Even if you don’t care one bit — and this probably describes the vast majority of Americans — you have probably heard by now that a Great Format War has been fought, and apparently won. The HD-DVD format for DVDs, backed by Toshiba, has lost out to Sony’s Blu-ray format. To be sure, there are some caveats. In this Computerworld article, for instance, Lucas Mearian writes that Blu-ray’s victory may not be remotely as meaningful as it seems. Having recently spent a cold, rainy, but thrilling afternoon walking the Freedom Trail in Boston, I would put it this way: the Blu-ray victory may end up being as expensive, and as predictive of ultimate victory, as was the British victory of Bunker Hill. (This is not to say that HD-DVD will come back and win the war; it likely won’t. Still, the Blu-ray victory is hardly unqualified.)

So what are we to make of this format skirmish? We gathered up a group of smart people who think about such things — Shane Greenstein, Andrei Hagiu, Michael Santo, and Pai-Ling Yin — and asked them the following:

Is the battle between HD-DVD and Blu-ray really over? What can we learn from it?

Here are their answers. Thanks much for their participation and insights.

Shane Greenstein, professor of management and strategy at the Kellogg School of Management at Northwestern University:

While the history of format wars teaches analysts not to infer lessons too hastily, it is much more fun to throw such caution to the wind. So here goes. I see three lessons from this recent battle, one for vendors and two for buyers.

The lesson for vendors: a format victory does not guarantee profitability. Neither side in this fight committed a strategic error. Each hardware vendor lined up a large coalition, launched a sophisticated campaign, and fully funded their marketing efforts. Such sophistication led to large sunk expenses. That put both sides in a position to lose money unless the war settled quickly. It did not. HD-DVD had its best chance when it came to market earlier than Blu-ray. HD-DVD did not win because it did not build enough early sales to slow its competitor’s later sales, which went well enough to nearly tip the market.

The HD-DVD coalition responded by offering subsidies for content providers, keeping the fight alive. Reportedly, buyers bought a million units of HD-DVD and a million of Blu-ray, with the latter being more recent. Retailers – especially Wal-Mart and Best Buy – have recently lost patience with splitting precious shelf space between formats, and have settled on Blu-ray, the format that sells more content.

In brief, neither side exits this war with profitability. HD-DVD will soon assume niche status, and the coalition will take a write-down. At best, Sony avoided disaster by not losing completely. Still, that avoidance happened only with a very high initial expense that Sony cannot possibly recover until Blu-ray sells many units for a long time. In brief, neither side has profited, or will do so for some time.

The lesson for an impatient buyer: a format war does not benefit every impatient buyer. An impatient buyer wants the latest functionality at almost any price and wants it soon. Those buyers exist in every market for consumer technology gadgets, benefiting from the usual free-for-all. Things will turn out well for one group of impatient buyers, those who bought Blu-ray, but not necessarily as well for the other group, or HD-DVD buyers. The latter own a system with a good chance of becoming orphaned by hardware vendors and movie title providers. There is no way to buy insurance against such a contingency, nor is there a large tax deduction for donating obsolete equipment to museums stocked with 78 RPM turntables, 8-track tape players, and laser discs.

The lesson for a patient buyer: patient buyers gain certainty by ceding control. Patient buyers usually do not itch to change their situation quickly, waiting for a new gadget to exhibit a clear and pragmatic value proposition. Vendors believe that there are many such buyers in this market, comprising the vast majority of VCR owners. Indeed, it looks as if patient buyers benefited from waiting out this format war, and will soon experience lower prices, larger libraries, more convenience, and reduced uncertainty. Yet, as in prior wars, waiting has its risk. Patient buyers ceded control over the format choice to impatient buyers and sellers. Did earlier market participants make a choice that serves the interests of later market participants? It is difficult to say at this point.

Pai-Ling Yin, assistant professor of strategy at M.I.T.’s Sloan School of Management:

Unfortunately for Sony and Toshiba, both Blu-ray and HD-DVD lost the battle long before Toshiba’s withdrawal. To see this, it helps to remember that this is indeed only one battle in a much longer and larger war.

First, the longer war: technology markets are characterized by waves of innovation, where the latest and greatest of last year is replaced by the latest and greatest of next year. Joseph Schumpeter described this pattern as “the perennial gale of creative destruction.” Blu-ray and HD-DVD are simply the next generation of discs, replacing the standard DVD of the last generation. Thus, there is but a limited amount of time (until the appearance of the next generation technology) for the firms and the technology of this generation to reap the rewards of being the shiny new item on the block.

In the presence of indirect network effects, that window of opportunity can be eaten away in a standards battle between two incompatible technologies. Movie studios and game developers want to produce DVDs compatible with the standard that the most consumers adopt, and consumers want to buy the DVD player for which there exists the largest selection of movies and games. Consumers, worried about buying the losing technology (think Betamax vs. VHS), may delay adoption of both technologies until the battle is resolved.

To avoid delayed consumer adoption, Sony and Toshiba tried to coordinate on one technology standard in 2005. Their failure to do so led to the protracted fight in the market for content and distribution allies that leads us almost 3 years later to ask, “Is the battle over now?” The reality is that relative to the sales that could have been garnered from faster and higher volumes of DVD players had Sony & Toshiba been able to come to some agreement, both firms have lost. (It is interesting to note that the straw breaking the camel’s back may have been Wal-Mart’s decision to stop carrying HD-DVD players, reinforcing the importance of distribution and access to new technologies in market-tipping episodes such as the browser wars between Netscape and Internet Explorer — see Bresnahan & Yin’s “Standard Setting in Markets: The Browser War” — and from floor-based to electronic exchanges — see Cantillon & Yin’s “Competition Between Exchanges: Lessons from the Battle of the Bund.”)

Even worse, the window of opportunity is closing. This battle will end with both HD-DVD and Blu-ray retreating in the face of a new challenger: digital downloading. Disney movies can already be downloaded via Apple iTunes, cable companies offer videos on demand, and consumers can record shows and movies in high definition on their HD-compatible digital video recorders. The ability of consumers to perceive this challenger just over the horizon further stalls DVD player adoption. Why bother investing in a player when it may soon be obsolete?

This question brings us to the larger war: the next-generation DVD player is only one battle in the larger war over the living room. Who will control the home entertainment center? As digital technologies converge, firms like Sony, Microsoft, Apple, and TiVo continue to add more and more features to their respective products, allowing consumers to use a single device to manage pictures, music, video, games, etc. Blu-ray or HD-DVD is one feature. Another feature is network capability. Even when Blu-ray becomes obsolete, Sony hopes the device upon which it entered a household will maintain its prime real-estate position in the living room, and download a Sony Pictures movie via its Internet connection, as well as manage all other digital media in the home. As a result of Sony’s ownership of content, Sony may have a stronger interest than Toshiba in holding out in this losing battle, if only to get a foot in the door of as many homes as possible.

Andrei Hagiu, assistant professor of business administration at Harvard Business School:

Even after Time Warner’s announcement last month that it was dropping support for HD-DVD and becoming Blu-ray exclusive, and after Best Buy, Netflix, and Wal-Mart all announced earlier this month that they would give more prominence to Blu-ray and gradually but surely retire HD-DVD hardware and DVDs from their offerings, there were still some people who thought that HD-DVD had a small chance. Not any longer, after Toshiba officially conceded defeat recently: the HD-DVD format has lost — that much is certain.

The more interesting question is, “Has Blu-ray has really won?” This epic standards duel has lasted about two years and, as a result, both camps have sunk hundreds of millions of dollars into trying to gain the upper hand — not necessarily by improving their respective standards technologically, but, say, by paying bribes to large content providers in order to win their support.

For example, as a result of such tactics, Paramount and Dreamworks signed 18-month exclusive deals with HD-DVD last summer. (They were reportedly paid $150 million by Toshiba and its allies.) Given the outcome this winter, that looks pretty wasteful. Sony and the Blu-ray camp have also had to throw out a lot of money to sway movie studios, as well as to convince retailers and consumers that Blu-ray is the wave of the future rather than HD-DVD. It is not clear that the current size of the “pie,” which is now available for sharing between Sony and its allies, is big enough to offset these losses. In fact, the greatest irony of all is that Toshiba’s price went up 5 percent after the announcement last week. That’s not so surprising, in light of the above: investors must be relieved that Toshiba will finally stop throwing money away in order to get people on its standard.

Most importantly, what if this heavily publicized standards battle ends up being just a footnote in history, an irrelevant battle for an obscure technology, once the spotlight has shifted to other technologies (e.g., video on demand, IPTV and Internet download service) that might completely leapfrog DVD standards? And Sony, for all its might in consumer electronics, has generally looked awkward, slow, and uninspired when it came to designing content portals. (Think Sony Connect in digital music — about 3 years late on Apple’s iTunes; or its silly approach to content for its eBook — why would anyone pay for electronic books that you have to read within 3 months before they disappear?) Today, the company is nowhere to be seen in digital video services. Yes, the Blu-ray victory must feel especially sweet after the Betamax debacle 20-odd years ago, and given the reinforcing effects with PlayStation 3. But the company would be well advised to start looking into services such as Apple’s iTunes, Amazon’s Unbox, and many other advances that are threatening to make physical digital formats irrelevant.

