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The HD Disc Format War

Feb 12th, 2007
News from the front lines

So here we are, ten months into the high definition disc format war.  Last spring, HD DVD took the early lead with more disc releases and three players.  The only Blu-ray Disc player available for months was the Samsung, initially marketed with defective firmware that caused its video to be soft and lacking in detail.  Toshiba managed to design and market not one but two generations of HD DVD players while the rest of the BD player manufacturers tried to debug their first generation designs.  Unlike the HD DVD disc producers, the BD camp initially was unable to produce dual-layer discs and did not have advanced video CODEC support in place for the format, relying on the arguably obsolete MPEG-2 video CODEC to compress HD transfers.  The BD camp also held back disc releases until a very few months ago when several new players came to market from Sony, Panasonic, and Pioneer. 

And then there was the game console strategy.  Sony chose to incorporate an internal BD player into each of its PS3 consoles.  Microsoft chose to offer an external HD DVD drive for its latest Xbox 360.  And before you can say “HDCP-compliant HDMI output port,” the whole complexion of the format war shifted.

It’s been reported that since the Xbox 360 was launched November, only 92,000 optional HD DVD drives were sold in North America by the end of 2006.  Contrast that with the 687,700 PS3 consoles sold during the same period.  Couple that with the report that 80% of PS3 owners plan on buying Blu-ray Discs, and we have set the stage for a dramatic turnaround.  Home Media Magazine is now publishing Neilsen VideoScan point-of-sales statistics for the format war.  Examining the last three reports reveals that for the week ending January 7th, for every 100 BDs sold, only 47.14 HD DVDs were sold.  The ratios remains in Blu-ray Disc’s favor for January 14th, when for every 100 BDs sold, only 38.36 HD DVDs were sold, and for January 21st, when for every 100 BDs sold, only 50.51 HD DVDs were sold.  That’s an average of 100:45.34 BDs to HD DVDs or a ratio of 2.2:1.  BD is gaining rapidly for overall market share as well.  So it would seem that Sony’s PS3 strategy might be paying off.

This came at no small cost to the electronics giant.  Sony’s PS3 division lost $442 million for last three months of 2006, a loss ascribed to the game console launch.  Those losses were offset by what I think may be attributable to the very fine SXRD rear and front projectors helping Sony earn a 10% growth to $21.4 billion for its displays.  And a very positive indicator of the growth of high definition is that HD-ready flat panel sales for the last quarter of 2006 doubled compared to the previous year.  And demand for 1080p resolution displays, in particular, increased by a factor of six, very impressive indeed.

Toshiba and Thompson, the manufacturers that produce HD DVD players, have reported that they had shipped approximately 175 thousand HD DVD players in 2006.  I can’t seem to find similar numbers for BD players, but by now, Sony has shipped over one million PS3 BD equipped consoles.  The exciting thing about those numbers is that they transcend the format war.  Let’s, for the moment, ignore the number of desktop BD players sold.  If we add the Xbox 360 drives to the desktop HD DVD players sold we have a total of about 267,000 devices capable of playing HD DVDs.  And as we ignore BD desktop players, we still have over a million PS3s capable of Blu-ray Disc playback with 80% of the ownership cited as having intentions of buying Blu-ray Discs, or about 800,000.  Those numbers are dwarfed by the size of the DVD installed base of over 122 million players sold since March of 1997, but please consider that in DVD’s first year - a time period almost identical to high definition discs’ first year - only a little more than 315 thousand DVD players were sold.  We now have 1,067,000 devices in the installed base capable of HD disc playback, and that doesn’t include BD desktop players and computers equipped with either BD or HD DVD drives.

So is high definition taking off?  I respectfully suggest that the answer is a definitive yes.  And is Blu-ray Disc taking the lead in the format war?  Once again, I would have to suggest a definitive yes. 

For HD DVD to stay in the game will require some killer releases.  But on that front, things are beginning to look a little worse.  You’ll recall that I reported that the HD DVD Promotional Group listed three high profile Steven Spielberg films on its Coming Soon List.  Alas, that was premature.  The Group has since issued an apology for our Contents List, “The inclusion in the January 29 update of our ‘Coming Soon List’ of three Steven Spielberg classics was an error on our part. The HD DVD Promotion Group expresses sincere apologies to Steven Spielberg, Universal Studios Home Entertainment and HD DVD fans for this mistake. We will endeavor to prevent any similar mistake and to provide accurate information.”

Spielberg is historically very conservative about releasing his films to a new format.  DVD early adopters and aficionados yelped for their favorite films by Spielberg and Lucas as the two filmic financial giants waited for sufficient players to have been sold to make the releases worth their whiles.  In other words, these savvy business people wanted to reap a handsome profit.  Neither filmmaker would help a home video format succeed.  I’m afraid we will have a similar wait, but if the numbers I just reporte are any indication, the wait may be shorter.

The adult entertainment (AE) industry isn’t helping HD DVD much either.  Kind readers have written to reveal that what AE calls high definition and what we know to be high definition are two different things.  So far, AE HD DVD releases are reported to have been shot originally in HDV, a format that offers resolutions of either 1280x720 progressive or 1440x1080 interlaced (as opposed to the full resolution of 1920x1080), but with real-time MPEG-2 compression to the camera's tape cassette.  That single-pass real-time compression may explain the halos and the softness on the disc I described to you in my report addressing whether the AE industry might affect the outcome of the format war.

I will try to remain format agnostic (despite some readers’ perceptions to the contrary).  I now have a review sample of the second-generation top-end Toshiba HD DVD player: the $1,000 HD-XA2.  I’m in the process of putting it through its paces, evaluating both HD DVD performance and its DVD scaling performance.  I’ll retest the internal audio decoder and look for the low subwoofer output problem I reported in a previous Viewpoint.  I hope to have that review posted within ten days as my thirteenth chapter of Mr. Blanding Builds His Dream Theater.