HD DVD Rallies Consumer Audience in 2007 Driving Nearly One Million Dedicated Player Sales in North America

So, I will not give up on having one prevailing format just because many of us chose to shoot the dice ahead of the main event and came up with craps. I realize we were wooed into our ownerships and we might find satisfaction from blaming our seducers, but who hasn't lost a few hundred to the seducers of this world? It's part of life's education and what is then left to do but to go on to a better informed future? If we dwell on regrets, what do we get? Let's grow up, stop crying over spilt milk and get behind the idea of one format succeeding in the open marketplace. If history is any teacher we won't be sorry for making that choice.

Let me see if I can peel out your main points from above:

1. So you're saying that having one format is worth disenfranchising and alienating 1 million+ consumers on one side or the other?

2. You're claiming that since everyone knew about the format war that the consumer should be surprised to have the rug jerked out from under them?

I guess #1 is subjective. I mean, if WB can live with that, I guess that's what the bean-counters in corporate advised.

But regarding #2, I ask you to take a look at all the articles published in the past year, even from your own publication. The vast majority of the media in the past 12 months have been claiming that (loosly paraphrased): "There will be no winner, so feel free to pick a side". I don't recall a single article off the top of my head in the past year that has advised to wait.

In my opinion (not that you apparently care about consumer opinion), the easiest path to consumer satisfaction is to have all studios release in both formats. Then the consumer could truly decide the best platform on their merits, not on what political/financial deals their favorite studio happened to make with one side or the other.

For the past 30 years we've been living with movies being available in multiple formats. And not once in those 30 years, until now, have studios been bribed to only release on a single format. The studios are to blame for this format war, and they are to blame for not letting the consumer decide the market direction.

I will finish my response with a question: Why did WB switch to a single format? It wasn't what the consumers were asking for. Dedicated hardware sales were neck-and-neck in 2007, indicating an equal preference. Disc sales were 2:1 in Blu-ray's favor, but WB was already releasing in both formats, so they were probably doing better than most studios. Was WB losing money on HD DVD? I wouldn't blame them for switching for that reason. Their decision (and reason given) just baffles me.

- Miller

Dale:

Don't dance on the grave of HD-DVD with such joy. First it betrays an unseemly bias, which strongly affects your credibility. Your comments on this topic tend to be anecdotal and ex cathedra, which without credibility become valueless (which is also why your earlier reference to what you were told by a Blue Ray disc manufacturer has little value). Moreover, based on your arguments, consumers would have avoided cell phones until the war between AT&T and Verizon was settled; or not purchased videogames until either Sony or Nintendo vanquished the other; or retailers would not want to give space to more than one mattress manufacturer. You ignore how small HD discs are; in the space of one mattress, a retailer can stock hundreds of discs.

But more importantly, the grave you are dancing upon is more likely to be that of all HD disc media. Do you think that it was the format war which kept SACD or DVD-A from success, or do you think perhaps it was because the price was too high for the mass-market? The argument in favor of HD DVD was always the low cost of transitioning from DVD. Had it not been for Blue Ray, HD DVD would have already reached the mass-market with prices competitive with DVD. In contrast, if there had been no HD DVD, Blue Ray would still be too expensive for the majority.

Dale, if you want to see a successful high definition disc media, you had better hope that Toshiba (or any HD DVD disc manufacturer) files an antitrust action against Warner, or the studios collectively. Otherwise, in a few years most will be getting their HD software online, with discs being simply a niche market.

Phil

What players did you compare at what scan rate, with what display and what titles?

Various players throughout the year. Most recently (HARRY POTTER 5), a Sony 300 player and Toshiba A30 on two Sony LCD XBRs.

So, I will not give up on having one prevailing format just because many of us chose to shoot the dice ahead of the main event and came up with craps. I realize we were wooed into our ownerships and we might find satisfaction from blaming our seducers, but who hasn't lost a few hundred to the seducers of this world? It's part of life's education and what is then left to do but to go on to a better informed future? If we dwell on regrets, what do we get? Let's grow up, stop crying over spilt milk and get behind the idea of one format succeeding in the open marketplace. If history is any teacher we won't be sorry for making that choice.

Miller: Let me see if I can peel out your main points from above:

1. So you're saying that having one format is worth disenfranchising and alienating 1 million+ consumers on one side or the other?

That is a perfect interpretation of what I said, yes. Reality is harsh and unrelenting but when you have two sides in a football contest one has to lose and one has to win. I cannot help the laws of nature that govern such yin and yang things and so I have to accept it. I can add that a creative idea can make all the difference in the world in mitigating unpleasant inevitabilities and those who are creative know exactly what I mean.

Miller: 2. You're claiming that since everyone knew about the format war that the consumer should be surprised to have the rug jerked out from under them

?