So did we learn any new lessons about how to win a standards war? I’m not sure: it’s still all about doing whatever it takes to secure favorable expectations (from consumers and content providers) and getting exclusive deals for content or distribution (in the end, that’s what carried the day for Blu-ray, despite more expensive hardware). And oftentimes, these actions are not related to making better products.

Perhaps one lesson that this particular war drives home particularly well is this: not fighting in the first place might be a very good strategy to win, if only the contestants could be smart enough at the beginning. Mounting investments in standard wars is akin to a bidding war for a $20 bill: once you’ve decided to participate, you are sucked into a wasteful battle, in which people bid higher than $20. The worst consequence of fighting between incompatible standards is that consumers will simply not buy either until one has clearly won; why would anyone pay $400 plus for a 50 percent chance of getting stuck with a losing technology (a new Betamax if you will)? And then, when one technology has won, consumers might not rush to the winner if substitute technologies have appeared.

Bystander players in standards wars (in this case, content providers such as Hollywood studios) also have a lesson to learn: indecisiveness can be very wasteful for them, too. Sitting on the fence for too long rather than taking a stance and trying to make the market tip to one standard (which they have the power to do!) makes the pie shrink for everyone, including themselves. For example, why did Time Warner have to wait so long before committing?

Michael Santo, executive editor of RealTechNews and technology blogger:

For a long time, this war was a relative standoff, with HD-DVD selling more players and Blu-ray more titles, with an almost 2-1 margin in the first three quarters of 2007. Then the hammer fell, just before the Consumer Electronics Show in early January, when Warner Bros. announced that it would support Blu-ray exclusively.

This move left only Paramount and Universal as the major studios supporting HD-DVD, and gave Blu-ray a huge advantage in what counts the most in the war: content, with 70 percent of titles released only in Blu-ray. After all, what good is a player with nothing to play?

In the past few weeks, it’s been like a snowball rolling downhill, gathering speed. Netflix announced it was dropping HD-DVD, then Best Buy promoted Blu-ray over HD-DVD. And finally, Toshiba is throwing in the towel. And perhaps the biggest blow: on Friday, Feb. 15th, Wal-Mart announced that it would drop HD-DVD. When the world’s largest retailer drops you, you are toast.

Yes, the war is truly over. The lesson learned is an expensive one, for the companies involved as well as for consumers. For the former, the lack of a unified standard will end up costing the “losers” millions. You would have thought this lesson would have been learned after Betamax, but apparently it was not.

For consumers, the lesson is: don’t rush in immediately when something new comes out. Even without competitive standards, the number of problems in the early players, particularly Blu-ray, screamed, “wait.” Consumers should at least give new technology time to shake out the bugs, and, with competition such as this, let the dust settle. With this war over, though, there may be a new war beginning that the consumer can win: Blu-ray player price wars.

But does Blu-ray still have its work cut out for it? I believe this is the case, though its fate will take some time to play out. One need only look at recent announcements from HBO and Netflix to see the writing on the wall. Streaming video is the future, and will probably dethrone optical discs in the end – though probably not so fast that the Blu-ray Disc Association won’t have time to gloat.

Leave A Comment

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  1. Mayur says:

    Consumers will start thinking ‘n’ number of times before adopting any new technology, when they have more than one similar options to choose from.

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  2. chappy says:

    Sure digital downloading is probably the next wave of competition, but none of the commentators mentioned the thing I think that is important. Aren’t current, standard or upconverting DVD players just fine? I’m just not that convinced by the HD DVD format. I’ve rented HD DVDs online and the difference is hardly even noticeable versus a standard DVD. Why would people pay 3 to 4 times the cost when they already have a cheap substitute?

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  3. Adam W says:

    I was wondering what y’alls take is on the fact that this technology is clearly a “bridge” technology. What I mean by that is that given the current landscape, it is not feasible that it can be a long term sustainable product. Given the ubiquity of cheap memory and, as Santo points out, the rise of streaming video, is the short window of time that Sony has enough to reap any meaningful profits?

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  4. Lenny Timons says:

    Yes, download is the future, but it’s way to far off at this point (ask anyone who’s downloaded a standard definition movie if they want to wait for a 60 GB movie downlaod). I’m not sure consumers are really interested in HD movies when so many of them think DVD looks “great”. But assuming people want to watch movies in HD, optical disc is the only way to go now and for the forseeable future. We just don’t have the infrastructure currently to download HD movies in a reasonable amount of time, at least in my experience. And DVD doesn’t hold a candle to Blu Ray, in terms of quality, at least from my point of view.

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  5. Steve says:

    It all depends on your eye for video, the size of your display, and the quality of your video system. If you, like the majority of viewers, are viewing on a screen 40″ or smaller, and have a limited ability to discern differences in video quality, the differences may border on insignificant. For the growing number of people who regularly watch on larger screens, and/or have a better eye for the finer things in video, the higher quality gained from HD or BRD are almost a requisite for enjoyment. In fact, many people have spent hours enjoying the appearance of the content nearly as much as the content itself.

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  6. AaronS says:

    I think the lesson is for the manufacturers. Quite simply, instead of pouring millions of hours and dollars into the development of some product that is in direct competition with another for acceptance…why not reach out to the other corporation and seek to find a way that profits both groups AND the consumers.

    I don’t know if it would be the case, but is likely that if you brought in the best minds from boths sides, Blu-Ray would be even better. Or, for that mater HD DVD would be better.

    In any case, while we all know the benefit of competition, in such instances, we see that it was somewhat of a zero-sum game–one side entirely losing, in the long run.

    I have long wondered why, say, Ford does not reach out to Chrysler (who has always exhibited, it seems, a greater skill in aesthetic design) and come up with a car that profits BOTH companies. Instead, it seems our domestic car makers will only link up with foreign car makers for such endeavors. It’s as though they are saying, “We would rather join our efforts with a foreign manufacturer (who is as much a competitor as anyone) than to join forces with someone in our own country.”

    Collaboration and Cooperation are sometimes far superior to Competition.

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  7. miker says:

    I can’t help but think that this was akin to watching King Kong battle the T-Rex. Two species living on the edge of extinction. We’ve just witnessed the winner of a battle of obsolete business models. There will be no winner, only a temporary survivor. Digital downloading sucks right now and until the process gets “fixed” consumers will continue to buy disks. Download speeds are slow, downloaded quality issues persist, and download-to-rent plans treat consumers like sheep. And in the end we can still look to the studios lest they continue to try to sell us HD versions of Norbit.

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  8. jonathan says:

    The one that got closest was Michael Santo: consumers bought more Blu-Ray titles. Focus on that point instead of the pontification about wars for the living room. Why more Blu-Ray title sales?

    Is it luck? More popular flicks happened to come from Blu-Ray studios?

    Is it that Blu-Ray buyers were less interested in buying the cheaper player and were more invested personally in buying actual movies?

    Were consumers turned on more by the Blu-Ray name? I know I was. Blu-Ray is cool while HDDVD is stupid sounding and even hard to look at. To make that an economic point, if Blu-Ray is cooler, then the buyers might be more likely to be people who are into the movies, which is the same effect that Apple has seen with the iPod.

    But really, pontificating about how format wars are expensive and that the results don’t last is an exercise in stating the obvious.

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  9. Ron says:

    Does anyone have any real numbers on what portion of the public that can technically download HD from any source? I keep hearing about these downloads and have to wonder are they HD like Bluray and HD-DVD or are they something with less detail. I know that I have a very limited selection on pay per view and with my internet access, I am far from being able to download anything HD. With my current connection, I’m told that my area is not even in their 10 year plan to upgrade to that type of capability. I do though buy many DVD’s both new releases and old titles. Without some physical media, I see that my selection would be greatly diminished if forced to downloads and what the studios are seeing as overall sales would be reduced as well.

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  10. Rob Fink says:

    I own and HD player, I bought it at a steep discount a few months ago. I can probably count on both hands the number of HD movies I have watched on it and I own no HD movies. My problem was I couldn’t tell the difference between DVD and HD played on this recorder, so I played DVD and was perfecttly happy. I have no plans to buy a Blue Ray recorder. Right now there is no compelling reason to. I can get darn good quality watching DVDs on my HD recorder.

