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Research, Research, and Research

Oct 1st, 2007
And what about HD Adult Entertainment

Recent Surveys and Analyses

Forrester Research Inc. continues to examine the format war and consumer attitudes and has come away with some troublesome conclusions.  The firm believes that the war will rage for another year and a half before we can expect any resolution.  The primary cause is consumer apathy provoked by uncertainty.  Consumers, reluctant to back the wrong horse, don’t want to invest until either the war comes to an end or prices fall. 

Its recent report states that the two camps have “been fighting what seems to be a war of attrition for consumers’ hearts and minds.”  At stake, of course, is a contracting $24 billion DVD market that’s ripe for revitalization by the next great thing: HD on disc.  Forrester has always maintained that Blu-ray Disc would be the ultimate victor, but the firm believes that the Blu-ray camp needs to reduce prices.  Since the only fundamental hardware difference between a BD player and an HD DVD player is the optical head (each with a blue-violet laser diode), I’ve always wondered why BD players are more expensive.

Forrester is quite specific, “Blu-ray needs to offer a viable hardware model at the $250 price point by Christmas 2007.  The Blu-ray camp must also stave off further studio defections, and employ more aggressive promotional tactics to counter HD DVD’s recent momentum.”  The firm maintains that typical HD-ready display owners are only willing to spend about $200 for a new HD disc player.  The firm contends that the war is Blu-ray Disc’s to lose if that camp doesn’t get more price competitive.

The NPD Group has also done some recent research (a little more about that report later) and has concluded that a lack of new, highly popular titles is hindering the acceptance of HD on disc.  So let’s take a look at . . .

The Fourth Quarter

Consider the twenty highest grossing films of 2007 being released in the critical fourth quarter. In order of box office earnings (shown in millions) they are: Spider-Man 3, $337, 10/30, Sony, BD; Shrek The Third, $321, 11/13, DreamWorks, HD DVD; Transformers, $312 , 10/16, DreamWorks and Paramount co-production, HD DVD; Pirates of the Caribbean: At World’s End, $309, 12/4, Buena Vista, BD; Harry Potter and the Order of the Phoenix, $289, 12/11, Warner , BD/HD DVD; The Bourne Ultimatum, $216, 12/11, Universal , HD DVD; Ratatouille, $203, 11/6, Buena Vista, BD; The Simpsons Movie, $181, 12/18, Fox, BD; Live Free of Die Hard, $134, 11/20, Fox, BD; Rush Hour 3, $133 , 12/26, New Line, BD; Fantastic Four: Rise of the Silver Surfer, $132, 10/2, Fox, BD; I Now Pronounce You Chuck and Larry, $119, 11/6, Universal, HD DVD; Ocean’s Thirteen, $117, 11/13, Warner , BD/HD DVD; Hairspray, $116, 11/20, New Line, BD; Superbad, $111, 12/4, Sony, BD; Evan Almighty, $100, 10/6, Universal , HD DVD; Meet the Robinsons, $98, 10/23, Buena Vista, BD; The Santa Claus: The Escape Clause, $85, 10/20, Buena Vista, BD; 1408, $72, 10/2, Weinstein , HD DVD; and, Surf’s Up, $59, 10/9, Sony, BD.  (The two New Line releases will arrive on HD DVD in 2008.)

Twelve are BDs with an aggregate box office of $1.898 billion.  Six are HD DVDs with an aggregate box office of $1.140 billion.  And there are two format agnostic releases with an aggregate box office of $406 million.

So even with Paramount and DreamWorks accepting their financial incentives and going HD DVD exclusive, and ignoring the two format agnostic Warner titles, the BD camp has a 2:1 numerical advantage and a 1.67:1 film popularity advantage based on box office.  Advantage Blu-ray Disc.

These figures should improve BDs lead in disc sales of 66:34 year to date (BD to HD DVD was 61:39 for the week ending September 16th).  And, if The NPD Group is correct, might stimulate some hardware sales.  But will consumers respond to these visual and aural riches by buying high definition players for the holidays?  Returning to that NPD Group research report, it sheds disturbing light on that question. 

