Despite Format War, High-Def DVD Follows DVD Launch Experience

If you're waiting for either Blu-ray or HD DVD to emerge as the standard for high-definition DVDs, don't hold your breath. There's no end in sight to the battle between these formats, judging by comments made during this week's DisplaySearch HDTV Conference.

Studio support is now split about evenly between Blu-ray and HD DVD, thanks to a recent decision by Paramount and DreamWorks to release movies only in the HD DVD format. By the end of the year, there should be about 400 titles available for each format. So consumers who buy a player now will have to live with the fact that some movies won't work on their player, and they could be left out in the cold if the industry ever unites behind one format and it's not the one they chose.

This uncertainty has many consumers waiting on the sidelines. A recent survey by DisplaySearch's parent company, NPD Group, showed that only 11 percent of the respondents said they were very or extremely likely to buy a high-def DVD player in the next six months, compared to 66 percent who said they wouldn't or were unlikely to buy one. About 23 percent were fence-sitters who said they were "somewhat likely" to buy a new player.

More than half the respondents said they were waiting for a clear winner to emerge in the format war, but that's not the only thing holding them back. Many said they see sports, not movies, as the killer HD application, and they get that from broadcast TV. Seventy-two percent of the consumers surveyed said prices were too high, while 70 percent said they don't need to replace their standard DVD player. The availability of lower-priced upscaling DVD players was another factor mentioned.

The good news is that satisfaction was very high among those who've taken the plunge. Nine out of ten owners said they were highly satisfied with their high-def player. The main source of dissatisfaction was a desire for more movie titles. Asked why they chose a particular format, about half the Blu-ray purchasers cited technological superiority, while a similar percentage of HD DVD player buyers said a cheaper price was the reason.

The research firm expects sales of high-definition DVD players to total 1 million units by year's end. (That doesn't include game consoles such as the PlayStation 3 and the HD DVD add-on for the Xbox 360.) That represents only 5 percent of total DVD player sales, but about 26 percent of dollar revenues. That's because the average selling price of a high-def player is $433, more than four times that of a standard DVD player. The company believes sales will grow to 5 million units by the end of 2008, though it didn't indicate which format might have the lion's share.

The topic of interactivity and the ability to connect to the Internet was debated, during a panel discussion that included executives from Microsoft, Warner Bros., Sony Pictures, Paramount, Disney and Pioneer. Not surprisingly, backers of HD DVD—which makes these features mandatory in all players—saw this capability as a major advantage, while Blu-ray backers said high-def picture quality and high-resolution audio quality were more compelling reasons for buying a high-def player.

Members of both camps acknowledged that one day packaged media will be surpassed by digital delivery of content, but that's still a ways off. High-def DVDs can be used as digital training wheels to get consumers used to consuming online content. "We can use HD discs [with interactivity] to move into digital," said Warner Bros. executive Dan Silverberg, "Consumers will get a quicker tutorial into video-on-demand and other things by owning an HD DVD or Blu-ray player."

In an interesting side note, Sony Pictures' executive Don Eklund for the first time confirmed that Sony's PlayStation 3 game console, which has an integrated Blu-ray drive, will receive an upgrade that will enable features such as Internet connectivity and picture-in-picture, something no current Blu-ray players can do. The PS3 comes with an Ethernet port and 40 or 60 GB of memory, key components required by these new features. I'll be posting more info about the new mandatory Blu-ray specifications that take effect at the end of the month (Oct.31st) in a separate post.—James K. Willcox