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  11. J says:

    In response to #2, that is a pretty big problem. HD DVDs (that is, high def DVDs in general) may not pose a significant value to the customer. DVDs won out over VHS due to significantly enhanced picture quality (of which there is definitely a jump from DVD to HD), similar price point, and perhaps most importantly better user experience. HD is more expensive than “normal” DVDs, and require new hardware (and an entirely new display if a consumer lacks an HDTV), and the only thing they offer is higher fidelity visuals. Hi-fi sound is there, too, but most consumers lack the hardware to notice the difference.

    By contrast, on-demand services of all types will most likely dominate the HD market over physical media since it will be cheaper (no production costs, just bandwidth) and easier (hit a button on your remote).

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  12. Jim says:

    Andrei Hagiu: “For example, why did Time Warner have to wait so long before committing?”

    could it be that they were waiting for the $400 million payoff from Sony to distribute only on Blu-Ray? (as reported recently by the Toronto Globe & Mail)

    If the majority of the content is only available on one format, that format will win.

    I was going to ask what format all the porn was on, but I’m not sure that played a part in this.

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  13. Chris Newman says:

    All of these arguments for HD downloads assume bandwidth is limitless and free. Comcast is already starting to charge heavy users. When a few bittorrent junkies moved into my building, my download speed was cut in half. That doesn’t even begin to address the DRM issues. At least with physical media (Bluray), you don’t have to worry about your content provider going belly up and turning all your movies into hard drive clutter.

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  14. BayouBlue says:

    I think it is interesting that nobody mentioned the impact of the Playstation 3.
    This was Sony’s Trojan horse Blu-Ray player into millions of living rooms.

    I would never have spent the money on a stand-alone player, but once I had the PS3 it seemed logical to spend a few extra dollars to buy new movies on Blu-Ray instead of standard DVD.

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  15. oddTodd says:

    I’m surprised no one discussed the bundling of a Blu-Ray player in the PS3, while the HD-DVD player was an expensive extra for the Xbox 360. In the end, if Toshiba really wanted to win, they should have just given away a few million HD-DVD players for free. That’s essentially what Sony did with the PlayStation.

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  16. Asterix says:

    Blu-Ray did win. Why do people keep thinking that suddenly within the next year or two everyone will have broadband networks and massive hard drives to download all their movies? Plus most people like haveing a physical thing to own. A Blu-Ray is tanagable, a download isn’t.

    The Blu-Ray players will come down in price fast to the point where it becomes why not by a Blu-Ray. I bet next Xmas there will be $200 Blu-Ray players.

    And everyone totally forgets games and storage. The PS3 is on the rise, Xbox 360, decline. Also there is the fact that Blu-Ray will now become a dtorage medium for computers (with up to 200Gb in the future) and Sony get a cut of all that stuff sold.

    Blu-Ray and downloading will co-exist nicely for many, many years to come, and Sony will certinally make a lot of money on Blu-Ray.

    – Asterix

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  17. DJH says:

    It’s clear that most consumers held back from this format war, delaying significant investment in one or the other. (Yes, there were some early adopters, but let’s face it, hi-def DVDs of either format were simply not moving.) To an extent, this consumer reticence fed the continuation of the format war, since without significant consumer “bu

    This reticence could be attributed to uncertainty; i.e. people chose not to buy until they knew what would prevail. This is what I read from a lot of tech writers. But what about expense? Hi-def players are not exactly cheap; even the inexpensive-by-comparison HD-DVD players cost a good deal more than “standard” DVD players (aside from late-2007 price drops).

    If consumers held back because of pricing, and Sony and Toshiba both spent a lot of money that they’ll never (at this point) get a return on, perhaps they might have been better off marking down the players, instead of subsidizing (bribing? studios, gotten some early-adoption momentum (to borrow a term from modern politics), and thus settled the format war sooner and actually had a better return?

    I find it difficult to believe that neither company anticipated that pricing might be a barrier to success.

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  18. Kris says:

    For all that are saying how downloads are the next big thing…think about what is happening in Time Warner & ComCast test markets. They are trying to charge more for per GB usage. This means that downloads and streaming content will cost you MORE, providing they do not come from your friendly neighborhood cable company.

    I’d prefer to own my Blu-Ray movie on disc and not pay a company $4 or more each time I want to watch it again.

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  19. Stephen says:

    Downloads still suffer the same problem that kept the music industry alive (and is the reason iTunes hasn’t replaced companies like Fye): Harddrive space.

    If your CD player (or DVD player in this case) dies, you buy a new one for a “relative” low price, and instantly have access to your library of songs (or movies). However if your harddrive fails, you have to jump through hoops to re-download everything (or pay again).

    Computers also have much more harddrive space than before, but with the vast variety of things being put on them (online video games, music, movies, work programs, etc) it would be impossible to hold everything in your library. I personally own over 400 dvds, I’d have to have a computer mostly dedicated to films if I opted out of a dvd player.

    Unless the price of Blu-rays end up more than the cost of a computer, I doubt that download sales will overtake them.

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  20. Robert Biro says:

    The best analyses of the DVD format wars can be found on sites like EngadgetHD and TivoLovers. Simply put, you have look at who actually buys High Def media, not the players. As it turns out, the major reason Blu-Ray won out was the excellent player built into the PS3. PS3 owners are buying loads of Blu-Ray titles. The PS3 player is firmware upgradeable due to the PS3’s internet connectivity so it allowed those early adopters for get the newer features in the 1.1 and soon 2.0 prfiles.


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  21. Shawn K. says:

    The age of digital downloading is here via iTunes. I don’t know if people really recognize the significance Apple TV will have on the market in three to five years, but it will and has begun to change the face of the way we get our movies.

    In today’s age, who compiles photo albums in books? Alot of people read their newspapers online. Most people have more albums in their computers than they do their CD players. Cars are being standardized with hard-drives to store our music.

    The age of “hard copies” is over. Your entire movie collection, saved in one place, accessible whenever you need it, 100% portable and completely backed up by iTunes.

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  22. misterb says:

    I’ve noticed that nobody seems to be discussing the extended media features that were the real difference between Blu-ray and HD-DVD. The idea was that the “next” format would extend the capabilities of the extra features on the DVD’s, including direct ties into the Net. Of course, with the winning format undecided, content authors were not going to invest in the tools and expertise necessary to create unique features. But now Sony has the platform in the PS-3 to combine web, gameplay and movies into an entertainment media that will provide an experience on the PS-3 that can’t be easily matched on XBox, Wii or PC.
    No sense thinking small in a contest this large,if Sony can create an authoring system that can take full advantage of Blu-Ray Profile 2.0, they may be able to make their money back in players and games sold.

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  23. RPFN says:

    Andrei Hagiu writes, “why did Time Warner have to wait so long before committing?”

    The answer: $400 million. Warner Brothers is the big winner in all this having successfully negotiated the killer deal with Sony.

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  24. Stephen says:

    Having read this debate one question still troubles me. WHY WAS THERE A WAR IN THE FIRST PLACE? I work in the industry and the one thing that is clear is that more an more people are moving towards having a Media PC or equivalent in their front room. These centres can have fitted a very cheap dual player $150 which mine has as a matter of interest. With more and more of us turning to this technology hybrid rather than domestic players of the past why were we all so bothered about the war. As it happens HDDVD was a more stable format, longer established and was due for a storage upgrade this year to surpass the current greater storage of Blu Ray. Blu Ray on the other hand has a greater number of movie releases availble. Why were software producers not talked about more, these are the key developers who need HDDVD or Blu Ray and they would most definetly go for a more stable format. Finally the Chinese HD forum has announced that it is to use HDDVD in future, they’ll most likely buy the licence from Toshiba. This is the biggest marketplace in the world for games and movies it can’t be over looked. I am not so sure that HDDVD will not rear its head once more I just wish we hadn’t all got so caught up in this Betamax versus VHS war thing. It wasn’t the same as there were dual players available. The consumer lost out here because they weren’t told about the dual player options soon enough. And that’s the real casualty of this war, consumer choice!

    PS Has anyone noticed how quiet Microsoft have been during all this…. is something brewing

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  25. Ari says:

    This war cost me nothing. There was no way I was going to buy either format before the war was over. Moreover, I have little desire to own movies. I like to rent them watch them, and move on. Therefore the renting model makes more sense for me. For that I have On Demand, Apple TV if I want, Netflix, and if I’m in the mood for nostalgia perhaps Blockbuster. Who ever perfects that model – i.e. HD quality, speed of delivery (online),lack of DRM leading to consumer transferability, and still can be profitable will be the ultimate winner.

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  26. VODsux says:

    Downloadable content versus Blu-ray is little different today than pay-per-view versus DVD.

    People say VOD is the future but at $5 a pop versus cheap Netflix Blu-ray, the latter will win for years to come.

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  27. Wyatt says:

    I definitely agree that, longer term, digital downloads will trump everything, but no one brought up any of the major hurdles that are already being felt there as well.