The research company polled 5,500 HDTV owners about their awareness of high definition discs and their plans to purchase players.  73% expressed satisfaction with their DVD viewing experiences (they don’t know what they’re missing).  52% were aware of the two HD disc formats, but only 11% are planning on buying an HD disc player within the next six months.  62% are waiting for price reductions.  (They can apparently afford to buy expensive HD-ready displays but are reluctant to take full advantage of them with the best sources of HD content available today.  Odd.)  I was surprised to learn that only 20% of the respondents learned of HD disc through family or friend; I would have expected that number to have been higher.  Perhaps the influence of sites proselytizing the new formats, as they did ten years ago with DVD, has diminished.  Hmmm.

What has the Adult Entertainment Industry done for the format war lately?

A quick look on the Web reveals that there are now about sixteen adult titles on HD DVD and only about three on Blu-ray disc.  Advantage HD DVD.  But that rather pathetic numerical showing would seem to indicate that the adult entertainment (AE) Industry currently is just testing the waters.  Digital Playground seems to be leading the pack with the largest number of HD DVDs released and they have a few more in the pipeline.  I’ve speculated about the potential of AE to be more immediate and involving in high definition.  And I’ve compared AE’s influence during the VHS versus Betamax battle to this format war.  But so far, there are an insufficient number of titles to have an effect.  And then there is the issue of technical quality.

Since it’s the quality of the presentation and how it affects the viewing experience that might influence buyers, over the course of several months I also reported on three AE releases, two HD DVD and one BD.  The earliest suffered from severe edge halos and was soft, characteristics that would negate the advantages of HD.  But image quality improved as AE studios became more familiar with the two new formats.  Digital Playground recently sent me its latest, Sexual Freaks, and I took a critical look.

The disc is essentially a handful of sexual encounters punctuated by fantasy elements to spice it up; it features Digital Playground’s most popular contract player, Jesse Jane.  The edge halos that contaminated the studio’s earliest HD DVDs seem to have been banished and the level of detail can be quite impressive; that imparts a sense of immediacy and involvement lacking in lower resolution presentations.  The bad news, however, is that the director chose to emphasize the fantasy element visually.  The images have the distinct appearance of overexposure (no pun intended).  The brighter end of the video dynamic range is exaggerated, and a filter was used to create the illusion of glowing whites.  As a consequence, on high contrast edges the bright areas glow and cast an entirely different kind of halo into the dark areas.  They are translucent and misty.  It’s like the appearance of oncoming headlights on a foggy night; the lights aren’t distinct but are surrounded by an ethereal glow.  And that impedes the illusion of immediacy and intimacy that higher resolution can provide.  I wonder if it was used to disguise skin imperfections.

Director Robby D. Fix also suffers from the standard definition syndrome.  Instead of taking advantage of 1080p’s six times greater resolution, he composes far too many shots in extreme close-up, seemingly compensating for 480p’s reduced definition.  This is most likely because the same material will be released on DVD, the visuals down-converted from the HD master.  Until the cameras are pulled back a bit and compositions are designed for the revealing nature of HD, the viewing experience won’t be completely satisfying on large HD displays.  The technical solution could be composing for the big screen and then cropping and down-converting for DVD rather than exclusively down-converting. 

So AE isn’t quite there yet.  Neither the quantity nor the nature of the releases will have any significant effect on the format war.  But as the installed base grows and if AE responds appropriately, a synergistic effect could make the AE Industry more influential.

Parting Thoughts

It’s unlikely that either Shrek The Third or Transformers will give HD DVD the lead in the format war during the holiday season.  BD is most likely to retain its lead and score substantially with the greater number of big films in the fourth quarter.  The AE Industry is being cautious, releasing HD content slowly, and too often with material that’s been shot with standard definition in mind; so far, its influence is negligible.  HD DVD retains the price advantage; and at least one research firm believes that the BD camp must respond with less expensive players to survive. 

In another recent article, it was reported that Paramount and DreamWork’s decision to go HD DVD exclusive caused some smaller, independent film studios to pull back from a BD exclusive contract.  They were frightened that the tide might have turned and instead chose to wait more before making a commitment.  Small independent studios simply don’t have the funds to author for both formats.  This is just another indication of the destructiveness of the war; add that to stimulating consumer confusion and apathy.  This writer finds the prospect of a prolonged war disheartening.