Paramount HD DVD payoff mentioned in Viacom financials

[WickyWoo]

But I guess that doesn't count since it is a 100% Blu mantra.

It's an educated hypothesis based on the statements of various industry sources both studio and CE based, combined with knowlege of trends both historical and contemporary

[Marquoz]

Originally Posted by scweb13

I guess you might have to get rid of that PS3, because it has a cell processor in it.

Priceless! I think people across the street heard me laughing at that one!

[jdc115]

Originally Posted by Rabidhunter

30 million dollars, that was all? Isn't that like Bill Gate's daily allowence? It is insulting that Paramount sold out for so little. Quite too bad at any rate. But I can't blame them, money is money and it makes the world go around... Or is that gravity, I forgot.

Well, I can understand it given the early stage of the format. You can look at it this way, they probably wouldn't make that kind of money selling HD content in the next 18 months. If HD-DVD ended up winning, they made a very smart choice. If both formats survived, they could return to Blu at some point though with some unhappy customers but in time everybody would forget about it. And later adopters wouldn't care so much anyway.

And as it turned out, Blu wins, they made more money with this payment and still get to release on Blu. I know some people still feel pissed off at them, but over time that will go away and there are not enough pissed off people to cost them $30M

It didn't seem like a bad business decision and probably still won't be in the long run.

[bluskiff]

I think the ill feelings sparked by paramount leaving did do them harm. A lot of home theatre guys were really pissed off at them. I know I lost a lot of respect for paramount it felt like they spit in my face. I am coming around now I will feel much better when I have the startrek movies in my hand. It was like being let down by an old friend. But again I am getting over myself I will follow the hddvd fans example grow up and move on. The war is over.

[BluOgre]

Originally Posted by Dynamo of Eternia

You are dreaming if you actually think that the sales of Paramount Blu-Ray discs during the time frame of their HD-DVD exclusivity would have earned them $29 million or more. It was then, and is still now, a niche product. I do hope it goes more mainstream in time, but in the short run Paramount made much more money than they otherwise would have, and in the long run they are releasing on Blu-Ray again anyway so it really won't have a long-term negative effect.

Did you actually read the first post? Viacom and Paramount were expecting LOSSES (compared to the previous year) prior to the HD-DVD agreement. That means that if they had never gone HD-DVD exclusive and stuck with their existing business model of releasing movies on both Hi-Def formats, they still would have been projecting coming up with less profit than the year before. The HD-DVD deal is what prevented that from happening.

Firstly it was a terrible decision both from a business and PR standpoint.

Business wise, let's look at the new releases alone they have missed out on for Blu-ray:

Blades Of Glory - 75k
Next - 50k
Transformers - 400k
Mighty Heart - 10k
Hearbreak Kid - 25k
Stardust - 25k
Strange Wilderness - 25k
There Will Be Blood - 50k
Cloverfield - 100k

I put in the last two because there is no way they are EVER going to sale what they could have if they released them day/date with DVD. Now they are old titles and sales will be minimal. So these are just small projections of what these titles could have sold from Aug of last year to now. The cost to distriubutors for these titles is about 24 dollars. That's nearly 20 million in lost revenue. And then we are not even talking about catlaog and other small new releases yet. You say niche.....that's true but we are talking about a premium price for this "niche" product.

My guess is after everything they would have made just as much money (if all they got was $29 million) if they would have stayed with Blu-ray and they wouldn't have had this PR nightmare. Look at them now....struggling just to get their new releases out on time because they are so far behind on the priority list with manufactures. As someone else stated, I'm sure there is other costs they could have avoided if they wouldn't have sold their soul to the devil.

Dreamworks is a whole nother deal however, they only released Shrek 3 and Bee Movie.....which probably would have not even been big sellers for Blu-ray. They made a smart choice, paramount however was short sighted. I really do think in some way they thought HD-DVD was going to last longer than it did. Because if they knew it was going to bomb so early this year I think they would have decided to not accept the bribe.

[Barnum]

Who really cares???? This is the way business works. Yet it keeps coming up over and over again. Companies pay for exclusives all the time. Sony does it, MS does it, Nintendo and on and on and on.

So many people think they are so business smart but in the end don't understand business at all. I am not trying to defend an action by any side but there are reasons why companies do things and since 99% of the public has no real clue what was going we can only speculate and chances are also wrong.