    There’s a great article in the latest Wired (http://www.wired.com/entertainment/hollywood/magazine/16-03/st_essay) that discusses the looming battle between the studios and the distributors. In fact, taking a look at the following C-NET article, there’s already compelling evidence that digital downloads are falling well-short of their potential (http://www.news.com/8301-13579_3-9884368-37.html?tag=nefd.pop). Seriously, lacrosse championships?

    Again, I think digital will win eventually, but Blu-Ray will gain a good toehold. Whether or not it (Blu-Ray) is actually profitable is a different story.

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  28. chuck says:

    Toshiba should have bribed the users (cheap players), not the studios.

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  29. The DaybreakBoy says:

    Many of you refer to unlimited download caps, which will allow the downloaded movies format to be successful. This does, however, seem to be exclusively an American phenomenon. In countries without strong telecommunications competition and decent infrastructure downloading anything more than 10-20 gb a month is extremely expensive.

    Similarly, when in America, I noticed that strangers in LA would refuse to take my money when I offered to pay them for letting me call NY on their cell phones. In my country (New Zealand) a cell phone call of five minutes would cost around $8, the after tax equivalent of an hours work for an unskilled worker.

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  30. Eduardo says:

    People seem to forget that the decision of when to offer downloads is in the hands of the studios, so some people will still prefer to buy the disc rather than wait. I also believe that there is a large number of people who like to own a copy of the movie although it is available for rental.
    On a different note, the format war was not only about in which format movies will be distributed. The artcile also mentions the positive effect on PS3 but the overall effect of the availability of 1080p content on sales of 1080p TVs (giving Sony an edge over both 720p TV manufactures in Taiwan and China and plama manufactures which don’t have price advantage on 1080p). Hard-disc recorders and, as prices fall, bluray recorders also benefit from the move to full-HD. Another market which will benefit is optical storage for computers, which should see a much faster adoption thanks to cheaper blue diodes (Sony is poised to be the leader in optical drives).

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  31. Denis-Carl Robidoux says:

    The movies on blue ray discs are recorded on streams up to 36 Megabits per seconds and when then majority of people will have access to such speed on the Internet then and only then blue ray could become obsolete

    But also I like having a refined product in my hand and downloadable movies do not fulfill this.

    I do not think that the Blue-Ray failed, I believe it will flourish.

    Having a nicely transfered movie on high-definition is like magic, my eyes feast on those really fine pixels and whoever believes that a regular DVD or a “upconverted” DVD is enough missed the point on what is HDTV, completely

    Even HDTV by cable is not up to the challenge, they have too much mpeg artefacts due to re-compression of the data stream, maybe it’s just my area but I don’t think so.

    So I believe Blue Ray will flourish.

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  32. doppleclutch says:

    The panelists seem to exist in their own echo chamber and don’t seem much beyond it.

    The real test of whether Blu-Ray has “won” the war will be 02/19/09 when analog OTA transmissions will cease. This will be a major push for consumers to trade up to HDTV sets. If the manufacturers are wise, they will bundle Blu-Ray players wth the sale of their HDTVs (may do so now) so the consumers will see (and show off) the benefit of the HDTV they just bought. This bundled-sale will in turn generate a long term sustained sale of Blu-Ray discs.

    That’s not to say Blu-Ray will overtake DVDs. DVDs for all intents and purposes are “good enough” that the inertia to change is too great to overcome. DVDs and Blu-Ray will co-exist for a long time as DVD will be the “Value” and “Mainstream” format while Blu-Ray will become the “Prosumer” and “Enthusiast” format.

    I’m not terribly confident in the prospect of digital downloads, as there is a major trade off between download time / bandwidth and quality. This will of course change over time, but for now, high quality downloads is NOT PORTABLE. If you’re taking a road trip / plane trip, DVDs are still the best format for bringing along portable entertainment as they’re easy to copy (within Fair Use provisions, of course) and inexpensive to replace in case of loss. In time, we may see Movies on an USB key (with or without downloading), but the distribution infrastructure for DVDs is already in place. Kids get bored in the middle of a road trip? Stop by Wal-Mart or Blockbuster and pick up another movie on DVD.

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  33. Kenny says:

    I agree that digital downloads will eventually overcome Blu-ray, but theres only one problem with that prediction for the near future. The current internet framework is no where near able to withstand the sheer bandwidth required to deliver high definition content on the Blu-ray level to individual homes, computers, and etc. Take Comcast for example. Currently they’re offering 6-8Mbps download speeds for the typical cable internet user. I’m living in an apartment with mostly college students, and it shows. The apartment’s been contracted out to Comcast so we don’t have a choice, and so everyone in the building has the same or similar service. Already the pitfalls of current technology shows itself as I never go above 1.5Mbps download speeds. That speed is not enough to stream Blu-ray quality movies. Recently we tried to watch a Netflix DVD quality movie, and it had some troubles near the center. This was even after Comcast came out and upgraded all the hardware in the building.

    So from personal experience I would have to say that Blu-ray will have at least as much time as DVDs did to stay in the market before it’s outdated by the next technology, namely streaming/downloaded movies.

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  34. Jay says:

    Yawn … Downloads
    Where does this belief that downloads are the future come from? Is no one paying attention to the fact that more and more companies are trying to charge us more for our bandwidth? I will not pay twice for content and I will stick with physical media that I can do whatever I want with.

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  35. janpi says:

    Must be reduction in price


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  36. Ray Rivera says:

    Yes I agree to that downloads are the future but the current abysmal state of broadband in the US is the thing that will hold it back. Cable and communication companies like AT&T will continue to stifle it in lew of their own media distribution options/monopoly. I guarantee that psychical media will always have a place as long as storage density increases. Their may be a lull here and there as new technology develops but the tangible will have it’s place regardless. Now give it 3 or 4 years after the recession for broadband to catch up with Europe, when Americans have the money to be leeched by the com companies again, then we will see viable speed options for almost instant on demand down loadable movies, “But for a price Urgarte, for a price”

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  37. Brad Templeton says:

    I hope that had you told Toshiba and Sony they would fight a 2 to 3 year war, they would have done anything to make nice. That’s forever in the digital media world. While some posters think downloading is some time away, they could not be more wrong — it is already here, and people are downloading tons of HD content on P2P networks. Not always legally, perhaps, but the lack of legal HD content is the studio’s choice, not a failure of the network or a lack of demand by the consumers. Thanks to P2P technology, there is more than enough capacity already, and the capacity keeps growing.

    Until recently, most consumers have only had a 720 line HDTV. That’s only 2.6x more pixels than DVD, and only 1.6x more linear resolution. While I see a clear difference, it is nowhere near the 10x often cited as necessary for widespread consumer rapid adoption. 1080 line TVs are 6x in pixels and 2.5x in linear resolution. Still meagre.

    Not that I don’t want it, I want the best as an early adopter, and I won’t get better than that for some time, unfortunately, so I’ll accept it. But it’s not the sort of thing that drives a market dominator.

    (HDTV is 10x better than broadcast SDTV however. The problem is that DVD was also better than broadcast TV.)

    The lesson here is new, but simple. Don’t make linear extrapolations in the world of digital media. Realize that 2 years is a very long time in that world, and even if you hope to win the war in 6 months, consider the probability that it could drag on, and if that probability is significant, you are wise to compromise and avoid a war.

    In this case perhaps they knew that, but just always waited for the other guy to compromise. In that situation the most reasonable answer is to find an arbitrator to pick, or to flip a coin.

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  38. Andy says:

    We do have the infrastructure to support super-fast downloads (tons of unused fiber optic cable practically everywhere). It’s just that there is no incentive for internet companies to do it because there is often minimal competition. In many areas only one company (Comcast/AT&T/Verizon) dominates.

    One possible solution is a government subsidy for higher speed broadband (10 Mbps+). That should encourage new players and existing ones to invest in those technologies.

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  39. Jeff M. says:

    Funny how everybody keeps talking about digital downloads being the future. I don’t know ANYBODY who utilizes this, nor anyone who is interested in such a thing.

    Do I live in a weird part of Chicago or something?

    Everybody I know was waiting out the format war. Now, they are waiting for a BD Profile 2.0 player to be released and then they will consider buying.

    On Demand is nice for “renting” a movie, but if it is something I want to own, give me a physical disc. Even though I listen to a lot of music on my computer, the songs are ripped directly from physical CDs that I own. Am I in the minority here?

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  40. Tony says:

    I work in the content provider industry. IPTV is one of the services we offer. The obvious obstacle to downloading HD content now is bandwidth. Even for standard def tv, a copper infrastructure is barely adequate to support the throughput needed for acceptable video quality. HiDef content nearly triples the bandwidth requirement and VOD increases it by orders of magnitude because you are moving from a multicast to a unicast environment. The simple explanation to all this is Fiber to the Home (FTTH) which we are exploring. It makes sense in some new development areas, but the majority of the United States is still based on 100+ year old copper “last mile” infrastructure. In order to support “the wave of the future” what is really needed is Gigabit speeds to the home. This is either too costly or simply not available to the majority of consumers at the present time. I predict satellite broadcast/ppv and disc-based media will be the forerunner for HD content for a long time to come.