I think you mean that the consumer should NOT be surprised. Sure, that is what I mean. I mean (please forgive my use of this football analogy again) if you are suited up and in a football game and someone tackles you and throws you for a loss, is it any surprise? You can't tell me that you didn't know there were two formats and that one might have to go. You have been too vocal too long for that story to be believed.

Miller: I guess #1 is subjective. I mean, if WB can live with that, I guess that's what the bean-counters in corporate advised.

The greater good is what has to be served at this time or it's all lost.

Miller: But regarding #2, I ask you to take a look at all the articles published in the past year, even from your own publication. The vast majority of the media in the past 12 months have been claiming that (loosly paraphrased): "There will be no winner, so feel free to pick a side". I don't recall a single article off the top of my head in the past year that has advised to wait.

I recall many such articles in quality publications like the New York Times, Wall Street Journal, and USToday. I am going from recall but it is my business to know these things as co-publisher of HDTV Magazine. If you want me to do the research to find you the references, I will.

I will note that against my council my partner did publish an article which recommended the HD DVD as the choice to buy now. He is paying a little price for that piece (and receiving praise too) now and I am sure he has learned some things about what you can and cannot do in this field if you are to survive for a good long time. I am sure you all join me in hoping Shane grows enormously in this field and is a wise and trust council to our readers for years to come.


My views have been consistant since the start of this high def DVD movement. I continue to say as I did from the start that the decision on formats should not have been left up to the public, for it is too complex for that. See my article with an interview with Mark Knox, spokesperson for Toshiba published in HDTV http://www.hdtvmagazine.com/articles/20 ... hd_dvd.php

Miller: In my opinion (not that you apparently care about consumer opinion), the easiest path to consumer satisfaction is to have all studios release in both formats.

I spent 26 years in pro bono service to this cause for the public with a 26 year public record to prove it. You might want to match that before you hurl your insults.


But I have no argument with your solution except that by serving the million you want to protect from any losses you add cost to hundreds and hundreds of millions of disks for the life of the formats for 100% of the people who have high def players of any kind. There is added cost to double sided pressing if for no other reason than the quality control issues. There is a higher failure rate (not to mention the time taken in testing) in HD DVD pressing due to jitter. Both sides have to be scan checked for it. I have to also mention that it's not the same media for both formats.

Miller: Then the consumer could truly decide the best platform on their merits, not on what political/financial deals their favorite studio happened to make with one side or the other.

If you accept democracy that is exactly what happend. The consumer swung to Blu ray by a narrow margin and even if you don't like the fact that Sony boosted the vote by including Blu ray in their PS3, it's still a vote. (it was reported at this year's CES that 83% of PS3 owners use that machine for their Blu ray movie viewing).

Miller: For the past 30 years we've been living with movies being available in multiple formats. And not once in those 30 years, until now, have studios been bribed to only release on a single format. The studios are to blame for this format war, and they are to blame for not letting the consumer decide the market direction.

Sorry, I was in the financing business for motion pictures in the 60s and 70s and what you say doesn't jibe with reality. There all kinds of deals made daily which you can call bribes. Product placement is a bribe in your sense of the term since money is exchanged for exposure by the film industry to a product or service.

All studios do not huddle in a corner and decide these things nor could they legally (anti-trust violation). The fact that studios or people disagree is hardly news. We don't agree so who is to blame, me or you? It could be that the power of the product is such that all come to an agreement, but that did not happen this time. But since you want to blame someone let's start with Toshiba. They chose a system design that was cheapest for the movie industry to start up their high def strategy. It does not cost a great deal to retrofit existing DVD pressing plants for HD DVD production. Toshiba's very well known strategy was to use this low cost of entry to attract all of the studios to their system. That strategy has now backfired in 5 out of the 7 studios. Toshiba did not have your interest at heart but had their focus on getting all of Hollywood to support THEIR hardware. Nothing wrong with that. Business is business and Sony is no less devious. But let's not put halos where they don't belong.


And back to this "bribe" business. I suspect you are talking about the "report" that Warner's was somehow paid for their decision. When Warners was questioned at the Blu ray press conference in Las Vegas about this the response from Warners was an absolute NO and the question itself provoked a great deal of laughter from all the insiders present. The Warners guys quickly added, "But don't I wish.

Miller: I will finish my response with a question: Why did WB switch to a single format? It wasn't what the consumers were asking for.

What consumers are you talking about? More than half who entered the market spoke for a side. Do you just count the HD DVD owners as the consumers?

Miller: Dedicated hardware sales were neck-and-neck in 2007, indicating an equal preference. Disc sales were 2:1 in Blu-ray's favor, but WB was already releasing in both formats, so they were probably doing better than most studios. Was WB losing money on HD DVD? I wouldn't blame them for switching for that reason. Their decision (and reason given) just baffles me.

