Delays Won't Harm Hi-Def Launch

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http://www.videobusiness.com/article/CA6320097.html

Delays won't harm high-def launch
DIGITAL HOLLYWOOD: Sales will start in year's second half
By Jennifer Netherby 3/29/2006

MARCH 29 | SANTA MONICA, Calif.—The bumpy start to HD DVD and Blu-ray is likely to have little impact on either format’s consumer launch, electronics execs behind both formats said during a Tuesday panel at the Digital Hollywood conference here.

“The first few months are almost irrelevant,” said Andy Parsons, a senior VP for Pioneer Electronics and Blu-ray Disc Assn. spokesman, when asked after the panel if Blu-ray might benefit by the delayed launch of competitor format HD DVD.

At the same time, Parsons said Pioneer might slightly delay its planned June launch of Blu-ray players.

Toshiba said last week it would hold off shipping its HD DVD players—originally due in March—until Warner releases movies on the HD DVD format (VB, 3-27). Warner was scheduled to deliver the first titles on March 28, but two weeks ago, the studio pushed the street date back to April 18 and cut the initial release slate to three titles.

Meanwhile, Blu-ray hit a bump when Sony Computer Entertainment said in mid-March that it would delay the release of PlayStation 3 to November because of finalization issues with the high-definition format. Sales of the PS3 are expected to give Blu-ray a significant boost in consumer adoption rates.

Both HD DVD and Blu-ray say they are committed to winning over high-def households but that sales aren’t expected to really start until the second half of the year.

Warner Home Video senior VP Steve Nickerson said despite the format battle, Warner expects high-def players to be adopted faster than DVD because high-def will be launched on set-top boxes, computers and game systems in its first year, unlike DVD.

By the end of 2006, the studio expects sales of 500,000 standalone HD DVD and Blu-ray players, between 2 million and 3 million game consoles and 2 million to 4 million computer drives, putting overall high-def adoption on both formats at between 4.5 million and 7.5 million.

In the first nine months following the launch of DVD in 1997, 300,000 players had been sold.

In less than four years, Nickerson said 100 million high-def DVD devices are expected to be sold, surpassing sales of DVD in its first four years.

Also, with the significant investment and players behind both formats, Nickerson and others on the panel agreed that it’s possible that two high-def formats could succeed depending on consumer adoption.

Not to say that the two sides aren’t battling for consumers.

Mark Waring, director of Sanyo Technology Center USA, predicted the lower cost of HD DVD players compared to Blu-ray will weigh in HD DVD’s favor.

Meanwhile, Parson’s said content will matter most in the battle between formats and dubbed Blu-ray the “safe choice” for consumers after pointing out that studios have announced 82 unique titles for Blu-ray versus 19 for HD DVD. Twenty-five titles have been announced for both formats.

Nickerson presented consumer research Warner had done following the Consumer Electronics Show in January asking people who owned an HDTV or planned to buy one within 60 days whether they planned to buy an HD DVD or Blu-ray player. Roughly 60% said they planned to buy a player within the next 12 months primarily because of the better picture quality rather than interactive bonus features. The survey found that potential HD DVD consumers were more budget conscious, while those saying they planned to buy Blu-ray liked the title availability and believed the technology to be superior.

Interestingly, 60% of consumers that said they planned to buy PS3 consoles said they would continue to buy standard DVDs because they don’t plan to connect the console to an HDTV.

“That was a little alarming to us as a studio,” Nickerson said.

Blu-ray’s inclusion on the PS3 game console is expected to drive consumer adoption of the format just as the PS2 was able to do for DVD, and that was part of the reason some studios backed Blu-ray over HD DVD.

Warner’s research also found that consumers had a lack of information on both formats because little consumer marketing had been done at the time.

Both sides are now ramping up marketing for their formats. Toshiba is holding a 40-city tour demonstrating HD DVD.

Sony has announced a consumer education campaign for Blu-ray in its Sony Style retail stores and online.

Parsons told VB that Blu-ray companies plan to work with retail to aid the launch of Blu-ray with demo discs that show off the picture of the format and recommendations on how to set up demonstrations for consumers.

Parsons said he is concerned that with all the attention focused on the launch of the two formats, the media could declare high-def discs dead in six months before things get off the ground.

“It takes time for the market to know what it is,” he said.