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  41. linlu says:

    Downloads would be nice except for one other thing, the blasted DRM that is used pretty much kills it.

    Take iTunes. I don’t own AppleTV but I was looking at it until I read these choice items in the latest iTunes user agreement. Buy a movie via AppleTV and it’s stuck to that device, you can’t transfer it to your iPod (not even sure if you can watch it on your Mac/PC anymore). If your AppleTV goes belly up, you lose everything on it – Apple’s agreement says it’s your responsibility to safeguard the physical storage media. Funny thing is once a movie is ‘moved’ to AppleTV, how are you supposed to back it up?

    Not sure what happens if you transfer a movie to your iPod, can you no longer watch it on AppleTV? From what I read of the TOS with the latest iTunes, that’s what I interpreted. iPods are more likely to fail than AppleTV given their usage (how often have you dropped yours).

    As for iTunes, try reinstalling it on the same Windows machine and guess what happens, you eat up one of your allowed devices. Considering that I had to reload from the recovery CD, there was no way I could de-authorize the previous installation. More DRM crap, it’s the exact same machine, yet iTunes counts it as a new machine.

    All this DRM crap just makes me stay away from Movie Downloads. And frankly, I just don’t see the value in paying more for the same movie that is also out on DVD. I don’t watch the extra content, it’s a waste of time. I also agree with several others, if I could fast forward a VHS tape, why can’t I fast forward past all that crap at the beginning of a movie? Some of those commercials and other crap at the beginning I find objectionable (Disney is the worst) with respect to my children.

    Jack Valentine? (MPAA? former president) said he thought it should be against the law to skip the stuff at the beginning of a DVD. I should send him a bill then at my hourly rate for the time I spend waiting for the menu to come up so I can start the movie.

    I suspect if this isn’t already happening on downloads the same crap will occur there as well. But in that case the movie will be so full of DRM that you can’t shrink it to just the movie (and if you do, you’ll probably get sued since the DRM is a two way mechanism – they know who you are).

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  42. Hubert Chen says:

    I think there’s a clear winner of the format war: Nintendo. Sony’s decision to force Blu-Ray technology into PS3s cost them heavily in PS3 sales. The initial reviews of the PS3 were highly critical because of the high cost of the unit and it turned potential customers to the much cheaper and more consumer friendly Wii. The bundling of console and next-gen DVD player may have been successful on the Blu-Ray side, but based on the past 2 years of PS3 vs Wii sales it’s a clear failure on the console side.

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  43. Dan K. says:

    I enjoy the quality of DVDs, and I enjoy HD content a little bit more. But it’s important to bear in mind that HD (whatever the distribution medium) doesn’t quarantee a good viewing experience. It’s still up to whoever produces these movies to do a good job with the encoding. We’ve seen with DVD that the transfer of older movies is often indifferent or worse. Some movies are lucky enough to get the Criterion treatment, others aren’t.

    I’m excited about Blu-ray for various trivial reasons — even though it’s a much less urgent upgrade over DVD than DVD was over VHS, it will be a welcome upgrade. But on the whole I’d rather have a well encoded DVD than a careless transfer to Blu-ray.

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  44. Redx says:

    I download a lot of HD content, and there is a definite difference in comparison to regular definition content. There are tens of thousand of people out there doing the same thing at any given time.

    I don’t know anyone who regularly pays to download HD content though.

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  45. Kevin C. Redden says:

    I’m for one glad it’s over. Like many, I’ve seen a BR/HD DVD, and the same on DVD. Even with 50″ plasmas, the difference is small. Also how does the resolution help, if what your watching is garbage anyway (writing, directing, etc) The amount of garbage that’s pumped out of Hollywood anymore makes it about 1 out of every 20 movies would be worth purchasing on BR/HD DVD.

    I got really tired of the standards war when there was at least 5 different competing standards with DVD. I didn’t buy my first DVD computer drive till about 2 years ago, when FINALLY there was an exact definition on what does what. Thankfully the only thing I had to worry about was +/- R, not those oddballs like Dvix, RAM, and others.

    The only reason I’m going to buy a Blu-ray drive for, is the computer. 50g of storage is a lot better than 8gs. Yes I waited too. I’ll get a Blu-ray TV drive when that’s all there is and they’re around $50 or so.

    Now for down loadable movies, this won’t happen for at LEAST 10 years. The U.S. doesn’t want to do what Korea has, for example. 60g (I understand that’s the size of an HD movie) would take days to WEEKS to download even with the 8mbps DL you can get from here (and that’s inconsistent. 8mpbs is if your right next door to the switcher station). Why would I wait that long, when I can run to the rental store, and be back and watch it in 30 minutes? Even pay-per-view is faster than that.

    Of course then, what’ll happen is they’ll stick so much DRM, or restrictions on it, it’d be better to rent it on Blu-ray. (Look at all the stuff they do on Ebooks, and music. It’s not worth it.)

    – Kc

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  46. Craig says:

    I thought I’d confess that I blew it on the blu-ray vs HD-DVD fight. I concluded in mid-2007 that the likely result was DVD players that supported both formats (the same solution the writable CD market went to) and so I went out and bought an HD-DVD player (they were more reliable at the time) figuring my investment was safe — that I’d upgrade in a year or two to a player that had both formats. Ooops!

    Having been in the data comm field for 25 years I
    confess that I’m skeptical about how soon we’ll see
    downloaded HD content — or more specifically, downloaded HD content that is really HD and really
    drives a large screen TV. We may see what cable is currently calling “HD”, which is notably compressed
    (switching between over-the-air HD and the cable
    version makes a huge different on my TV — the
    over-the-air is sharply clearer). Real high-def
    eats bits…

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  47. KY Cats fan says:

    Just a couple points. Downloads. Everyone here is talking about downloads. Downloads may be the wave of the future, but it is a FAR, FAR, FAR off future. “Broadband” in America is a joke. How many times have you seen that cable commercial touting their “10Meg downloads!” like it’s somehow impressive. In the civilized world, USA is behind around 25-30 countries for true broadband adoption. The communications monopolies are keeping the speeds down because they have no (NONE, ZERO, ZILCH, NODDA) reason to be concerned. They own their areas and you have the choice of go with them…or go without. broadband in this country will be literally decades behind the rest of the world by the time downloads are an option.

    PS3…hehe. That argument makes me laugh. The PS3 is by far the best BD player on the market. Not only that, but it’s arguably the best game system. Add in that it also covers all of your entertainment and media, it’s very multifunctional. Now, the “fanboy” tag may try to be shot my way but I have owned a PS3 since launch and I have never had any issues with it. Yes, it is more expensive, but it is certainly worth what you pay for it. Buying the equivalent of what you get in a PS3 (hard drive, HD drive, wireless) all adds up to make the 360 way more expensive. Add in that Sony had MILLIONS of BluRay players in living rooms around the world made a huge impact. The sales of the PS3 are skyrocketing now too, so that only leads to more BluRay players.

    Lastly, physical media. These discs are also encoded with DRM, but with a physical disc, you can take it to your friend’s house, pop it in the player and be fine. Downloads will never be able to compete with this. Also owning the disc is tangible. Even if years down the road the technology becomes obsolete, you can still find even used players and your physical media is as good as day one. The VHS/DVD argument is so pointless as to be laughable. DVD, when it was the new kid on the block, was looked at like some kind of leper to any who didn’t enjoy the quality. There’s a majority of people in this country that could care less about quality but due to falling prices (as will ALWAYS happen when dealing with technology of any kind) the DVD simply became the default option. Eventually SD movies on DVD will be looked at like the VHS or 8-track is looked at today. Whether it is digital downloads or BluRay that is still around is irrelevant. It simply will happen. BluRay prices will continue to fall, both hardware and content discs. BluRay will have a very long shelf life, of that you can be certain simply because the cards are stacked against another option right now.

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  48. Matthew says:

    Why do 90% of people still not care? Because the players are vastly too expensive for an incremental improvement.
    Why are the bandwidth limitations cited by people who deny the near-future viability of downloads bunk? For the same reason these people were wrong about downloadable music: Reduced quality isn’t that important to the market. 128k compressed MP3s do not compare to CDs. That didn’t stop them from destroying the music stores (good riddance, incidentally). Come to think of it, that applies to basically every other product that can be purchased through, for instance, Walmart. For the mass market, it’s about distribution and price.

    PS-I still buy CDs. What does that show?

