Futurists: Both Formats Will Grow

[Ruined]

Looks more and more like Dual Format Players will be the norm in the future.

Originally Posted by Video Business

Futurists: Both formats will grow

HOME MEDIA EXPO: Consumers still confused about Blu-ray, HD DVD

By Jennifer Netherby -- Video Business, 7/18/2007
JULY 18 | LAS VEGAS—Both HD DVD and Blu-ray Disc will have a place in home entertainment’s future and a big one at that, according to research presented at Wednesday panel “The Future of Retail and Home Entertainment” at the Home Media Expo here.

By 2012, high-definition DVD will reach $10 billion in annual sales, surpassing DVD sales, which are expected at $8 billion, according to Adams Media Research projections. Adams believes that high-def sales will be split equally between HD DVD and Blu-ray.

Firm principal Tom Adams said the industry is “slowly getting used to the idea that Toshiba’s not going away.”

But high-def DVD won’t grow as fast as standard DVD did. Part of the problem is a lack of consumer high-def knowledge.

“Consumers are entirely confused,” said Russ Crupnick, NPD movies and music analyst. NPD research shows that 10% of consumers think they already have a high-def player, while research says that closer to 1% actually do.

One of the complaints of consumers is that they don’t understand why they should upgrade to high-def. “More than price, people don’t see a big difference,” he said.

Crupnick said there’s an opportunity for smaller retailers to educate consumers about high-def, but he cautioned them away from heavily investing in it, saying many consumers will buy players and high-def movies at big box stores.

The typical high-def consumer is male, ages 18 to 34, reads men’s magazines such as Maxim, probably owns an iPod, drinks imported beer and makes most of his movie purchases at electronics and game specialty stores, according to Nielsen Media Research.

Other new technologies such as movie downloading and video-on-demand are expected to grow in the next five years, but not as fast as high-definition. Adams projects that movie downloads could reach $160 million in revenue this year, but he said that is optimistic.

Crupnick said NPD has seen a significant drop in movie downloads in the last year.

DVD sales continue to be an important part of the business.

The most important thing retailers can do is focus on customer service. Crupnick suggested retailers look at what companies that score high on customer satisfaction are doing, such as Amazon and Netflix.

Music consumers, who behave similarly to movie consumers, shop an average of five stores for media, according NPD. Over the last three years, consumers have shifted where they are buying DVDs. Between January and May 2004, 54% bought discs at video stores, compared with 42% this year. Purchases at online stores doubled in the same period, from 11% to 21%.

Store loyalty, he said, is a thing of the past.

But consumers are buying more DVDs at video specialty stores, according to Nielsen. In 2006, 28% of video purchases were made at specialty stores, up from 23.4% the prior year. DVD purchases at Wal-Mart slid from 21% to 17%.

At an afternoon panel about DVD manufacturing on-demand, execs from MOD companies said the business is just getting started, but it may offer opportunities for retailers to carry a broader range of content.

Amazon CustomFlix VP of content acquisitions Larry Smith said at his company, some smaller titles sell one or two copies, while others can sell even more.

Workout video You On a Diet: The Workout sold enough to make it the No. 7 top DVD seller on Amazon at one point.

[MooglePorn]

When people buy into the whole HD DVD/BD thing, even if they only support one or the other, they're telling the studios it's ok to have a split generation, IMO. Could end up like video games where every brand of system have exclusives that never get released on the other and the "true fan" has to own everything. Shit, it already is like that.

Kind of sad, and I bet it lingers on a while given new released info about HD DVD being more competitive. I was really hoping it was all but dead simply so this shit didn't happen.

[Hayrab]

Looks like Ruined has finally came to terms and accepted Blu-Ray dominance, this dual format players resignation is just a stepping stone

[ganthc]

Adams believes that high-def sales will be split equally between HD DVD and Blu-ray.

Bwahahaha!! I don't know how he came to that conclusion unless he feels bd studios become neutral.