[Teazle]

Originally Posted by Kris Deering

The previous technology that everyone here is so quick to compare BD to didn't have the same playing field BD has. VHS was hardly a contender given the vast differences between DVD and VHS, and on-demand and downloads weren't even an option.

I would be very interested to here something approaching an argument or evidence on this point. "Vast differences" between VHS and DVD? Wildly implausible. As far as the consumer is concerned the main difference was one's on a disc and the other on magnetic tape. When DVD was launched it was only 4:3 and 480i.

The other main difference between VHS and DVD when the latter launched was the price.

[Barnum]

Originally Posted by X-Ninja

I do. If this is true - It could convince people to never buy a Toshiba product again (cough-me-cough)
Though, even if it isnt true, i would never buy a toshiba product.

I guess you wont buy from many companies since this type of thing is done in some manner everyday.

[Dynamo of Eternia]

Originally Posted by BluOgre

I put in the last two because there is no way they are EVER going to sale what they could have if they released them day/date with DVD. Now they are old titles and sales will be minimal. So these are just small projections of what these titles could have sold from Aug of last year to now. The cost to distriubutors for these titles is about 24 dollars. That's nearly 20 million in lost revenue. And then we are not even talking about catlaog and other small new releases yet. You say niche.....that's true but we are talking about a premium price for this "niche" product.

But part of the $24 price likely includes the cost of production, so that's not all pure profit. Plus, the point is that for those movies that didn't make it to Blu-Ray, many people who didn't have (or want) an HD-DVD player likely just sucked it up and got the DVD version. Your arguement would hold more water if the lack of Blu-Ray versions of these movies automatically meant a complete loss of sales of any kind in any format to people who would have bought those Blu-Ray discs, but that isn't likely the case. Money was still being made. Only the most die hard of die hard Blu-Ray fans seem to be of the mind frame that they will never buy another DVD again and will only buy movies on Blu-Ray. Many people (myself included) will usually opt for a Blu-Ray version if it's available, but if it's not, will still buy the DVD version of a movie that they really want to own because at the end of the day, PQ and AQ are secondary to just simply having a movie that they actually like and enjoy.

Again, look at the original quote in the first post in this thread. They were projecting less revenue for the year than what they had made the year prior, but then ended up with $22 million higher in revenue compared to the previous year because of the HD-DVD deal.

Clearly, at the time this projection was made, it was prior to the HD-DVD deal even happening, and it was likely based under the assumption that they would still be releasing movies in both Hi-Def formats for the entire year. Now, granted, projections aren't always 100% accurate, and they could have come out a little higher than they projected, but they also could have come out a little bit lower. The point being is that they clearly weren't putting some huge stock in Blu-Ray disc sales making some mind-blowingly huge impact on their revenue at the end of the year.

Look, I love Blu-Ray, I want it to flourish, I want it to become mainstream. I hate the idea of downloads, and I don't see anything truely better or more convenient than BD coming along any time soon. But, I'm also not so blinded by my appreciation for the format that I can't see the forest through the trees in a situation like this. The 'Pro-Blu' choice may not necessarily automatically be the best choice for every single person, company, etc. who has to make some kind of a decision that somehow involves the format in some way, shape, of form. Would I personally prefer the pro-Blu choice to be made if it means better things for the format itself? Absolutely, because that is in my best interests as someone who wants the format to do well. But can I blame a company for making a choice that is not in favor of blu if it's not the best one for them at that time? Not really. It is what it is.

In the grand scheme of things, Paramount is now going to Blu-Ray, they made money off of their HD-DVD deal, any damage to their reputation from a PR standpoint is minimal at best, and the only people really scoffing at them over the whole thing are die hard Blu-Ray fans like many around here, who only actually make up a small portion of the total amount of Blu-Ray users, who at this time aren't exactly a tremendously huge group to begin with.

If you want to go on pretending that the damage is bigger than it actually is, fine. But anyone here who assumes and pretends that there is some huge deterimental damage to Paramounts reputation that in reality doesn't exist is no better than the bitter HD-DVD fanboys who go around spreading FUD about Blu-Ray to try and prevent further adoption of the format.

[Maximus]

Originally Posted by BluOgre

Firstly it was a terrible decision both from a business and PR standpoint.

