The High Definition Format War Continues

If you're in the market for high definition movie player you might be interested in this recent development. The struggle to win the High Definition format war isn't over yet but it does look like Blu-ray now has the upper hand.

Right before HD DVD's big press conference at the Consumer Electronics Show 2008, Warner sent out a press release that it would exclusively back Blu-ray, moving it away from format agnostic policy. This surprise move has sent the backers of HD DVD reeling, so much that all meetings with customers, analysts and press, and the press conference were cancelled by the HD DVD group.

"This panic-like reaction can only imply that the Promotion Group was caught unaware, and did not anticipate that Warner would go drop its support for HD DVD", said Carl Gressum, Ovum Senior Analyst. "It is more likely that the HD DVD Promotion Group was very close at getting the exclusive deal, and was on the verge of announcing it at CES", added Gressum.

A turn of the tide indeed and as with other exclusive format deals it is likely that there will be allegations of Warner Brothers receiving large sums of money to be Blu-ray exclusive, and very favourable T&Cs. Either way, Warner Brothers have played its hand perfectly, and most likely received the most favourable format contract of all the studios.

There is a lot of speculation whether this is the end of HD DVD. It is not, but we are getting dangerously close to a 'chapter 11' for the group. If the other HD DVD supporting studios now decide to drop HD DVD the situation will turn dire, and HD DVD could become more of a replacement to DVD on the PC client than as a movie distribution playback format.

How did it go so wrong? There are three areas where HD DVD failed. In a June 2007 report, Carl Gressum, highlighted amongst other the following for HD DVD:

1. Inclusion of white labels and 'China brands'
   Even though HD DVD has a cost structure better suited for low cost vendors, the format failed to actually bring these vendors on board, and to bring products to market in large scale.
2. PC distribution
   PC vendors operate on razor thin margins, and thus avoid costly components as long as possible. The format therefore had an opportunity to bring on board PC vendors to boost shipments and the install base of HD DVD playback devices. This also largely failed.
3. A-brand consumer electronic vendor support
   Toshiba was the main A-brand CE vendor backing the format with product, and the format failed to gain the support of other well known consumer electronics brands. 
4. Win over BD-camp in Hollywood
   Here the format succeeded with Paramount and DreamWorks. However, at CES it lost the support of Warner Brothers.
5. Defend support from the small content owners
   HD DVD was often cited as the favoured format for small content owners and content distributors, due to the cost structure of the format. However, it failed to ignite the markets in Europe and in Asia. These are huge markets, however the industry has so far taken a 'wait and see' until the format war settles down in the US.

Source: Ovum

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