Good question. I think to get to the answer we have to listen to what the movie company has said. They said that due to the conflict in the high def DVD marketplace not only were sales for high def discs less than projected but that the conflict had spilled over to impact DVD sales for all Hollywood products. (standard DVD sales were down 3.6% over 2006). But here are the officials figures:

January 08, 2008
Figures compiled by the Digital Entertainment Group and released at the CES trade show in Las Vegas indicate that sales and rentals of DVDs declined some 2% to $23.7 billion in 2007. Earlier VideoScan had reported that unit sales of DVDs were down 5% for 2007, but sales of higher-priced TV-on-DVD units meant that the total for the DVD market in the U.S. declined only 3.6% from $16.6 billion to $16 billion.


They attributed this 3.6% decline ($600,000,000) occuring in a "good movie" year to the "wait and see" attitude of the general public, who we know have been resistant to acquiring either high def formats and at the same time curbing any expansion of their library in the traditional DVD standard (fear of obsolecence). They feel if by making a decision to end the format confusion all forces will ignite and catalyze the new business and strip away these impediments and doubts.

Here is what Jeffrey Jolson, long time Hollywood reporter (and grandson of legendary entertainer, Al Jolson) reported in his online publication, HollywoodToday.net.

"Further cementing Warner

Until someone sues these bastards, the consumers will continue to be screwed over:

"PIttsburgh Post-Gazette columnist Don Lindich reports a dirty bit about Warner's defection to Blu-ray that we had uncovered in our own reporting of the format war at CES, and which we had confirmed through a different source (except for the payout numbers), though were holding close to our chest while we worked some other angles. Warner actually wanted to go HD DVD. They gave Toshiba the chance to bring another studio into the HD DVD camp before they turned Blu. Fox was lined up, and told the HD DVD camp it was going to switch to HD DVD, which would've also turned Warner exclusively HD DVD. At the last possible minute, it nixed the deal.

Lindich says it's because Fox received a reported $120 million payout from Sony to stay Blu-ray

Dale, please note that my comments were "format agnostic". I was not picking a side, only giving you a consumers opinion on how things look from the outside. It would appear from your reply that you are definitely for Blu-ray at any cost ... which sort of goes against your previously stated focus on "one format, no matter which". So you have me confused there.

when you have two sides in a football contest one has to lose and one has to win.
You missed my point. Let me try to use your analogy to explain my point. Let's say you had a football game with equal fans in the stands from both sides (50/50). Now, suppose you could end the contest with 100% of those fans being happy. We had that chance here, but one of the teams coaches switched sides in the middle of the game.

I think you mean that the consumer should NOT be surprised. Sure, that is what I mean. I mean (please forgive my use of this football analogy again) if you are suited up and in a football game and someone tackles you and throws you for a loss, is it any surprise?
Um, yes I would be surprised. I would be expecting to get a touchdown every time I touched the ball or I'm not a very good team member, am I? I'm not sure what you were trying to proove with that analogy, but I'm fairly certain you failed. How about you stop using analogies and just use English ... I understand that fine.

The greater good is what has to be served at this time or it's all lost.
You might be careful with that phrase, some notorious villians have used it to further their agendas as well. I'll let you do the research.

I recall many such articles in quality publications like the New York Times, Wall Street Journal, and USToday.
All fine publications. I'll go to them for international news or politics, or general knowledge ... but with respect to the format war, there are far more knowledgable sources, like your publication. I'd rather get the advice from the experts in the field, not the journalist for the big papers.

I will note that against my council my partner did publish an article which recommended the HD DVD as the choice to buy now. He is paying a little price for that piece (and receiving praise too) now and I am sure he has learned some things about what you can and cannot do in this field if you are to survive for a good long time. I am sure you all join me in hoping Shane grows enormously in this field and is a wise and trust council to our readers for years to come.
Not sure why you mentioned this ... it doesn't appear to have anything to do with anything.

My views have been consistant since the start of this high def DVD movement. I continue to say as I did from the start that the decision on formats should not have been left up to the public, for it is too complex for that.
Capitalism has worked for centuries ... why wouldn't it work here as well?

I spent 26 years in pro bono service to this cause for the public with a 26 year public record to prove it. You might want to match that before you hurl your insults.
I'm not calling on your "years of service", only pointing out that your interests here don't serve as many consumers as they could.

There is added cost to double sided pressing if for no other reason than the quality control issues. There is a higher failure rate (not to mention the time taken in testing) in HD DVD pressing due to jitter. Both sides have to be scan checked for it. I have to also mention that it's not the same media for both formats.
Are you claiming manufacturer errors with HD DVD? I've not seen that anywhere. Can you back up these claims or are they just manufactured to further prove your point?

it was reported at this year's CES that 83% of PS3 owners use that machine for their Blu ray movie viewing
By who? Oh, let me guess ... Sony?