Business wise, let's look at the new releases alone they have missed out on for Blu-ray:

Blades Of Glory - 75k
Next - 50k
Transformers - 400k
Mighty Heart - 10k
Hearbreak Kid - 25k
Stardust - 25k
Strange Wilderness - 25k
There Will Be Blood - 50k
Cloverfield - 100k

No way for Transformers, that will sell whenever it is released.

The rest I couldn't say, but Transformers will probably sell more than that on Blu-ray.

The way I see it, Paramount got the best of both worlds, sure they didn't get the full $50m cash they wanted, but they did get $29m which is pretty useful. In no way did the number of titles they released exclusive to HD DVD warrant anywhere near a $29m payment, but they still got it.

On the Blu side, sure they pissed a few people off, but all in all, they have made more money this way than staying neutral.

If they had stayed neutral, I don't think the war would be over anyhow, so what happened worked out for the best. The only reason WB even considered going Blu-ray exclusive is because they saw all of the negative fall out from Pramount's move and decided they didn't want that to happen.

[hanser]

So by bribing Paramount to red exclusivity, HDDVD shoveled indirectly its own grave? Ironic. But sounds very plausible.

[Anthony P]

I just don't subscribe to the blind faith that it is a sure thing now that HD DVD is gone or the childish poking at "red ants" as if they were any worse than the zealots so often on display here.

the problem is that all you do is blind faith. A few months ago it was blind faith that Warner would go Blu early this year. It was blind faith that as BD gains support HD DVD titles will be drying out and that it will become harder (even through import) to get HD DVD titles. The problem is that you gave blind faith. You re4fuse to see what is happening around you, while the rest of us look, understand, analyse and then conclude. Is the future 100% predictable? no, but sometimes some conclusions are beyond obvious. Do I know if or when I will have lunch? no, do I know if or when I will have supper? no, but it would be dumb of me to say since I don't know what I will eat and when that I should assume I won't eat anything else anymore. Yes in theory it could happen, and I could die right here while typing this, but some conclusions are more obvious and something extremely big would need to happen to make them wrong. Some are just more obvious then others and there are four obvious ones in HT discussion

1) HD DVD never had a hope in hell of surviving for long
2) legal DL has no chance of becoming mainstream in the near future
3) (if) what ever legal DL does go main stream it won't be anything offered today
4) BD is and will continue growing fast until it reaches mainstream.

[Anthony P]

In the grand scheme of things, Paramount is now going to Blu-Ray, they made money off of their HD-DVD deal, any damage to their reputation from a PR standpoint is minimal at best, and the only people really scoffing at them over the whole thing are die hard Blu-Ray fans like many around here, who only actually make up a small portion of the total amount of Blu-Ray users, who at this time aren't exactly a tremendously huge group to begin with.

Paramount might be in a slightly different situation (since they are owned by Viacom and not a traded company) but in the end that 30M is a one time deal (like winning a few hundreds of dollars at the lottery) so it does not add much but since they where supporting BD (unlike Universal) and they stopped stating reasons that HD DVD had better chances because of bogus reasons, it totally ruins their credibility at making decisions. The question a potential investor would be asking themselves is can the guy in charge (and his team) make the right decision and have the company take the right direction for future growth. A 30M windfall, is a luck break, but let's face it, we all know they won't get it next year (there is no more HD DVD to pay them off) and will they make other very publicized blunders? And that is what any investor would ask themselves.

[dialog_gvf]

Originally Posted by Kris Deering

I would love nothing more than to have Blu-ray at the same level as DVD is now a few years from now. But I'm not going to just outright believe it is a sure thing. Despite what others here say about me, we all want the same thing. I just don't subscribe to the blind faith that it is a sure thing now that HD DVD is gone or the childish poking at "red ants" as if they were any worse than the zealots so often on display here.

Did Chicken Little want the sky to fall?

I'd be very surprised, given the need for premium HD equipment and the premium cost of the software, that BD could match DVDs rise at the mass adoption point. But, so what? Why does it have to match or beat DVDs rate to be declared a success?

If it is 1/3 BD and 2/3 DVD in five years, why would that be a failure? The CE, having made next to nothing on DVD for years and years, would be making something on that 1/3 share (success). And the studios would probably be making close to 50/50 profit (perhaps even better) out of that situation (success).

Has the bar for declaring success been raised to total obliteration of the format that proceeded it?

Can I declare cassette retroactively a completely failure?

Gary

[Kris Deering]

Originally Posted by dialog_gvf

Did Chicken Little want the sky to fall?