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  49. csdiego says:

    As someone whose picture-quality requirements are far exceeded by a DVD on a dusty laptop screen, the Blu-Ray vs. HD-DVD wars mean nothing to me but an annoying slog to replace the discs I own, and probably the loss of some of the more obscure titles. I’m still mourning Mike Leigh’s High Hopes and John Huston’s The Dead, two titles that never made the transition from VHS. I will be delaying adoption of the new technology as long as I possibly can.

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  50. Jabba says:

    Blu-Ray (and HV DVD) will go the way of the 2.8 Mb floppy disk. You never heard of it? Exactly my point.


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  51. Analog Wave says:

    Digital Downloads are a pipe dream in the US. They will be doing in elsewhere faster, if and when it comes. The US is busy trying to CURB the use of high speed lines, not encourage it. Imagine what Comcast would do trying to provide 60 Gig downloads across its network. Its not going to happen. Too little infrastructure, too little speed to make that happen.

    The other issue is quality. I understand most Americans don’t care about audio or video quality, but you cant get HD video or Studio Master quality audio out of a compressed source that looks marginal on a 50″ HDTV, and sounds like crap on a proper Home Theater (NOT a home theater in a box for $300).

    For those that demand quality and that their purchase be put to good use, optical will be the format of choice for them.

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  52. Ross Anderson says:

    One very important factor has not been mentioned yet – SPDC (Self-protecting digital content). This is the DRM system in Blu-ray, which differs critically from HD-DVD in that it puts control in the hands of the studios, rather than the vendors.

    DRM in DVDs didn’t work because the benefits accrued to the studios while the costs fell on the vendors. Every DVD vendor wanted to have the second-worst security – it didn’t want to be the vendor that the studios beat up on, but it wanted to reassure its prospective customers that bypassing region coding would be dead easy.

    The studios eventually figured out that the economics of security were important for them, and so in November they swung behind Blu-ray. That appears to have been one of the decisive factors in the battle.

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  53. Ford says:

    Expense is not a valid arguement. I have a receipt for the first VCR my parents bought in 1982. It cost over $900. That was on a single income. A $400 blu ray player today is a bargain in comparison. Granted, the VCR back then was the first machine to let you watch what you wanted, when you wanted.

    If you don’t own a HDTV, your opinion doesn’t count. When you get one, you’re likely to find that you end up watching the HD stations more than any others, even if you don’t like the shows as much, WATCHING them is more fun in HD. When that gets boring, people want more. Thats when they’ll get the blu ray players. The whole digital thing is at least another 10 years away from being a serious threat. DVD itself has only been in the mainstream for ten years now. People will always want something that they can hold in their hand or let a friend borrow. Older people especially.

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  54. Stephen says:

    I saw several people mention the PS3s as a cause of Blu-ray sales and how Blu-Ray has hurt the PS3 sales.

    Let us go back to when PS2s were coming out. One can argue that part of why DVDs took off were because people were purchasing PS2s and saw “they can get a DVD player and a video game council for the same price”. This was good and well, and PS2s were often bundled with popular titles (Best Buy had a bundle with The Matrix 1). Then years later when the PS2s started breaking, Sony said “The PS2s can play DVDs, but due to the different weight and laser strain playing DVDs in PS2s will cause the PS2s to have a shorter lifespan”.

    9 years later, here we are. Perahps Sony has improved dramatically (or perhaps not, the year the PS3s came out Sony had a HUGE recall or product). I believe part of the problem with “investing in a system that can do both” is a decade before they tried to do just that and ended up several years later with neither. I don’t believe everyone expects a system to last forever (even though my DVD player is over 10 years old and still functioning well), but 2 years out of a 500 dollar model isn’t what a consumer hopes for.

    Of course, if you were going to buy a PS3 anyway, buying some Blu-Ray movies is a good call, to both test out the new system, and to “get a better return on your sunk cost of the system” if there is only a limited number of titles you are interested in. So PS3 sales may have helped Blu-Ray, but I don’t believe Blu-Ray helped the PS3.

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  55. EGL says:

    “The HD-DVD coalition responded by offering subsidies for content providers, keeping the fight alive….At best, Sony avoided disaster by not losing completely. Still, that avoidance happened only with a very high initial expense that Sony cannot possibly recover until Blu-ray sells many units for a long time. ”

    Isn’t this pretty standard microeconomics: two entities competing for control of a monopoly will consume the expected monopoly profits in the competition?

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  56. Lord says:

    Sony had the advantage through their ownership of a studio and a game console.

    VCR owners could care less about this. VCRs are all about recording which neither of these do (except on computers).

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  57. michael webster says:

    I guess that these two players didn’t know the Webster solution to the dollar auction game:


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  58. Kenneth says:

    The comments about the panelists being out-of-touch are misinformed. Clearly they have a slant towards the lessons the *companies* should have learned from this debacle. Sony won, yes, but there is not reason to believe that this is more than a Pyrrhic victory. How much was spent to win the market? Is there any assurance that “winning” the format war would lead to profitability? No one stated the total cost so far, but we must be into the billions when all is said and done.

    For all the caveats about how we’re singing Blu-ray’s dirge too early, we ought not forget that there is not unlimited time recoup these costs. Moreover, in light of existing technologies being “good enough,” a general slowdown in sales due to a weakening economy, and whatever the Next Big Thing ™ is, Sony is by no means out of the woods.

    The technological success of a platform does not guarantee its financial success. And no matter how much you try to spin it, as business entities it is the latter that matters, not the former.

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  59. DD says:

    Interesting that of the four people asked to comment, three are academics without a dollar’s worth of practical experience between them, apparently.

    How come no one mentioned Microsoft, who was an enormous investor/partner in HD-DVD, and is now in a peculiar position with respect to their XBOX game? Are they going to put a Blu-Ray player in it, replacing the HD-DVD player it ships with now?

    And anyone who thinks downloadable content is the answer is on drugs. The onerous Digital Rights Management that comes with all visual downloadable material guarantees that it will not catch on unless there are radical changes to it. And as for quality, well, the Amazon Unboxed standard def experience is akin to watching a second generation VHS tape. A decent quality HD DVD has at least 15 and often 20 or more gigabytes of data on it. Who in hell is going to wait around for 20 gigabytes of movie to download? The alternative is smaller file sizes with much lower quality product, and while that may appeal to some, many will turn their backs on it.

    Another reason this is bad news is because Sony controls the authoring and encoding software for the format, and if they don’t like what you’re doing, you can’t license the software. So far, just the porn industry is affected, but what happens next month when some new studio wants to get the software for a documentary they’ve done on Japanese atrocities in World War II, and Sony refuses to license them? Is that the kind of control we want to give to an entity like Sony?

    And lastly, if history is any judge, look for Sony to raise prices everywhere – the players, the finished product, the software to author the DVDs, all of it is going up, and soon.

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  60. William Bryson says:

    Here’s a lesson we’ve already learned from VHS and BetMAX: Don’t become an early adopter.

    A quality DVD upconverting player will suffice, especially if you have a huge DVD collection.

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  61. JCN says:

    Given that the cost of a blank DVD-R of high quality is now about 25 cents or less and an average rental is $2-4$ , anyone with a basic computer and DVD Shink and DVD Decrypter and a DVD burner can produce a great copy for 25 cents of any movie rented . In addition , almost any released DVD is quickly available in the DIVX or XVID format , and it will fit on a standard CDR for 18 cents or a cheap USB flash drive on a USB DVD player like the Phillips 5960, available for about $60( it even up-converts!). This form of downloading is already here and popular all over the world. I can’t see even bothering with Blu-ray or huge download sizes for the vast majority of films. Consider how MP3’s have replaced CD’s. DIVX and XVID are the same revolution in Video. The only thing missing is a high quality Hard Drive player with well supported software . They are just available now and will then enable storage without the need to burn to any disc at all.

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  62. Mike says:

    I’m surprised nobody has mentioned DRM. (Digital Restrictions Management) Both HD-DVD and Blu-Ray empower the studios to control how you watch the movie you pay for, with Blu-Ray giving the studios somewhat more control. I don’t plan to rush out to buy content which I can’t easily watch when and where I want to watch it. (The problems many people have had getting HDCP to work are hilarious from the outside looking in.)

    It’s also worth pointing out that the Blu-Ray spec is being updated, and future movies will be unplayable on almost all existing Blu-Ray players.

    One of HD-DVD’s biggest advantages was that it was possible to put both a regular DVD and and HD-DVD on the same disk–so you can watch the same movie on your 40″ TV at home or the built in DVD in your car; unfortunately, the studios were happier to sell you the same movie twice, and almost no content was packaged this way.

    The real interesting thing about this “war” is that so many people actually participated–the biggest losers are the consumers.

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  63. KDW says:

    The market would claim that I’m an early adopter and a net loser. I disagree.

    I purchased an HD-DVD player specifically to watch Planet Earth in high definition, and it is still capable of doing that neatly.