[Ruined]

Originally Posted by ganthc

Bwahahaha!! I don't know how he came to that conclusion unless he feels bd studios become neutral.

Of course, that will be the natural progression once cheaper HD DVD standalones saturate the market this XMAS and over the next couple of years

[Ruined]

Originally Posted by Hayrab

Looks like Ruined has finally came to terms and accepted Blu-Ray dominance, this dual format players resignation is just a stepping stone

Blu-Ray dominance? Hardly. As Sony has recovered from their miserable performance last year and continues to invest heavily in BD, I see no other outcome other than a stalemate.

Consider this - in today's market there is room for both. Just like DVD+R and DVD-R, or Sirius and XM. Eventually they will find ways to be compatible (Dual format players and/or discs).

Sony will not give up because they bet the farm on Blu-Ray and also because they have the PS3 userbase to sell to.

Toshiba will not give up because if Blu-Ray outright wins and replaces DVD, then Toshiba loses the farm - losing both DVD licensing *and* HD DVD licensing fees. (HD DVD preserves DVD licensing fees through the HD DVD/DVD combo disc and twindisc) Further, it is in Microsoft's best interest to keep HD DVD alive because it not only slows down Sony and makes the PS3 somewhat less attractive, but it also gives them time to market their hidef downloadable marketplace. Toshiba can continue to ramp up its userbase with cheaper standalone players saturating the market, eventually dropping to $199 and below in places like Walmart. While BD has some exclusive content, HD DVD has more than enough content available with Universal, Warner, New Line, Paramount, and Weinstein releasing. Once the tipping point is reached, both Lionsgate and Disney have no reason not to go neutral - that might not be this year, but it will happen.

And, the studio with the most influence (Time Warner) has developed their own disc format "TotalHD" which has both formats on the same disc, a format which they will receive licensing fees from if other studios adopt it - which may have to happen if both formats grow as analysts expect. So here too, the most influential content provider wants a stalemate as well to float their hybrid disc format that they will receive royalties from by studios that adopt it. Time Warner also has numerous patents invested in HD DVD, so they will get money from those patents as well when a Blu-Ray owner buys a TotalHD disc!

I don't see how either side could possibly throw in the towel, and I don't see any forseeable way the war can end with both sides spending cash. Both hardware companies behind each respective format have the farm riding on each respective format and the most influential content provider desires a stalemate to promote their own hybrid disc and HD DVD patents.

[ganthc]

Originally Posted by Ruined

Of course, that will be the natural progression once cheaper HD DVD standalones saturate the market this XMAS and over the next couple of years

What is your saturation point for the market? 1 million players? 5 million?

[Ruined]

Originally Posted by ganthc

What is your saturation point for the market? 1 million players? 5 million?

That's not up to me, that is up to the studios. The tipping point is the point where the studio feels that they will be losing a signficant amount of cash by not publishing on the format. Right now that has not been reached as HD DVD and Blu-Ray software sales combined has penetrated less than 2% of the DVD market. Its not so much the player sales but the amount of software sales the player sales generate.

So far, the Toshiba standalones have proved to generate excellent sales + attach rates. 1 million of those would certainly have a great impact on current sales.

[ganthc]

Originally Posted by Ruined

That's not up to me, that is up to the studios. The tipping point is the point where the studio feels that they will be losing a signficant amount of cash by not publishing on the format. Right now that has not been reached as HD DVD and Blu-Ray software sales combined has penetrated less than 2% of the DVD market. Its not so much the player sales but the amount of software sales the player sales generate.

Which makes the prediction a bit lofty. Who knows what goal would need to be achieved by hd-dvd in order to meet that end...or whether that goal would be offset by bd players selling just as well. While there is the threat of "lost money" it can be offset by the thought that those hd-dvd users may eventually buy dual-format players or just cheap bd players to watch the bd movies. It may be worth it to Disney, Fox/MGM, Lionsgate to wait out the end of hd-dvd rather than invest tons of money in the production of a dying format, when those users will inevitably choose to get a bd player to watch bd studio movies.