And back to this "bribe" business. I suspect you are talking about the "report" that Warner's was somehow paid for their decision.
No, I hadn't heard that. I was actually talking about the amounts paid to Paramount, Fox, etc. Are you saying WB was paid as well?

Here is what Jeffrey Jolson, long time Hollywood reporter (and grandson of legendary entertainer, Al Jolson) reported in his online publication, HollywoodToday.net.

"Further cementing Warner

What players did you compare at what scan rate, with what display and what titles?

Various players throughout the year. Most recently (HARRY POTTER 5), a Sony 300 player and Toshiba A30 on two Sony LCD XBRs.

Was the comparison on the same display or with both running side by side? What model# is the display? What scan rate? 60 or 24 frame? Without me researching do you know if the video came from the same master using the same codec for that title?

Dale, despite my aching wallet empty from all the HD DVD players and discs I have bought, I appreciate what you are saying and have to agree to most all of it. I don't like it, but certainly I knew I was on thin ice. I live near Sony's Culver City studios - I have this viseral feel of how big Sony is - and I know they are in it to win with that "entertainment industry" corporate agressiveness.

I have to argue one point, you wrote:

"Further cementing Warner

Just to prove a point - I have not purchased a standard DVD in several months. I normally purchase one or two a month. I've also held off purchasing a Blu-Ray or HD DVD for precisely the reasons stated by WB.

Anyone who made a significant investment in either format without thinking there was a real possibility that it could become obsolete in the very near future is simply ignorant.

pmalter0 - how is anything that Sony did to influence the success of Blu-Ray any different than Toshiba selling HD DVD players below cost to gain market share? Isn't that illegal, also - by your definition?

Petition to Warner

http://www.petitiononline.com/SAVEHDD/petition.html

What the heck it's worth a shot anyway.

___________________________________________

Side notes:
>1< Anybody here have any facts over the large number of upper management at Warner that seems to of changed in the last week?
>2< I know what will happened if 'Toshiba' does stop selling HD-DVD drives 'Before' BD-Live is released in set-top players.. Sony will come up with some reason that the consumer really does not need these features and will not be put into the newer Blu-Ray machines

David: Thanks for the invitation; but, I firmly believe that the only effective petition would be one that has the name of a court at the top.

Akirby: HD DVD is so much more an efficient technology that it is hard to say which is sold at a loss -- a $150 HD DVD, or a $300 BR. I have heard that Sony also loses a great deal on the PS3. But all this is anecdotal, and must be taken with quite a few grains of salt. Selling at a loss becomes unlawful predatory pricing only where it is done so in order to advance a monopoly or restrain trade. Hence, assuming arguendo that Toshiba has sold at a loss, is not likely to be unlawful. In contrast, however, I believe that the latest Warner/Sony deal is clearly an antitrust violation. In one of my earlier posts, I noted that there are many reasons why Toshiba might be hesitant to sue; unfortunately, one of them is that Toshiba has engaged in some similar shenanigans. Although I believe that there are legally significant differences (the biggest -- Warner's admission of its intent to put HD DVD out of business), it might mean that the best party to sue would be an independent HD DVD disc manufacturer (this then opens up the question of whether the disc manufacturer would have sufficient financial resources to attempt such major litigation). If you have been waiting to avoid purchasing an orphaned or obsolete technology, wait a little longer; and if no one files an antitrust suit, your best bet is to plan on downloading your HD movies in a couple of years.

Dale: Just about all the opinions of others you cite, are at best, just opinions, at worse clearly self-serving BS. I tried to explain this to you above, in criticizing your quotes of the BR disc manufacturer. You cite Warner's "absolute" denial of being paid by Sony and the "great deal of laughter from all the insiders" as if this were convincing evidence. I hope the fact that the denial was a lie will cause you to rely less in the future on the unsupported allegations of interested parties and presumed infallibility of industry "insiders."

Phil

When there is no single format dominating, the CE industry fears a proliferation of formats which further confuses the public and negatively impacts total market potential. Another reason often given for a single format may be lessoning as online sales grow. The tradiitonal argument has been that retailers did not want to carry and give shelf and warehouse space to multiple formats. That is not nearly the problem with online sales.

Question: Does anyone have accurate fugures on the licensing fees for player and disks for the two main contending formats? Also, while I have seen many reports saying that the HD DVD player is cheaper to produce ,I have not yet seen any bill of materials that would support that conclusion. Does anyone have a bill of materials for either or both formats? Thanks, Dale

I can't speak to real terms - but in general the industry has shown, costs for hardware are considerably less than we would think. In huge scale manufacturing, we're talking cost of raw material, the processing from (almost) dirt into finished materials get's so cheap it's not that costly and thus you can almost talk in cost vs. weight.

