Warner Backs Blu-Ray: The Beginning of the End of the High-Def Format Wars?

Warner Brothers Entertainment today announced that the company plans to release high-definition movies exclusively in Blu-ray format beginning this spring, which comes as a major blow to the competing HD DVD camp. Only two major studios — Universal Pictures and Paramount Pictures — are now providing high definition content exclusively in the HD DVD format, while Sony, Fox, Disney and Lionsgate all support Blu-ray. According to Variety, the Warner announcement includes both Warner Bros. Pictures and Warner’s New Line Cinema.

Opinions differ over whether today’s news is the final death knell for HD-DVD, although most commentators believe that it is the beginning of the end for the format. The Wall Street Journal quotes Pali Research analyst Rich Greenfield as saying, “We expect HD DVD to ‘die’ a quick death,” but the Journal also states that “other analysts thought HD DVD could survive Warner’s decision, as long as the group could hold on to support from Universal and Paramount.”

Microsoft’s support for HD DVD as an add-on to its Xbox game system may help to keep the format alive. But if sales of Blu-ray discs continue to exceed those of HD DVD — which, with the Warner announcement, appears inevitable — it is difficult to envision Universal and Paramount remaining exclusively with HD DVD. Movie studios are in the content business. They won’t sit on the sidelines and let revenues slip away because of media format differences. Expect to see one or both of these studios switch to supporting both formats in the future.

And they may want to move quickly. As Scott Kirsner points out in his CinemaTech blog, as the delivery of on-demand high-def content becomes more viable, the studios have a limited time period to extract profits from media sales. Kirsner writes that “Studios probably don’t have a decade to squeeze nice profits out of Blu-ray disc releases, as they enjoyed with the original DVD format.”

Regardless of how long HD DVD hangs on, the emergence of a single dominant format is an important step forward in the home entertainment business. The format wars have frustrated consumers and severely hampered the growth of high-def media. A few electronics companies like LG Electronics and Samsung have attempted to sidestep the issue by developing dual-format players that support both Blu-ray and HD DVD. But this doesn’t resolve the real problem. The content is more important than the player. For many people, the value of their movie library far exceeds that of the device used to view the discs. It’s the media people are investing in, not the player. Until we get a single, universally supported format, high-def media will continue to stumble.

There are many who hoped for HD DVD to succeed as the format of the future. When Knowledge@Wharton covered the topic of Blu-ray vs. HD-DVD back in November, 2006, we received e-mail messages from angry readers lambasting us for merely quoting Forrester Research analyst Ted Schadler who predicted that Blu-ray will win out because it has more support from the studios. While many techie-types may have favored HD DVD because of some perceived superiority of the format, in many cases their aversion to Blu-ray may have been driven in part by their disdain for Sony and the company’s tendency to develop proprietary solutions rather than support industry standards.

But the differences between HD DVD and Blu-ray are not significant enough to cleave to one side with religious fervor. It’s more important that we have a consistent, durable format.

And it looks like Sony may emerge victorious this time. After being on the losing side of Betamax vs. VHS and Memory Stick vs. Secure Digital, Sony may finally have a winner in Blu-ray.

5 thoughts on “Warner Backs Blu-Ray: The Beginning of the End of the High-Def Format Wars?

  1. I was looking forward to your thoughts on the Warner Bros. announcement, Kendall. Secretly (and I’m not sure why I’m almost ashamed to admit it), I’ve been hoping HD-DVD would win this format war.
    But, with 6 out of the major 8 movie studios out there, it’s pretty much game/set/match.
    I didn’t really appreciate the almost-hasty nature in which the studios chose sides in this war, until your quote from Kirsner. The Studios’ window of opportunity is definitely shrinking, and probably faster than anyone ever anticipated!
    Luckily for me, *the* software titles that I want to own (which i will tell you in person so as not to permanently tarnish my street cred on the internets) have not been released in either format. So, I won’t have to re-buy them in order to protect my investment.

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  2. Joe:
    A lot of people share your view that it would be better for HD DVD to become the dominant high-def format — as we heard loud and clear from Knowledge@Wharton readers when we published the assessment that Blu-ray stood the better chance of success back in 2006.
    But I think that getting a single format is more important than the relative differences between the two. I’m pleased to see signs that a dominant standard will emerge and I hope we can move past the debate over which format is “better” and just move on.
    Remember that Betamax was generally recognized as having better video quality than VHS, but that isn’t much comfort now if you have a large library of Beta content.
    Although, as an aside, one point often forgotten in the argument that “Beta was better but eventually lost” is the fact that VHS had other advantages over Beta. For example, the 3-hour recording time of VHS tape made it a more convenient format for feature films than standard Betamax with a 1-hour recording time. That may have been a key factor in why video rental stores, along with consumers, favored VHS. (There’s a good discussion of the Betamax vs. VHS war at MediaCollege.com.)
    There are often multiple dimensions to what determines which is the “best” format. And market dominance is often overwhelmingly the most important of these.
    :Kendall

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  3. At the end of the day, the format wars came down to marketing. The studio support, plus the PC support has won the day. Interestingly, as Blu-ray rolls on, and develops new products like the 100gb BDXL format, we must remember that HD DVD disks have been seen with 500gb capacities before.

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