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Blu-ray Disc vs. HD-DVD

Feb 14th, 2005
Who's scoring points?

In the late '90s, the competing proponents of the various incarnations of DVD came together to negotiate, compromise, and agree on one format standard. When the discs hit the market during the seven-city rollout of '97, not all studios were on board - many foolishly got behind the short-lived Divx - but at least DVD as we came to know it had the consistent support of consumer electronics manufacturers. Alas, as you all know, that is not the case for the introduction late this year and early next of high definition DVDs. Battle lines have been drawn.

As we report on product developments and discuss our looking forward to assessing player performance and high definition disc quality, you may be asking yourself, which player should I buy? HD-DVD or Blu-ray Disc? Considering that players are expected to cost initially between $900 and $1000, purchasing one of each is an unpleasant prospect, and buying into the more likely winner takes on a certain urgency. Let's take a quick look at each and see if it's possible to figure out where to place our bets.

Each format seems to be embracing the same advanced video CODECs: VC-1, a variant of Microsoft's WMV9 compression algorithm, and H.264 based on MPEG-4 (Blu-Ray will also support the familiar MPEG-2). So there doesn't appear to be any CODEC advantage (no pun intended).

Storage capacity is another matter. A single-sided HD-DVD holds 15 Gbytes; a double-sided disc holds about 30 Gbytes. Blu-ray holds considerably more, 25 and 50 Gbytes. It came as no surprise when Superbit DVDs demonstrated that picture quality increases as compression decreases, but to support lower compression requires storing more video bits. Since Blu-ray has the higher storage capacity, it offers the prospect of lower compression and a higher bit rate. So even though both formats' advanced CODECs tend to fail more gracefully than standard definition DVD's MPEG-2, I expect better image quality from Blu-ray. Blu-ray's larger capacity also holds out the hope that one or both of the lossless audio compression schemes announced by Dolby and DTS may be applied. So Blu-ray Disc should make possible improved sound quality without sacrificing visual quality as the bit budget is increased for the audio. Score two for Blu-ray Disc.

As far as studio support is concerned, little has changed since I wrote my High Definition DVD Dilemmas piece. Warner Home Video, Universal Studios Home Entertainment, and Paramount Home Entertainment have announced their support for HD-DVD. Sony Pictures Home Entertainment, MGM Home Entertainment, and Walt Disney Co. will release on Blu-ray Disc. 20th Century Fox Home Entertainment has yet to commit. Since the most popular films have the power to drive a format forward, I took a quick look at the top one hundred films based on domestic gross to gauge how these studios might affect the outcome.

TOP 100
HD-DVD Studios
Number of Titles
Domestic Gross $M
Blu-ray Studios
Number of Titles
Domestic Gross $M
Warner
21
4970.40
Sony
7
1806.40
Universal
15
3530.60
MGM
3
536.60
Paramount
13
3114.70
Disney
19
4261.20
      
Sub-Totals
49
11615.70
 29
6604.20
      
Fox potential
17
4491.30
 17
4491.30
Totals
66
16107.00
 46
11095.5
20th Century Fox Home Entertainment has 17 titles in the top one hundred, representing $4.5 billion in box office receipts. If Fox chooses to release those films on HD-DVD, 66 of the top 100 will be available on that format, representing an aggregate box office of $16.1 billion. Blu-ray will be left with 29 titles representing a total box office of $6.6 billion.

If Fox chooses to release its films on Blu-ray Disc, 46 of the top 100 will be available on that format, representing an aggregate box office of $11.1 billion. HD-DVD will be left with 49 titles representing a total box office of $11.6 billion.

So if Fox embraces HD-DVD, score one for that format. If Fox embraces Blu-ray Disc, there is no clear advantage. At the moment, HD-DVD seems to have the edge, but without Fox declaring, the studio support advantage hangs in the balance.

No studio is committed to an exclusive commitment. (The exception, of course, is Sony Pictures Home Entertainment; its parent company has a large stake on the hardware side.) So based on the ultimate popularity of one format or the other, any studio can switch sides or offer content on both. But initially, the unfortunate reality seems to be that to replace your favorite films on standard resolution DVD with its high definition successor, it looks like you'll have to buy two players. I wonder how long it will take for a clever consumer electronics manufacturer to offer a combo player, one compatible with both HD-DVD and Blu-ray?