Okay, sketchy commentary, but the bottom line for an HD DVD player is, unless exotic chips (Reon) and metal plates etc. are added they are not much more than ordinary upconverting DVD players. Drives (okay maybe Blue LD's are still a bit more than red) are basically the same, power supplies about the same, boards and most all the chips are still boards and processed silicon...I'd suggest that the cost of a HD player is only a tad more expensive than an upconverting DVD player - and they are down to $50. (Perhaps the HD drives are HD and DVD so maybe a bit more there).

The history of the industry makes this rather obvious. Thus, I do not think Toshiba is loosing money on hardware. I would guess they aren't on marketing either they haven't seemed to spend much. But Sony seems to be pouring on the marketing and are probably spending themselves negative.

(I would not suggest that the better hardware is not more expensive - less quantity, lots more material, maybe lots more labor...etc. pushs the costs quickly.)

The main factor between these new players and the upconverting DVD players you're comparing to is licensing. There's a lot of new IP (Intellectual Property) in these new players that have to be licensed.

So in that Bill of Materials, you need to include patents and licensing, not just silicon and drive technology.

- Shane

I write the following due to all the animosity this format war has ignited over the last 1.5 years.

The outcome of this format war along with the angry and accusatory voices from the losing camp would be no different had HD DVD claimed victory.

There is the business of manufacturing and the business of technology innovation! All products reach a plateau where manufacturing profits are limited and success or failure becomes a game of cents in cost to produce. Deep down these folks want nothing more than to have the public replacing their libraries of something every 10 years for some reason; it creates higher profits for manufacturing and can lead to new players in technology steering us to other places the old guard may not.

SACD and DVD Audio didn

My question above is:

Does anyone have accurate figures on the licensing fees for player and disks for the two main contending formats?


It occurs to me that we are all sincere people here. So, why not join forces as investigative reporters and let the conclusions be drawn from the facts we collectively gather?

OK, there may be a few jerks that haunt these forums and so those of you who are just jerks, how about bowing out and doing your fellow man a favor.

OK, with the jerks out of the way now let us more sober-minded take a serious look at these two formats.

But first...in reading the many forums on the high def DVD there is a staggering amount of prejudice at work. Let me be the first to jettison mine. I have learned that no new truth or fresh fact can penetrate a prejudiced mind. Quite frankly, I don't know where many of these very strong advocacies for either format come from. I have found very few who can stand up to deep questioning as to why they support this or that format. the determining factor typically boils down to some kind of hatred for a company identified with a format. When we get too close to where ignorance overtakes reason the reaction is to charge the questioner with a bias for the opposing side. In some cases a format is embraced for no other reason than to save a $300 investment made earlier and has little to do with any broader appreciation of a format's value. We need to rid ourselves of all this kind of thinking if we are to get to the truth.

I am hoping that some of you (or all of you) have already done a thorough job of investigative reporting and can offer us quickly a solid set of reasons for a conclusion (choice). Most of the arguments I have seen of late go feebly to finger pointing at "greedy manufacturers and manipulative studios" making smelly deals behind closed doors. That kind of argument can be taken up after we know all the more substantive facts and reasons for making a sound choice. Then we will know what is odorous and what is not.

Some of you on our forums may be part of professional team that is in support of one side or the other. It is not uncommon for professionals to use these forums to advance public opinion for your employer's ambitions. I hope you will reveal yourself and let this discussion be far more transparent. We need to know what you know but we don't want it fed to us in a way where our own credibility is questioned for not swallowing everything laid out in your anonymous one sided presentation. Join us without bias and we will listen.


TOPIC

One of the things being said today by Toshiba in their latest press release and new advertising campaign is that HD DVD has superior image and audio. Since we all respond to "better image and sound" that is a powerful consideration. Let's take that claim seriously and see if it is supportable. Back up your findings with as much engineering and science as you can and if there is any interpretation of those findings required for perspective's sake, use the most expert commentator you can find.

That should get us started. If no one picks up on this challenge then let's just leave the decision to those who have enough dicipline to examine every detail and abide by their conclusions. __Dale

I agree wholeheartedly with Dale. And in an effort to show some ecumenism, I, as an HD DVD backer will call BS on Toshiba; many reviewers have compared HD DVD to BR and none have found the alleged superiority of HD DVD. So let's start off by eliminating that potential issue. However the issue we were on --which is less costly to produce -- it's probably the most important issue of all.