I'd be very surprised, given the need for premium HD equipment and the premium cost of the software, that BD could match DVDs rise at the mass adoption point. But, so what? Why does it have to match or beat DVDs rate to be declared a success?

If it is 1/3 BD and 2/3 DVD in five years, why would that be a failure? The CE, having made next to nothing on DVD for years and years, would be making something on that 1/3 share (success). And the studios would probably be making close to 50/50 profit (perhaps even better) out of that situation (success).

Has the bar for declaring success been raised to total obliteration of the format that proceeded it?

Can I declare cassette retroactively a completely failure?

Gary

Judging from things I read in forums? Yes.

Most here (and in most forums) think that BD has to be the next DVD to succeed, which I think is a BIG uphill battle.

Personally, I'd be happy with the same amount of support Laserdisc had, with the exception of price of course. There was no lack of titles, and studios catered to the higher end enthuasist with better video/audio and better supplements. They knew it wasn't going to be a mainstream item so they didn't "dumb it down".

I wouldn't have any problem at all with Blu-ray becoming a niche videophile format, as long as it was continually supported. I just don't want to see another D-Theater, SACD, DVD-A type thing just because it doesn't blow sales expectations out of the water.

[Clark Kent]

Originally Posted by Kris Deering

I wouldn't have any problem at all with Blu-ray becoming a niche videophile format, as long as it was continually supported. I just don't want to see another D-Theater, SACD, DVD-A type thing just because it doesn't blow sales expectations out of the water.

More Blu-ray units have been sold right now than the world wide total of D-Theater, SACD, and DVD-A lifetime units put together. Blu-ray has already blown way past Laserdisc as a home video format in terms of sales and player penetration. I will never understand the nostalgia people have for the Laserdisc format(and yes I owned a Laserdisc player).

[Anthony P]

I will never understand the nostalgia people have for the Laserdisc format(and yes I owned a Laserdisc player).

some people liked the fake prestige more then having movies to watch. They are forgetting they could not get all the movies and are romanticizing the few they did.

[Kris Deering]

Originally Posted by Anthony P

some people liked the fake prestige more then having movies to watch. They are forgetting they could not get all the movies and are romanticizing the few they did.

Sounds like someone that doesn't know much about laserdisc. There were PLENTY Of movie out for that format and ALL the studios supported it. Last time I checked there were over 44,000 titles released on laserdisc. But hey, I guess that is a "niche" format with lackluster title support huh?

But you just keep on poking. If it entertains you to think you're getting a rise out of me with your 11 year old banter, by all means keep going.

[Anthony P]

There were PLENTY Of movie out for that format and ALL the studios supported it. Last time I checked there were over 44,000 titles released on laserdisc. But hey, I guess that is a "niche" format with lackluster title support huh?

so you could get all the movies on LD? you are full of BS all the time. Yes there where a few but a real fan wants to have every movie he wants. And if they where not on LD you where stuck watching the VHS, and if they won't be on BD then we will be stuck watching on DVD and I, for one, want the extra quality.

[mjbethancourt]

And while I enjoy Blu Ray, it wasn't a mature of a product as HD DVD and Sony has said that it doesn't care that we all have to re-buy equipment to reach profile 2.0. Features like that were already available in HD DVD.

Re-buy equipment? Have you never heard of a firmware update?

The damage to Paramount is more serious than just upsetting people by favoring a bad format. I for one was quite irritated at having to pay inflated prices (for a short time) to get "out of print" paramount blu-rays, only to learn a month later that they would be back in the game soon. It's a breach of trust, it causes serious disillusionment. Consumers hold grudges over things like that, whether you want to tag them as "Blu-ray Kool-aid drinkers" or not.

Furthermore, many of you are seriously underestimating the lost revenue. Not only were they out of the Blu-ray business for what will be like six months, but they also quickly found themselves out of the HD-DVD business. Also, the data clearly shows that Blu-ray sales picked up rapidly once the format war ended. Had that happened sooner, who knows what Blu-ray sales figures would have looked like over the holiday season. They will never know how much money they really lost. And DVD sales were tanking over the last year, because people stopped buying THOSE waiting for the format war to end. They cost everybody a bunch of money. It was stupid.

Oh yeah:
44,000 Laserdisc titles? Where the crap did that number come from? Without some kind of evidence, I'd be very surprised if it was even a tenth of that number, and most of those are short documentary/educational videos.