    I have always intended to continue further purchases using TV, or an equivalent digital download device. I have a very hard time investing in shiny silver platters when storage costs have plummetted to the point where it was cheaper for me to put all of my DVDs onto hard drive, uncompressed, than it would have been to buy a high-quality piece of furniture to hold the DVDs.

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  64. GW says:

    Two points:

    1)Our Comcast DVR/cable box gives us the ability to watch HD movies and other programs on demand (and to record HD programming on network, cable and premiums channels). Most on demand movies are at no additional cost, with new releases generally priced at around $5. The number of HD movies and programs available on cable is now substantial, and continues to increase rapidly.

    2)Our up converting DVD player provides a materially superior picture compared to the unit it replaced, and looks great on a 50″ HD screen. It cost $79.

    Bottom line: there’s no compelling reason to go to BR.

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  65. JW says:

    Overhearing some customers talking last summer at Best Buy. One bragged about Blu-ray saying it was better than generic HD. I think the cachet of the better name had something to do with the eventually win.

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  66. ke says:

    I think this conversation is perhaps more irrelevant than the fate of high definition DVD formats themselves. How many different intellectuals does it take to say almost exactly the same thing?

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  67. Brian says:

    First, Aaron S, companies calling one another to both gain profit out of something is called collusion and it is illegal. Otherwise any commodity producer could call the rest of the industry and they could decide which price to sell for.

    Second, Chuck, Toshiba tried to bribe the consumers with a $99 HD-DVD player…they probably did it to late though.

    Lastly, the smoke screen of exclusive deals with the movie companies didn’t give us a winner…it has been written in numerous articles that he porn industry creates so much hard content that they are the drivers in new formats winning or losing.

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  68. Mitch says:

    Thank you commenters 14,15,16,20,31 for making some good points.

    The Experts brought absolutely nothing to this discussion.

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  69. brad says:

    i dont understand who cant see the difference in 1080 dvd’s. when i watch a normal dvd, and then watch blu-ray, there is a huge quality difference in picture and sound.

    it makes me wonder if these people even have a 1080 tv, the ones that cant tell the difference. i own a sony blu ray player and a toshiba 1080 upconverter, along with two 1080 tv’s(one a lcd, the other a crt). i still notice a big difference from my blu-ray and the upconversion, let alone from normal dvds.

    as to the hd-dvd argument, the war is over. arent they going to stop making hd-dvd’s? if so, then why argue? this has happened to consumers plenty of times before, its capitalism. buyer beware.

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  70. Shane says:

    Those who keep saying downloads are far in the future because of the speed of home internet connections are dead wrong. The cable companies are already capable of delivering real time HD on demand to customers because they store copies of HD movies on a server on their networks, past the main bottleneck that limits internet speeds.

    When I used Time Warner cable, I was able to order HD movies PPV, and I would begin watching nearly right away – this downloadable rental format preceded HD-DVD and Blu-ray by several years.

    Since Time Warner is also a content owner, they have the ability to charge a subscription for unlimited HD movies on demand. Whether they will or not will determine just how quickly digital downloads take off, since the technology and infrastructure have already existed since before HD-DVD and Blu-ray hit the market. Comcast and the other cable companies could quickly follow suit, cutting deals with content owners. That last mile bandwidth costs the ISPs very little, compared to the actual internet bandwidth where they have to pay for access to lines they don’t own.

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  71. B-ICAL says:

    the upscalers only fill in 50% of the screen with filler. every 2 lines are the same, every 3 lines are different. With Blu-ray every line is different. Thats why it says “true 1080p” with HDMI or an effective video cable. This is way better than DVD.
    ll this lol….. For me Blu-Ray is huge. 8gb dvd’s suck now. Less shelf space used for BD-R’s and BD-RW’s. Thats what im talking about, Just Im talking GB/shelfspace here. I make discs for my PS3 720p/1080p You can fit a lot more movies onto a disc than just one 😉

    BD supporters know where its at. 4 and 8 layer BD discs??? People. Its basically a HDD in your pocket :)

    Allt he BS I have dealt with over the last 3 years. All along I knew Blu would win.

    The jokes on MS and fools who tryed to breed idiots into thinking they were soooo good. Truth hurts doesnt it. Your bad format wouldnt trick us who knew the Blu. It wasnt just early adopters. I dont call em that. The “early adopters” you speak of are people who know what is going on. The others were cheap buying HDDVD and got stomped. I have no respect for HDDVD format cause all of its adopters (lies) treated me very horrible whenever I met one. So for me I am extremely happy.:)

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  72. stephen says:

    For anyone who has a 1080p display and wants decent visual quality it’s absolutly essential technology. CD did the same thing for audio in the 1980’s. While DVD was cheap, had improved mechanical stability and slight improvement in visual quality over VHS tape it is so far from cinema quality.

    DVD is expensive when compared to blu-ray which offers 1080p Hi-def, widescreen cinema Experience 7.1 channel sound and extra features for around the same price.

    I only get blu-ray now it’s visual quality is absolutly outstanding.
    Watcing DVD it seems like everything is out of focus after you get used to the visual quality of blu-ray and you begin to notice so much more you simply cant see on DVD.

    It would be like someone who is visually impared suddenly getting glasses and everything comming into focus.

    I suspect many people who cant see the difference may suffer from eye problems or must have their equipment set up incorrectly.

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  73. Jason says:

    There are two things that are going to hold BD back from making much money. First off is the perceived value of the HiDef players is only going to be seen once you own a display that is capable of showing the difference. If you own a HDTV display 42″ or smaller… you really aren’t going to get the same level of increase in the picture quality as you are if you have say a 55″ model. The bigger the screen the more noticeable the difference becomes. This is compounded by the fact that most of the HDTV models I see for sale around here are still 720p which will show even less of a difference to the public at large. Tied up in this is my second point, the extra cost associated with BD/HD. People are not going to pay extra for the same thing if they can not tell the difference between SD or HD/or the difference is not great enough to justify the extra cost. For the most part HD/BD releases typically cost 2x as much as the equivalent DVD release.

    I know there are people who can see the difference regardless of screen size or resolution and are willing to spend the extra money to get upgraded quality. I am one of them myself. However, the pool of people that fall into that category would be the people who already purchased one or both of BD or HD-DVD. I really do not think that John Q Public for the most part will notice or care and when you include the extra cost’s associated with it then it will be even less.

    Just my 2 cents.

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  74. David says:

    Digital downloads are far off from being a competitor with Blu-ray. Many people may be doing it at this point but there’s still more people who would rather have a real library of their favorite movies. For one, a computer with any amount of storage will quickly be consumed with high definition downloads. Also having a library of these HD downloads is not so smart unless you really believe that hard drives are never likely to take a dump. I’ve seen that happen a lot since I use to work in a store with a computer shop. I bet everyone would just love to lose all of what they collected because of a hard drive crash. Also it is obvious that there are many people who really enjoy the bonus content that many movies have which isn’t available on digital downloads. In fact there are more people who are just naturally collectors and they want to have the feeling of true ownership of a movie. These reasons alone is good reason to throw the digital download vs Blu-ray idea in the trash. It’s just the media dreaming up more controversy.

    Someone also mentioned DRM. DRM is necessarry for movie studios so to make it harder for people to rip them off. Everyone has pushed the studios to this point. I don’t think anyone anywhere should be complaining about that subject. If you buy the movie, you can watch it whenever you want, wherever you can play the disc. It doesn’t control how you use the movie in a legal way, it’s there to control how you use it in an illegal manner. Apparently Blu-ray had a better system for this than HD-DVD. The music business really need DRM anymore. It just cost too much to try and find new ways to keep people from ripping music. It’s too easy for people to find a way around it. That’s why iTunes doesn’t have DRM on music anymore but they do on movie rentals. It makes perfect sense.

    Honestly I believe the better format won. It will eventually open things up for studios and game developers to do more on one disc than the HD-DVD would have been. Also Blu-ray will have more interactive extras soon. Apparently it’s not there yet but it will be. The Playstation 3 can already support Profile 2. Those of you who don’t understand what that is, I suggest you Google Blu-ray Profile 2.

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  75. Bob says:

    My only question is what happened to the consumer side of the choice?

    This whole battle seems to have played out within the electronic and recording companies. I’m not sure I see any advantages to the consumer of Blu-ray over HD, and the cost, hence the price, is higher. It may be better on computers due to higher data capacity, but not movies. (I already don’t have a use for any of the “extra” junk they put on DVDs. Just give me the plain old movie.)

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  76. Rob Wagner says:

    In response to Andrei Hagiu’s comment about Sony’s Connect eBook policy: Sony has altered the terms on its ebooks with the release of the PRS-500. Books are bought permantly, though still encumbered with DRM. They’re still staying a few yers behind. While Apple and others are starting to remove restrictions on their digital downloads, Sony has only recently begun seeing digital content as somewhat owned rather than rented or leased.