HD-DVD may offer an economic advantage. The manufacturing process is so similar to standard definition DVD that converting a production line from one to the other is claimed to take mere minutes. Blu-ray will require an investment in new manufacturing equipment, which may impact Blu-ray Discs' cost to the consumer as production facilities are amortized. There are early indications that HD-DVDs will be sold at a $5 to $10 premium over conventional DVD. (In my opinion, that premium is a strategic error. Since HD-DVD has been touted as using the same production lines as standard definition DVD, a price premium seems unjustified.) If the Blu-ray camp decides to match HD-DVD's price structure to be competitive, neither format has an advantage. But if Blu-ray passes the cost of retooling on to the consumer, score one for HD-DVD. Regardless, pricing high definition DVD above standard definition DVD might discourage early acceptance.

HD-DVD may have a timing advantage. Blu-ray Disc introduction is reported to have been delayed until the first quarter of 2006. HD-DVD is scheduled for fourth quarter 2005 introduction, in more than enough time for the holiday buying season. Marketplace momentum can be a wonderful thing. And considering the initial player prices, there may not be enough discretionary funds around to buy into both formats. Score one for HD-DVD.

And then, of course, is the issue of compatibility. I won't belabor the point I made in my High Definition DVD Dilemmas piece. But if only one format's players have full bandwidth, full resolution, component video outputs, then all the early adaptors who own HD-ready displays requiring analog signals will only buy the player with the signals they need. That would be very significant. Some early reports from CES indicate that HD-DVD players will have only an HDCP-compliant HDMI output, no analog. If this turns out to be true (take back a point from HD-DVD), Blu-ray Disc could then win sales from the owners of existing analog-only HD-ready displays with ease, simply by including high definition component video outputs on its players. That specific combination of circumstances could spell doom for HD-DVD. But without any verifiable information about the nature of the outputs on any high definition player, no points can be awarded to (or taken away from) either side.

If you're very uncomfortable with the uncertainties and you're not impatient, you could wait for either player prices to come down or for a combo player to come along. And while you're waiting, the marketplace eventually will point the way. After all, when DVD was introduced and during its ascension as the fastest growing consumer product in history, it co-existed with VHS. As consumers embraced DVD, the pressures of the marketplace drove VHS sales down, and we can expect that as a medium for bringing motion pictures into the home, VHS soon will become extinct. This is very Darwinian. I believe the same kind of evolution will take place as we transition from standard definition DVD to high definition DVD. The fittest of the two high definition formats will survive, and standard DVD will find itself moving down the food chain. The downside of waiting is that without sufficient market success, high definition DVD could become a niche product, with limited sales and high prices. I'd hate to see high definition DVD become another Laserdisc.

Of course, one of the most frustrating prospects of the transition from standard definition DVD to a high definition DVD is the need to have to buy again the films that are already in our libraries. How many times will we be expected to send our hard-earned cash Hollywood's way for precisely the same films? Is high definition DVD a good investment? One that will last?

Moore's Law has taught us that technological progress is wonderfully relentless, but a higher resolution future format is unlikely to be brought to market for a very long time. HD-DVD and Blu-ray Disc standards are incestuously related to the broadcast standards that define the display modes of HD-ready displays. And the success of high definition DVD is dependent upon HD-ready displays' market acceptance; this includes televisions, monitors, and projectors - both front and rear. For a higher resolution format to become economically viable, a huge installed base of appropriate displays must develop. That's simply not going to happen any time soon; consumer acceptance of today's high definition products has been slower than the consumer electronic industry and the FCC would have liked. Fortunately, high definition DVD most likely will prove to be HD's killer-app. I think high definition DVD will help the transition from analog television to digital in ways not yet appreciated. I certainly won't discount the notion that eventually a four thousand line video format may replace today's roughly thousand-line format for high definition, but I expect HD-DVD or Blu-ray will have a longer lifetime than standard definition DVDs.

There doesn't seem to be a clear winner, yet. I expect that to review high definition DVDs, we at DVDfile will have to purchase two players. Sigh. If my expectation for the higher image quality of Blu-ray Disc comes to pass, I would have to place my hopes for the success of that format. If the quality of the images from the two formats is indistinguishable, then we may have no choice but simply to sit back and allow Darwin to prevail.

Previously published related articles:

High Definition DVD Dilemmas, January 2, 2005