So far, the Toshiba standalones have proved to generate excellent sales + attach rates. 1 million of those would certainly have a great impact on current sales.

Those attach rates seem to not be helping in the sales department. Blu-ray still enjoys a 2:1 lead over hd-dvd, this with the hd-dvd onslaught of new titles. For such excellent attach rates, it seems odd that with more titles released every week, bd movies still trump hd-dvd movies week after week.

I also love how you don't consider ps3's when you refer to hardware sales, but you always count them when it comes to attach rates.

[Ruined]

Originally Posted by ganthc

Which makes the prediction a bit lofty. Who knows what goal would need to be achieved by hd-dvd in order to meet that end...or whether that goal would be offset by bd players selling just as well. While there is the threat of "lost money" it can be offset by the thought that those hd-dvd users may eventually buy dual-format players or just cheap bd players to watch the bd movies. It may be worth it to Disney, Fox/MGM, Lionsgate to wait out the end of hd-dvd rather than invest tons of money in the production of a dying format, when those users will inevitably choose to get a bd player to watch bd studio movies.

Remember, the market HD DVD is targetting is the mass market. To a mass market consumer, there is a massive difference between 299 and 499, and there is a massive difference between 199 and 299. Heck, to that consumer there is a huge difference between 99 and 199. The MS/Toshiba strategy is a long term one that will be floated by lower priced players. These consumers will most definitely not pay a $200 Blu-Ray studio tax when there is plenty of content on HD DVD to be bought.

Those attach rates seem to not be helping in the sales department. Blu-ray still enjoys a 2:1 lead over hd-dvd, this with the hd-dvd onslaught of new titles. For such excellent attach rates, it seems odd that with more titles released every week, bd movies still trump hd-dvd movies week after week.

How do you figure that? The main reason BD has more software sales is because they have more blockbuster releases and at the moment a bigger installed base. That can easily swing with HD DVD standalone price drops and sales. If POTC, Apocalypto, Terabithia, etc were on HD DVD we'd have a different story. Of course, studios like Disney are fully aware of this, I am not the only genius who has figured this out

The attach rates certainly do help. Right now Blu-Ray by your measure has well over 2 million players in the field, while HD DVD has less than 500,000. However, despite 4x the players 300 on HD DVD has been keeping pace with the BD release and Planet Earth continues to outsell the BD version. Only having a 2:1 software ratio is poor when you have over 4x the players in the market, and that boils down to attach ratio.

I also love how you don't consider ps3's when you refer to hardware sales, but you always count them when it comes to attach rates.

You can't count PS3s as a straight-up Blu-Ray player because their primary function is a video game machine as has been discussed exhaustively. But if they are mentioned, attach rate of course has to be brought up simply to demonstrate percentage wise that most people aren't using PS3 as a HD player. And, in the end, studios like Warner Bros have remarked that they prefer their base to be made up of movie enthusiasts who purchase a lot of movies rather than gamers who buy a movie here and there when there is a drought of PS3 games.

[ganthc]

Originally Posted by Ruined

Remember, the market HD DVD is targetting is the mass market. To a mass market consumer, there is a massive difference between 299 and 499, and there is a massive difference between 199 and 299. Heck, to that consumer there is a huge difference between 99 and 199. The MS/Toshiba strategy is a long term one that will be floated by lower priced players. These consumers will most definitely not pay a $200 Blu-Ray studio tax when there is plenty of content on HD DVD to be bought.

