Rumor Mill Thread on Digital Bits...

[Dyana B]

I was just reading a very interesting piece on the digital bits rumor mill page, and I think that you will find the following very interesting as well:

Things do not appear to be looking up for HD-DVD these days, folks. Based on the reports we're getting from sources at the studios and in the retail industry, this format war is all but over, from a practical standpoint at least. Frankly, we'd be surprised if HD-DVD still a viable commercial home video format much past the end of the year.

Word we're hearing - and no, not just from sources inside the BDA - is that Best Buy is not only planning to favor Blu-ray in their stores going forward, but may also be planning the gradual phase out of HD-DVD by the end of the 2nd quarter of 2008, so they can focus entirely on selling Blu-ray to their customers in the 2008 holiday season with a clear message. These sales you're seeing on HD-DVD hardware right now are - from the retailer's perspective - about clearing them off the shelves. Don't look for them to restocked much. The exact timing of this will depend on sales, and HD-DVD software will continue to be stocked for a while to service those customers who have already purchased players. But despite the retailer's public statements, which help Toshiba save face, privately they know which way the wind is blowing.

So too do Universal and Paramount. Paramount is expected to announce a return to Blu-ray Disc by mid-year, if not sooner. They reportedly want to give Toshiba some time to sell out current inventory, and to make their own preparations. Paramount at least has done all the ramp-up work needed to release on Blu-ray, as they've already done so as recently as last year.

Universal's position is a little more perilous, on the other hand, as they're more than two years behind all the other major studios in terms of Blu-ray development. Word is their HD-DVD video encodes can't simply all be ported over to Blu-ray, as some of them "aren't good enough." So some of the digital film masters have to be re-encoded, which is a lot of work. Sources are telling us that one of the things Universal is hoping to negotiate with the BDA is help doing just that. Nevertheless, expect Universal to have at least announced a decision to support Blu-ray going forward, likely in addition to HD-DVD, by the end of the year.

As for Toshiba's statements that they haven't yet lost the format war, again this is all about saving face. Yes, Toshiba hasn't officially waved the white flag... but it seems as if the rest of the industry is starting to wave it for them. Even Apple's Steve Jobs has now declared Blu-ray the victor in this thing (see this piece at CNBC), though like Microsoft's Bill Gates, Jobs is already talking past high-def discs to promote downloading as the future (for the record, we think both of them are significantly overestimating the speed with which consumers will embrace downloading over packaged media). So while the fat lady may not quite be singing yet for HD-DVD, let's put it this way: She's already standing out there on stage, all gussied up nice, with the band warming up, the spotlights lit and the curtains about to rise.

Frankly, Toshiba is going to have to create their own branded Blu-ray Disc player/recorder for the Japanese market or risk being left completely in the dust in its home territory, which is now 90% dominated by Blu-ray (and recorders are the preferred device in that market). So Toshiba's smartest move, at least in our opinion, would not only be to quickly embrace Blu-ray... but to move fast to create the best and most affordable Blu-ray/HD-DVD Combo player to sell here in the States. Right now, the available Combo players tend to be buggy and cost over $700. If Toshiba were to make a truly reliable one available for less than $500 in time for the holidays... they MIGHT actually move some units to early adopters and enthusiasts that have already purchased a lot of HD-DVD titles, but who will be looking to get into Blu-ray later this year. Guess we'll see.

Stay tuned...