Before we eliminate all polemics however, I would like to address some of the Richard's allegations:



SACD and DVD Audio didn

many reviewers have compared HD DVD to BR and none have found the alleged superiority of HD DVD. So let's start off by eliminating that potential issue.

OK. But I do have to say that I know other reviewrs have noticed differences. Here's one example (which I agree with) from Josh Zyber on MI:3 (And I promise not to post anything further on the subjective superiorityof one format over another.)

"In comparing the VC-1 compressed HD DVD to the MPEG2 compressed Blu-ray, differences were subtle but observable. On my screen, the Blu-ray looks slightly softer throughout, with just a bit less vibrancy and "pop". I'll concede that at the present time I don't know whether this is attributable to the first-generation hardware currently available or a distinction between MPEG2 and VC-1. Where I do think the compression codec comes into play is that the Blu-ray is noisier in many scenes. For example, the green wall in the background of the shot at the 13:35 mark is grainy on both discs but less so and more stable on the HD DVD. Neither disc looks poor by any means."

I don't know how to approach this subject exactly so I will appreciate some guidelines form the forum.

Let me start out with my own view that says by "cost"we mean total "cost", including R & D, licensing, manufacturing engineering, manufacturing tooling, manufacturing, marketing, distribution, service and returns, overhead burden. Then that total cost is divided by the market size to be realized in that same time frame. Or do we take the simpler road and take unit price at retail and be done with it? Perhaps some experienced analyst can suggest how we arrive at true costs. Are we going to accept the cost benefit from the subsidized boxes and assume there will not be a payback later?

In the case of Blu ray, where all players are not required to do the same thing, the calculations might prove a bit dicier than with HD DVD.

There are licensing costs and I have asked for that information. I found some, though nothing conclusive, on the web. I think we must go to the horses' mouth--the licensing agents--and get from them all that we can. The licensing applies to the player, the DRM, the management of the license, and a per unit fee on the disk media. There is also special license for rewritables for computers, which appear from my research to be where the greater number of high def DVD drives will ultimately be installed. Knowing that number will help us arrive at total cost. Then there is the cost of disk mastering and pressing (licenses for each here also) and the cost of obtaining rights for movies and other content (is it the same for both formats? If so that's a wash.) Should we not take into account the cost of promotion to the various sectors and distribution and service to those sectors?

SINGLE FORMAT....WHY?

I think we need expert witnesses from the industry to give their reason why one format is desirable. Having been through all of the HDTV wars since 1984, I can tell you that the mantra throughout was to reach accord for one standard/format to keep cost at a minimum. I don't know if that was believed by everyone because of repetition of the message or whether consumer electronics development and manufacturing history made proved it to be an axiom? I will say that the presidents of all of the companies with which I had the privilege of interviewing always held up one standard per product category as the Holy Grail. When Europe broke away from the 1125/60 camp (that was the Japanese production standard) it was in order to temporarily scuttle the HDTV movement. Europe had not kept pace with emerging HD technology and they feared that their own consumer electronics industries -- huge employers with a uniquely European social flair-- would become beholden to, or even obliterated by the Japanese. Europe put the brakes on the entire world movement when they claimed the need for a uniquely European standard for production (which at that time dictated the display). I watched the air let out of the balloon and many threw up their hands in disgust. Had it not been for the introduction of digital into the dialog about transmission in 1991 I think the Europeans would have forestalled the global HDTV movement by as much as ten years simply by their introducing a seperate and divisive format. Even with two production standards the more-than-clever Joe Flaherty (he created also electronic news gathering) from CBS, Inc. reached a monumental accord with everyone involved around the world and from the 1125/60 and the 1250/50 production standards arose the Common Image Format of 1080i/50 and 60 (1080 active lines) . That allowed the world competitors to make one imager to get things rolling everywhere at the lowest possible cost. That proved to be a important in that it has led to global standards for displays, i.e., 1080 X 1920i 50/60 and finally 1080 X 1920 50/60p. That fixed common image format set the HD displays which can now be be found around the world. You can imagine the state of affairs if there were no industry guideline! We could have as many screen formats as there are households!

Of course, here in the USA, the FCC demands that there be just one standard or format for broadcasting. But that is a different situation than with stand alone external boxes.

I have this question: Does the public have the collective wisdom and focusing power to choose from a set of specifications and effect a sophisticated new format?

Let's call upon leaders in the CE industry and ask them what they know about the consumer's understanding and how prepared they think we are to make this decision on a format?

That's enough for now.

Dale

One of the things being said today by Toshiba in their latest press release and new advertising campaign is that HD DVD has superior image and audio.

The press release I believe you are referring is:
Toshiba Deploys New HD DVD Marketing Initiatives Based on Strong Fourth Quarter Unit Sales

HD DVD not only creates the ultimate high definition entertainment experience, leveraging all of the promise of the format such as superior audio/video performance...