And is mass market going to want to buy a player that only plays one studio's exclusive content. Is that mass market going to want to NOT have Sony, Disney, MGM/Fox, or even Lionsgate? When it comes time for the mass market to start buying, you don't think the marketing will be "If you want the Spiderman movies, POTC, Cars, The Lion King, Aladdin, Chronicles of Narnia, etc, you must choose Blu-ray and not HD-DVD"? Blu-ray will take advantage of this studio advantage when the time comes. Then we will see if a $99 player matters when it won't play Cars, POTC, Spiderman, etc. And customers will pay $100 bucks more for a player to get that content.

How do you figure that? The main reason BD has more software sales is because they have more blockbuster releases and at the moment a bigger installed base. That can easily swing with HD DVD standalone price drops and sales. If POTC, Apocalypto, Terabithia, etc were on HD DVD we'd have a different story. Of course, studios like Disney are fully aware of this, I am not the only genius who has figured this out

And at what point does hd-dvd start getting more exclusive blockbuster releases, and how many of these do they have up their sleeves? Bd studios have them queued up for the Xmas season and into next year. Oh yeah...hd-dvd has Evan Almighty.

Besides hd-dvd crying "IMBA!!!!" in Europe, bd studios have no reason to switch if they can hold the fort and secure a lasting format in blu-ray.

The attach rates certainly do help. Right now Blu-Ray by your measure has well over 2 million players in the field, while HD DVD has less than 500,000. However, despite 4x the players 300 on HD DVD has been keeping pace with the BD release and Planet Earth continues to outsell the BD version. Only having a 2:1 software ratio is poor when you have over 4x the players in the market, and that boils down to attach ratio.

I have never said that all ps3's count as bd players, but you have sworn off counting any...unless the attach rate is mentioned. It's nice to be able to say hey, they don't count for hardware numbers but they do ding bd when we mention attach rates. You can't have it both ways.

You can't count PS3s as a straight-up Blu-Ray player because their primary function is a video game machine as has been discussed exhaustively. But if they are mentioned, attach rate of course has to be brought up simply to demonstrate percentage wise that most people aren't using PS3 as a HD player. And, in the end, studios like Warner Bros have remarked that they prefer their base to be made up of movie enthusiasts who purchase a lot of movies rather than gamers who buy a movie here and there when there is a drought of PS3 games.

And I've said before that most don't have to. Even if 10-20% do, it's still a massive number of bd players in the market. Not all people are like PH, and demand a standalone console. As high-rated a bd player as the ps3 is, with its adapting to every hurdle that has faced the format (which will probably include dts-hdma decoding into pcm), why wouldn't there be a chunk of consumers that are bd movie purchasers first, and maybe just casual gamers...like myself.

If Warner felt that bd customer base was fickle, why wait on TotalHD? Obviously they would save costs by just selling the one disc with both formats on it. Why wait till next year? Something tells me that they want to see what the sales numbers look like at the end of the year. If it is still 2:1, then what reason is there to waste time with hd-dvd?

[Ruined]

Originally Posted by ganthc

And is mass market going to want to buy a player that only plays one studio's exclusive content. Is that mass market going to want to NOT have Sony, Disney, MGM/Fox, or even Lionsgate? When it comes time for the mass market to start buying, you don't think the marketing will be "If you want the Spiderman movies, POTC, Cars, The Lion King, Aladdin, Chronicles of Narnia, etc, you must choose Blu-ray and not HD-DVD"? Blu-ray will take advantage of this studio advantage when the time comes. Then we will see if a $99 player matters when it won't play Cars, POTC, Spiderman, etc. And customers will pay $100 bucks more for a player to get that content.

This is obviously not the sell the consumer will get when he goes out to get a player at Walmart or Best Buy. They want to sell as many players as they can, so they will sell the consumer whatever he is willing to afford.

And of course, though BD has more exclusives, HD DVD has a ton of content as well and the marketing will be "why spend double the price for the same thing?" - a mainstay of American marketing. Clearly HD DVD must get more studios on board eventually, but when a person buys into either format this XMAS they will have a huge amount of titles to select from.

