CNBC: HD DVD: No Way For It To Come Back Against Blu-ray

[GreenMotion]

http://www.cnbc.com/id/22508081/site...t%7C&par=yahoo

HD DVD: No Way For It To Come Back Against Blu-ray
By Julia BoorstinCorrespondent
cnbc.com
| 04 Jan 2008 | 05:09 PM ET
For years, everyone's been waiting for an indication that either Sony's Blu-Ray or Microsoft and Toshiba's HD DVD format would emerge triumphant and the other would go the way of the BETA deck.

Today, finally, a crucial tipping point in this battle in which the $20 billion dollar home video market is at stake--Warner Bros has decided to distribute its high definition DVDs exclusively in the Blu-ray format, ditching its previous plan to distribute in both HD DVD and Blu-Ray.


This gives Sony's Blu-ray format the critical mass it needs to become the standard. Blu-Ray currently has exclusive distribution of content from Sony (obviously), plus Disney , 20th Century Fox and Lions Gate . Now HD DVD's only exclusive distribution parters are Universal Pictures and Paramount Pictures/Dreamworks (which was reported paid hundreds of millions of dollars to side with the format).

Hollywood must be breathing a huge sigh of relief (I think I can hear the Disney and Fox execs from my office). The $20 billion DVD market needed a successor to the aging format, and now the fact that the Blu-ray format is the clear leader it's not just a huge win for SONY, but also a crucial win for the movie studios.

All of Hollywood needs a format to win, and fast. The longer the battle dragged on the harder it would be to transition that $20 billion home video market, and the more likely that that revenue stream dry up.

On the flip side, this is bad news for Microsoft and Toshiba, the two main proponents of the HD-DVD format. They were counting on the lower price of HD DVD players to tip things in their favor, figuring if they could sell players for $150 it wouldn't matter that Sony's PlayStation 3s, which cost hundreds more, had a Blu-ray player embedded, and that their format would win.

At this point I think there's no way for HD DVD to make a comeback. The question now becomes, how quickly will Universal and Paramount/DreamWorks start distributing in Blu-Ray?

This holiday shopping season was considered crucial in determining which format was more popular, and though I'd suspected that Warner Bros. was going to make this announcement, as recently as yesterday the PR department was saying they had no announcements in the works, so this was a last minute decision.

I'm interviewing Kevin Tsujihara, the head of Warner Bros. home entertainment division. In the years that I've known and interviewed him, he's always been considered a leader in the space, pioneering Warner Bros. digital distribution. Executives across the industry look to him for guidance on the future, and I'm dying to hear what he has to say!

Questions? Comments? MediaMoney@cnbc.com

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[Banjo]

Originally Posted by GreenMotion

This gives Sony's Blu-ray format the critical mass it needs to become the standard.

Gee whiz, why do people keep assuming it's Sony's format? Didn't they ever hear of the BDA?

[kiskiboy97]

How will Jim Goldman spin this one?

[gandley]

Public perception is everything, HD DVD will be taking a bath right now

[turfman1964]

Does anyone think Universal will go at least neutral in the next 6 months?

[Verbal]

Originally Posted by kiskiboy97

How will Jim Goldman spin this one?

First question that popped into my mind.

For the record, I work in the news department of a television station. I've informed our producer of the importance of the Warner story, and it'll be heading up our consumer news segment.

[sj001]

Great article... but I feel pissed off everytime someone is so ignorant as to say "SONY'S format". It's the BDA's format... damnit!

[vladittude0583]

Originally Posted by Banjo

Gee whiz, why do people keep assuming it's Sony's format? Didn't they ever hear of the BDA?

I believe it was Sony that initiated Blu-ray, therefore, they are primarily credited for.

[aygie]

Originally Posted by vladittude0583

I believe it was Sony that initiated Blu-ray, therefore, they are primarily credited for.

Sony and Panasonic? cant remember, better check my sig!

[Bullseye]

Is NBC tied in with Universal. Maybe they will announce neutrality at CES.

[Proteus]

Originally Posted by Banjo

Gee whiz, why do people keep assuming it's Sony's format? Didn't they ever hear of the BDA?

I agree.

Both Panasonic and Phillips have a larger stake from what I understand (or was it Pioneer.. one of the other P's anyway).

Sony just stepped up first with the PS3 to unleash Blu-ray on the world on a large scale (not to discount early standalone efforts).

On another note, I do find it interesting that CNBC seems to be spending the most time covering this and spreading the news of HDDVD's demise. I would have expected news sources less close to HDDVD to do this... Could they be setting up a favorable environment for their own announcements? Hmm...?

[mystiksuicide]

I give Universal 45 days before they first go neutral and 6 months before they are exclusively blu. The big question is Paramount can they get out of the 18 month contract?

[Blubaru]

Originally Posted by turfman1964

Does anyone think Universal will go at least neutral in the next 6 months?

I think there is a very good chance that they will go neutral in the next 10 days.

[common_sense]

This song is for the hd-dud losers.

http://www.youtube.com/watch?v=cGqroT1FZ5Y

[quetzalcoatl]

Originally Posted by mystiksuicide

I give Universal 45 days before they first go neutral and 6 months before they are exclusively blu. The big question is Paramount can they get out of the 18 month contract?

I think we will see the old game of "last one at the table gets stuck with the bill."

[frank_t]

Originally Posted by turfman1964

Does anyone think Universal will go at least neutral in the next 6 months?

Who knows? I suspect there are complex relationships (read: legal) between MS, Tosh, Uni, and Paramount that can't simply be undone.

It's possible that Uni may come forward with a "Physical media is dead. Downloads are the future" response and just not bother with Blu. But that would be stupid. The infrastructure simply can't handle the bandwidth HD content would require.

Look at Comcast and other ISPs already throttling users who transfer too much. Throw a huge amount of HD content into the mix and we have a disaster on our hands.

--

Maybe we'll get some insight into those rumored "out clauses" that paramount has?

[Clark Kent]

This decision by Warner is a massive blow to Microsoft and the Xbox 360 as a videogame console. Microsoft only got into this format game because they feared if Blu-ray was the sole market choice for HD that it would put the Xbox 360 at a massive disadvantage long-term against the PS3. It would not surprise me if we see a fully integrated Xbox 360 as BD player within 18 months. Microsoft is not going to throw good money after bad.

[Proteus]

Maybe the 'big announcement' by Gates at CES isn't an HDDVD in the 360 but a Blu-ray player?