I

Perhaps some experienced analyst can suggest how we arrive at true costs.

Dale, as someone who has litigated costs perhaps a hundred times, let me offer the following: 1) for determining return on investment, full book costs, or "fully distributed" cost are employed; 2) for pricing purposes, long-run marginal costs are employed. Accordingly, from the consumer viewpoint, I believe long-run marginal costs would be most appropriate.

You also address the history of conflicting standards in HDTV and the problems this created.
There are some enterprises which are called "natural monopolies," which because of the nature of the enterprise and the costs involved in the infrastructure must be government owned or regulated, or require government established standards. The historical references you have discuss are of that type. However, there is absolutely nothing about HD discs that are naturally monopolistic. Now I realize that to some of you this is an issue in contention; however, I submit to you that no knowledgeable judge, lawyer or economist would agree. I will have to admit here that I am speaking ex cathedra, but I have 40 years of litigating and regulating natural monopolies to support my right.

I have this question: Does the public have the collective wisdom and focusing power to choose from a set of specifications and effect a sophisticated new format?

That misrepresents the issue; the public is not selecting a new monopolistic format; it simply is choosing which of two competitive formats offers them the best value-- something the public does most successfully all the time.

Let's call upon leaders in the CE industry and ask them what they know about the consumer's understanding and how prepared they think we are to make this decision on a format?

The leaders of industry will be most happy to give you their self-serving declarations of the monopoly they would like to create.
And those declarations will have about the same value as that of Warner's representative who answered "absolutely no" to the question of whether Sony paid them to support BR.
While we're at it, we might as well ask Sony if there should be competing formats to the PS3; or ask Verizon if there is a need for any other formats for cell phones, etc..

Phil

Phil,

It

A slight shift...the game industry has had a number of platforms. All incompatible, and the game companies have had to package (read as: port with at least some labor) their products for the many platforms. The customers have clearly been happy, buying millions of each. The game industry while losing it's pants (approximately!) "buying" the customers through game console losses. The game media industry is massively successful even with all the burdens.

I suppose this model does not work for the common non-technical, non-passionate customer, or impulsive kid but it sure makes the Warner statements, and a lot of the "for the common" or market good seem like falacious arguments.

But, I hate to say it, I too agree this particular market is simplistic enough to be stymied by the confusion of a choice. Or it really was not a market at all. Downloaded music has already systemically taught us simplisticly that plastic is dying.

Slight difference here. Gaming platforms have major differences that are apparent to even the most average consumer - different controllers, HD capability, networked gaming, etc. including the biggest one - games. Do you think anyone would have bought a Nintendo 64 without Mario? No way. Same for PS2 and Gran Turismo. I'm sure Xbox has similar games that are Xbox exclusive.

Shift to HD movies - the average consumer puts in a disc, pushes play and watches a HD movie with great surround sound. There is no difference between HD DVD and Blu-Ray (again, for the average consumer). Cost is also a factor - it's a little easier to buy 2 video game consoles for as little as $300 than it is to buy both DVD formats for 2-3 times that much with no discernable differences.

We can argue the technological differences forever but that won't change the average consumer's perception.

your responses suggest numerous times along with a propensity to advocate stances grounded in legal rights that do not by themselves serve the public interest. I say appear since your behavior could easily be your emotional response as to how Toshiba got the shaft

The antitrust laws were specifically enacted to protect the public interest. My anger is in response to a gross violation of those laws and and a concomitant attempt to give the public the "shaft."

I and everyone I have spoken to couldn't care less how many formats there are as long as the format we choose is the least expensive for the quality we desire, and is not subject to being orphaned.

How self serving is that? It speaks volumes about your responses and is quite odd for a lawyer who knows there is no law to prevent anything from being orphaned

Are you really trying to compare the self-serving nature of some one with a $149.95 interest to another with a billion-dollar interest? Moreover, there most certainly are laws to prevent something from being orphaned by contracts or conspiracies in restraint of trade -- which is what we are dealing with here.

the war is really all about money focused on two different carriers and each camps benefactors with each side hoping to do the other in and become the world wide standard at the consumers expense.

That begs the question of whether the consumer is better off with one or two formats.

Do you really mean to tell us that 2-3 years ago you were for another format war and that would be in the public

We seem to have gotten by nicely with just one format for standard DVD. Any company can make a player for both formats, so there's no monopoly on the hardware. To the average consumer, the end result of both formats is identical - viewing a movie in HD on a HDTV.

What can we possibly gain from keeping 2 formats that would offset the hassle of having 2 formats?

You either have to commit to one format and forego content made only for the other format or you have to buy 2 players that deliver essentially the same content at the same resolution. If you're exchanging movies with friends you have to know which format(s) they have.

