When I say “the big dog,” I'm actually not talking about Blu-ray. I'm talking about Wal-Mart.
Back on April 26, 2007, I wrote a Creative Cow blog post with the same title as this article, and said that Wal-Mart would be the one to decide which hi-def DVD format would win.
Player sales wouldn't decide it. Not disk sales of one format or the other. Not porn.
You already know about The Big Announcement that came on the heels of The Other Big Announcement, so Toshiba apparently thinks I was right on the money.
Ironically, when I wrote my blog post about the power of Wal-Mart last April, the word was that Wal-Mart had invested heavily in HD DVD: $100 million, for 2 million players from the Chinese manufacturer Fuh Yuan at $50 a pop. Sell 'em for $99 each, the rumor went, and game over.
Needless to say, Wal-Mart and Fuh Yuan vigorously denied the rumor. But you can be sure the folks from Toshiba and the Blu-ray camp have been all over Wal-Mart for a long time. Everyone involved has to have seen this coming for a while.
In fact, it appears that Toshiba had been planning their announcement for a while. The only question was when.
Wal-Mart's announcement was the nuclear anvil that blew the camel and its back into oblivion, but it came on the heels of others: Target (the #2 US retailer), Blockbuster, Circuit City, Best Buy, Netflix...
Maybe the one that really took the wind out of their sails (and sales) was Woolworths. A company that most of thought was DEAD tells you you're finished? Ouch!
Oh wait. The US Woolworth chain really IS defunct. The announcement a couple of weeks ago was actually from the UK chain with the S at the end of their name. Okay, a little less humiliating than having a DEAD retailer throw down on you.
Unless you're Olivier Van Wynendaele, the European assistant general manager of Toshiba’s Consumer Products Division, and you say on January 28th, “While we’re disappointed by Woolworths’ decision, it is extremely early to spot which format will eventually win.”
Blu-ray. Rhymes with DOA.
That's not true anymore of course, but the victory of Blu-ray wasn't always seen as inevitable. Quite the contrary, some saw it as inevitably doomed.
Joe Kane's are among the industry's most respected peepers. Formerly the chair of the SMPTE working group devoted to calibrating studio monitors, he created “A Video Standard,” the first comprehensive video description of NTSC -- on Laserdisc!
It included calibration tools that installers like me relied on back in the day, to ensure the highest quality, most realistic and consistent images possible....but it was primarily aimed at consumers, to educate them about how good an NTSC image could look at its very best.
And he HATED Blu-ray when it first appeared. The MPEG compression was so nasty that he concluded that studios either didn't care what consumers got, or couldn't tell the difference between good compression and nasty compression. Either way, he concluded, “It is my personal belief that Blu-ray is all about greed.”
He was far from alone in this. ProjectorCentral.com has long been an advocate for the highest quality displays, and not just the ones they sell. As a result, their website has been a great resource for everything HD. In July of 2006, they posed the question, “Blu-ray: Can it survive?” It's still worth reading, because so many of the reasons stated for HD DVD's superiority came to be even more true for Blu-ray.
It's one reason Kane said in January 2008, following the Warner Brothers announcement that they were switching to all Blu-ray, that he's disappointed that the war is over so soon. For that matter, he's disappointed that more people didn't see that the war was the best possible situation, because it forced each format to respond to the other, adding new features in a drive to come out on top.
One of the examples that he gave was interactivity provided through internet connections, originally an HD DVD-only feature that was later added to Blu-ray. When the top selling hi-def DVD was 300, the Blu-ray version outsold the HD DVD version 3:2. But among the HD DVD users, two-thirds of them connected to the internet for content and experiences unavailable to Blu-ray users.
Blu-ray has since added that feature as a result of competition.
One more irony. Michael Bay (Bad Boys, The Rock, Armageddon, Pearl Harbor) has been Blu-ray's most visible and vocal supporters of Blu-ray...but the highest selling hi-def DVD of any format so far is currently his film “Transformers,” available exclusively on HD DVD.
He was inititally so upset by this that he declared on “Shoot for the Edit,” his official website, that he wouldn't helm TF2. He softened his position the next day.“ [A]t 1:30 in the morning I posted - nothing good ever comes out of early am posts mind you - I over reacted.”
Among the reasons why he was mellowing? “[T]oday I saw 300 on HD. It rocks!”
(I absolutely love his passion and his candor – including his public admission of his change of heart – which are much to be admired and emulated. Also gotta love that he does some of his best work on a peer-to-peer forum.)