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  77. John says:

    Blu-ray won.I live in the UK and for us HD streaming from the internet is at least 5+ years away as we simply DO NOT have the infrastructure to support that much bandwidth. Even now our ISPs are struggling over the BBCs iPlayer and the amount of bandwidth it requires never mind the additional bandwidth of HD content! The fact is even if companies promote HD downloads/streaming no-one will actually be able to utilise it effectively over dated, copper connections. FTTH is the best option but that would mean ripping all our roads up and laying new cables which would cost an operator billions and billions of pounds. The operator would surely need to recuperate losses so expect high-speed/bandwidth connections to be pricey in comparison to todays prices. This in turn could lead to the cost of streaming a HD movie adding up to be the same as buying a physical disc.
    So in the UK at least (and probably every other country with ‘last mile’ copper) Blu-ray has the edge. And it will for the foreseeable future.

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  78. Dan says:

    PS3 made a big difference for me. Being an avid gamer I was going to get a PS3 anyhow, no matter what format it used. It plays all my PS1 and PS2 games as well as PS3 games. The fact that it plays HD movies was just a bonus. It was an easy matter to buy a few Blu-ray movies to try out with minimum risk.

    Forget about downloading HD on the Internet. The infrastructure won’t support it and the ISP will clamp down on bandwidth hogs, or, start charging by usage.

    However, downloads from specialized satellite services, like XStreamHD, might be the wave of the future. The only thing about that is I can’t imagine my Mom and Dad owning that kind of infrastructure in their homes (gigabit home LANs). They don’t even have a computer. Going from VHS to DVD was a big enough jump for them, but since BR players will also play DVDs, it doesn’t seem like a big jump for them to get an “updated” disc player one day. Downloaded HD just seems like too much of a niche idea right now for the masses.

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  79. RLM says:

    I say Blue Ray format is the real winner here. From a technological aspect, there no way that the internet would be able to support a vast number of downloads of HD content. The average users not going to have the bandwidth to be able pulling 30 ~ 40 gig of data on regular bases. I am sure we would see some form of net neutrality from the ISP and they’ll want a piece of the action. In addition, the next generation of HD content is going from 2k to 4k of pixels of data per frame. Hum !!! Downloads could reach up to 80 gig of data on an average movie. Remember folks, the better the video quality, the more data that’s required to download, hence this gives the content provider more control their content.

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  80. Henri says:

    dvd-audio and super audio cd came charging out to replace cds, and either because the format didn’t provide a large enough leap or because the two formats negated one another, we still have cds, and that is slowly ceding to a download model.
    The umb disc model for the psp is another media format that has dead-ended.
    And excluding gaming, where we see proprietary ds cartridges, there has not been a successful physical media format since the dvd. Blu-ray if it does succeed will probably be the last physical media of any great impact. And a future war may break down along the lines of mpg vs mkv vs vlc vs mp4 vs something yet to come. At which point, these lessons may not be the best teachers for digital distrubition.

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  81. Chris says:

    Another pointless ‘war’, however I am glad there is a winner and since I own a PS3 I am pretty pleased with the result. Im not sure i like the idea of downloading movies being the future, I personally enjoy buying and owning movies on cd and can’t imagine downloading content. However it worked with music, why can’t it with movies.

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  82. Jonah says:

    What’s interesting about this format war is how little it should have (theoretically) affected customers. There exist hybrid players:


    that ensure that the cusomter doesn’t have to care about the format – just the content.

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  83. Paul says:

    “I’m not sure I see any advantages to the consumer of Blu-ray over HD, and the cost, hence the price, is higher.”

    That’s only because Toshiba subsidized the price of the players, taking a loss on each one. They could do that because they were the only company making HD DVD players. If Sony had tried that, all of the other Blu-ray makers would have screamed bloody murder. The price of Blu-ray is not higher. The price of HD DVD was artificially low and did not reflect the real cost of the technology.

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  84. Geo says:

    On Downloading HD Content: Right now few have the bandwidth and those who do get a significantly less quality in definition and motion artifacts. In addition the current rules require completing the viewing (once started) in 24 hours before it is deleted.
    Some allow purchasing but of a download but that requires extensive storage space and it is not tranferrable so you are locked in to the device and service.
    Finally there are no extra, commentaries, delete scenes, etc.

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  85. Paul Brians says:

    During the long competition between the two hi-def formats, many commentators cited the victory of VHS over Betamax as a precedent that would guarantee the defeat of the perceived superior but pricey Blu-Ray. The flaw in this argument was that whereas videotape had an immediate huge market filling a strong perceived need, hi-def players appealed early on only to sophisticated, better off consumers for whom technological coolness trumped price. Add in the fact that even unsophisticated shoppers knew enough to want not to repeat the mistake made last time which produced the victory for VHS.

    The HD-player battle was not fought in the broad lowest-common-denominator marketplace, and analysts who treated it as if it would be weren’t paying close attention to who was really buying the players.

    Many of us have been waiting a couple of decades for hi-def, and we weren’t about to be stampeded into a second-best alternative.

    Note that I’m not claiming that Blu-Ray is provably superior; only that most commentators who had a preference chose it. The fact that HD-DVD was widely touted as being cheaper to manufacture probably put off more purchasers than it appealed to–it sounded like the mark of an inferior product.

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  86. tadeot says:

    I think, the ware is over, and the two contenders LOOSE
    In fact, this war is only in the USA, cause rich and idiot peoples have a lot of money to spend in a tentative of involve the rest of the world
    But usa is only the 5% of earth people, and 50 % of the money in the planet, this is a fact and no one in the world is changuing your mind, cause american decided that blue ray wins a stupid battle
    To day no one in the entyre world is waiting more than a day to SEE the last chapter of LOST or any other content released in EUA
    Its inpossible to think in wait a year or more to your local provider make a local version of your favorite movies in your local idiom and in a blue ray packagge
    Then if sony thinks they win, its wrong, they loose, and are going to loose more money than the competitor, this time who first leave the battle is who really won the battle , and remains with with money to make another bussiness

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  87. Ian says:

    One major point that seems to be ignored is that Blu Ray’s triumph was gained by abuse of Sony’s market position. The main reason HD DVD lost was that it did not have the content because Sony Studios and the studios that were paid by Sony refused to release DVDs in HD DVD format. HD DVDs were cheaper to press and the players were cheaper to manufacture but there was certainly not a level playing field. As for downloading from the internet, one recent study calculated that it will be five to ten years before there is significant really high speed download capability. Lastly, take a look at HD,via whatever source, on a sixty inch plasma and you will no longer state that there is no real need for it.

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  88. Markus Schultz says:

    Many of the duplicators believe that Standard DVD format will be here for much longer simply because they believe that there arent DVD packaging machines that can automate the packaging of Blu-Ray Discs. However a few companies have automated packaging machines available that can package the new Blu-Ray Disc formats. Many of these DVD/Blu-Ray packaging machines can even automate a wide variety of media formats like Wii Nintendo DS and Universal Amaray cases. Digital Media Automation ( http://www.dma-incorporated.com ) is a company that makes such a machine that automates the packaging of blue ray , standard dvd and even the games packaging. Several other companies can be seen at the Media Tech Expo.

    Markus Schultz
    Munich Germany

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  89. Jason says:

    Well its been a while since this thread started, but i would like to add my two cents to those who wander by this site. Basically one thing many people here are saying is that downloads doesnt seem to be a feasable future of media delivery. The reality is, 33% of all data transfered through the optic lines in the ground and sent through servers and routing stations and to your home are Bit Torrents ONLY and thats not counting the other forms of P2P that there are like iTunes and Limewire to name a couple… Bit Torrents are the wave of the underground future. As of now i can download a TV series recorded in HD and fit hald the season on one DVD or 2-3 episodes per CD. I can download an entire movie in DVD quality (on a 32″ LCD(which is important)) and fit it on a CD. 700mb only takes about 1-2 hours to download, and with bit torrents you can download multiple files at the same time, limited by your broadband limit… It doesnt cost money for the ISP’s to fork out more bandwidth, or if your downloading 1TB of data every month on a 6mbps connection. Chargeing heavy users is just a capitolism game that they like to play to make an excuse to charge you more money, thats all it is. they own or rent the copper or optics for a set price, there is no toll meter swinging around for every bit of data that passes throught the line. no in reality downloading is the future and it will be commonplace everywhere as it is for me already. There will be HD without the 60gb downloads, its will be encoded differently is all. just like the 1:10 ratio of .WAV and .MP3 files so too will there be a difference like .MOV to .AVI or .OGG file compression systems, and computers will ship with a terrabyte of HDD as common place. There will be a small niche for physical storage media as there is today for CD’s but for DVD’s instead. Some people are just years behind the rest, much like those still watching their VHS tapes today…

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  92. Robbie says:

    Very helpful article as there were so many points to the war that I was not aware of. Good job!

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