And there is no way it can be cheaper to mfr movies in both formats or half the movies in one and half in the other.

You sound like a lawsuit looking for a client.

Phil--

Where were these talks of lawsuits agaiunst Toshiba for having studios locked up to them? How come there were no lawsuits between DVD-A and SACD? This is a losing lawsuit.

Apple has an agreement with every major studio for downloading every movie released withing 30 days of release and immediate downloading for shows for $2,99 to $3.99.

Now in 2 weeks they are releasingan HD Apple TV upgradeto their Apple TV 2.0. People with old 2.0's can have an inexpensive upgrade and people that want a new HD Apple 2.0 can buy it for $229.

Word from Macworld is that a $229 Apple TV will begin shipping in a couple of weeks, with more than 100 HD titles ready to be rented. Cost will be $4.99 for new releases and $3.99 for library titles.

Once you choose a movie, you

Apple has an agreement with every major studio for downloading every movie released withing 30 days of release and immediate downloading for shows for $2,99 to $3.99.
This is the same deal all other download services have. There's nothing special about the Apple relationship. I have an article coming out comparing these video download services very shortly where more information will be available.

High-def films will be available in 720p, and may include 5.1 Dolby Digital surround sound. We say may, because as one observant commenter noted, there

To allchemie: I do not have the profit numbers for Vista, and really don't think they matter - they are so freeking big . Vista is hardly a bust. It may have more detractors, but it still is the default on almost all new PC systems Millions and Millions of them. I work for a giant corp, we are moving to upgrade 170,000 systems to Vista - and that is just a drop in the bucket. It will take a while for us, but regardless - we don't get it for free. Nor the Office that will go with it.

As for critizing MS for distributing as beta to do debug...ROFL. You obviously have never produced software. What they are doing is spectacularly correct in getting to a solid product. ALL SW companies do that in one form or another.

I get the feeling you're a solid Mac guy. Cool, but please bring your gaze back into focus.

My business is solely populated by PC's.Not one Apple. We bought one new PC with Vista and experienced a lot of problems and like many companies I know have stayed with XP PRO.

At home I have both an Apple intel macbook and an Apple Intel iMac and a Dell XPS PC. I copy my companies accounting and critical information to my home pc and also to the Apple, which I connected another hard drive to, as the Intel Apple's can run many OS's. Even if you only have one hard drive you can partition one for OS X and for Microsoft XP or Vista.

I'm not an Apple fanatic, but I do find that the ones I have had crash far less often than all the PC's I have had.

Sorry for the segue, but my main point--and Shane is correct that I was comparing Apple SD movie downloads to HD, my point was when most people thinkof a site to download movies and music it is generally iTunes and iMovies. Apple became enormously profitable at cd's expense with generally lower rez audio downloads. I own two iPods and have never used either, but I am over 50. I like the better quality of cd's and would rather copy them to terabyte hard drives or an Escient.

I know Apple has competition inthe downloadable movie market, but I will bet any amount against someone elses choice that when they start offering 720p HD they will far outdistance all other downloadable services, not to mention over a year or two exceed the sales of HD and Blu Ray. Only the people that want expensive permanent copies of movies are likely to want discs. Heck, it is cheaper to download a 720p in 5.1 and later decide if it is on your permanent list of disc purchases.

I own many hundreds of dvd's and would gladly part with over half of them no questions asked. I bet most others feel the same way. This has undountedly driven Apples success in music. In pop and rock music it is a rare album that doesn't have mostly filler. Between the portability of a download and choosing the cuts of music you know are good has made Apple a huge success. I expect the same with movie downloads, particularly with people that have very good high speed internet. I wish everyone could have FIOS for internet usage, telephone, and even fast online gaming.

Back to the question of HD and Blu Ray. The studios don't live in a vacuum. They sell most of their discs to Walmart, Target, Costco, and many other mass merchandisers--including amazon. They mostly make their decision on the feedback from these stores. These stores not only want, but are demanding one format. Store space is expensive, particularly for two formats that perform the same. As expensive as Blu Ray machines have been with the exception of PS3, the feedback has been Blu Ray is outselling HD and they would prefer (if not demand and step out on their own--a la Target) that they only will use space for one format. They don't want confusion from their customers and they owe it to their shareholders to make the most money per square foot that they can. Two formats of the same thing brings down their profit per square foot of selling space.

I don't care who wins--HD or Blu ray in this disc showdown. There will be a winner, which is not to say that both won't exist. It may well be like the people who still love vinyl LP's and can buy them versus the cd's. The loser may well make a couple of different machines a year to keep up and the studios will likely sell the rights to each movie to a company or companies that want to make HD discs. This has happened with vinyl and will likely happen in this war--whoever wins.

Greg