And at what point does hd-dvd start getting more exclusive blockbuster releases, and how many of these do they have up their sleeves? Bd studios have them queued up for the Xmas season and into next year. Oh yeah...hd-dvd has Evan Almighty.

HD DVD has the support of Warner Brothers who arguably has the most Blockbuster releases and one of the best catalogs that is out there of any studio. Sure, Blu-Ray has their support too but that doesn't take away from HD DVD's selection.

Besides hd-dvd crying "IMBA!!!!" in Europe, bd studios have no reason to switch if they can hold the fort and secure a lasting format in blu-ray.

Sure they do. Blu-Ray and HD DVD appeal to different market segments. Blu-Ray seems to appeal more to gamers and the younger crowd as evidenced by the movies studios are choosing to release and the best sellers on the format while HD DVD seems to appeal more to the older crowd and HT enthusiasts. They were both marketed in such a way as well, with Blu-Ray's main push being a video game system and HD DVD's main push being standalones.

I have never said that all ps3's count as bd players, but you have sworn off counting any...unless the attach rate is mentioned. It's nice to be able to say hey, they don't count for hardware numbers but they do ding bd when we mention attach rates. You can't have it both ways.

Again, you are the one seeing things in black and white when the answer is a very simple one in the grey area.

And I've said before that most don't have to. Even if 10-20% do, it's still a massive number of bd players in the market. Not all people are like PH, and demand a standalone console. As high-rated a bd player as the ps3 is, with its adapting to every hurdle that has faced the format (which will probably include dts-hdma decoding into pcm), why wouldn't there be a chunk of consumers that are bd movie purchasers first, and maybe just casual gamers...like myself.

Because if you are a movie purchaser first you would likely go for the solution that is best oriented towards movie purchasers: a standalone. The only reason that hasn't happened with Blu-Ray is because the standalones are missing features and aren't up to spec.

If Warner felt that bd customer base was fickle, why wait on TotalHD? Obviously they would save costs by just selling the one disc with both formats on it. Why wait till next year? Something tells me that they want to see what the sales numbers look like at the end of the year. If it is still 2:1, then what reason is there to waste time with hd-dvd?

Because lets say in your hypothetical situation that Blu-Ray stays in the lead, if it means Blu-Ray is eventually 25% of the DVD market and HD DVD is 20%, then it would be foolish to ignore that 20%. Discontinuing support of HD DVD does not at all guarantee that the 20% will automatically fold into buying Blu-Ray discs - they may move towards HD downloads, HD on-demand, HD rentals, simply roll back to DVD, or stop buying completely due to being POed at the state of home media. Not to mention that Warner makes more money with each HD DVD sold than each Blu-Ray sold, and they would get even more money if studios licensed out TotalHD. My guess is that the TotalHD delays is likely due to replication and getting the BD/HD DVD disc playable in all players than it has to do with any sales projections.

[ganthc]

Yeah, hopefully those totalhd discs are the right thickness for hd players.

I do wonder if the bd side will have the protection coat on it?

[Derb]

Originally Posted by ganthc

I do wonder if the bd side will have the protection coat on it?

If they don't, they won't work.

[Ruined]

Originally Posted by ganthc

Yeah, hopefully those totalhd discs are the right thickness for hd players.

And hopefully the "prestigious" BD side won't rot! (touche!)

I do wonder if the bd side will have the protection coat on it?

Probably, otherwise that side would likely have huge reliability problems.

BTW, related to this article - despite the recent positive BD news - in terms of dedicated HD players the Toshiba HD-A2 , HD-A20, and HD-XA2 are all outselling the most popular BD standalones on Amazon: Sony BDP-S300 & Samsung BD-P1200. Despite all of the known studio alliances and whatnot. So clearly there must be something more to this race than just content

[Derb]

Originally Posted by Ruined

So clearly there must be something more to this race than just content

Yes, Joe six pack's fallin in love with price cuts & HD DVD is winning that department.