Nevertheless, he says, “My films finished in Blu-ray are better - more true.” Joe Kane says that the new advantage in Blu-ray's picture is a direct result of the format war.
I'll give Michael Bay the last word on the subject. As he noted on January 4, six weeks before The Big Announcement, “..whatever Wal-Mart pushes – wins.”
(Did I mention that I love this guy? Be sure to read his posts linked above. And this one called 'Blu-ray Bay." While you're at it, read this one. This one too.)
What if they gave a victory and nobody came?
SD DVD sales are still blowing away both hi-def formats combined. For all the hub-bub notwithstanding, the gap is amazing. I'd LOVE to be corrected on this, but the best number I can find for total hi-def DVD sales as of Octoberr 27 '07 is 5 million for the two formats combined.
Five million? In just under 2 years?
Here in one of the slow weeks of the year, the top-selling DVD is "Snow Buddies."
Heard of it before? Me neither. It's a direct-to-video sequel to "Snow Dogs," and it moved 1.23 million units.
The top seller before that was "Game Plan," with 1.1 million units. "3:10 to Yuma" another 1.2 million."Resident Evil: Extinction," a few units short of a million.
See where I'm going with this? Throw in "Good Luck Chuck" with another 600,000 units or so, and you've topped all the Blu-ray and HD DVD titles combined since their introduction in mid-2006.
Let's compare the SD and Blu-ray sales of a single, huge title, “Pirates of the Caribbean: At World's End.” Even though it was released on December 9, it became the best-selling title of the year, selling 8.5 million units in its first week. Nice!
Blu-ray? 160,000 units. SD sold 53 times as many units. Not 53%. Fifty three TIMES as many. But the Blu-ray sales were being touted as a triumph. This is indeed the best SD to HD ratio of any title I've seen so far.
Let's put this is in the context of the Netflix "all Blu-ray" announcement.
Check it out yourself - 90,000 DVD titles, and "nearly 500" of 'em on Blu-ray.
You might say, wait, there'll be more. I have no doubt there will be...but let's say that 500 new Blu-ray titles show up at Netflix next month. That'll make 1000. Only 94,000 to go.
So let's say 1000 come in April. That's 2000 Blu-ray titles in stock.
That feels good, so let's say Netflix adds 3000 new Blu-ray titles in May. That's 5000 Blu-ray titles in all.
Now let's add 5000 new Blu-ray titles EVERY MONTH after that. It would take 45 more months for Blu-ray titles to catch up to SD DVDs...just about exactly 4 years from now...
...if not one single new SD DVD title is released between now and 2012.
There are 2 problems with my math. The first is huge: as of February 19, '08, the total number of Blu-ray titles is just over 450. Which means that with “nearly 500” Blu-ray titles, Netflix appears to have every single one of them!
The pace of Blu-ray releases will accelerate, no doubt. But while at least one particularly optimistic booster claims it will be a Blu-ray-only world in 3 years, the fact is that it took a decade for DVD to surpass VHS.
And how's THIS for a footnote –it happened just over 18 months ago! Q3 of 2006. Amazing, eh?
SD DVD is NOT going to roll over the way HD DVD did. Why should it? The end of the format war is far, far away.
When HD isn't HD
Somewhere north of 30% of US households have an HDTV, 10% have more than one....and less than HALF of those HDTV-owning households watch ANY HD content. Not cable, not satellite, and not bunny ears (actually the closest thing to uncompressed HD you can get).
This drives people like the Consumer Electronics Association absolutely INSANE.
Even though Best Buy has no stake in any HD content providers I'm aware of, the emphasis of their current TV ad campaign is that you need HD content for what they call "The Total HD Experience." (I'm guessing that they'll be happy to sell you the rest of the equipment you need for The Total HD Experience, but it's kind of hard to argue with the point.
The variation on the theme at the official Blu-ray website: “Without Blu-ray, your HDTV is just a TV.” Not exactly true, but, as above, point taken anyway.
The fact is that most HDTV owners are perfectly happy without HD content. The step up to plasma, LCD, DLP, et al. from your basic tuber vision is so much better that many viewers think that they DO have HD content, even when they don't. Their SD DVDs in particular really pop: great image quality, and the same default aspect ratio for both their TVs and their favorite movies. What's not to love?
Indeed, at least one CEA survey says that most people buy HDTVs to enhance their gaming and SD DVD viewing, NOT to watch television or DVD programming in HD.
The other issue is the quality of uprezzing DVD players with HDMI connections. With some of them costing under $100, and the best of them barely more than $200, the trade-off in image quality is more than enough to compensate for the prospect of buying new copies of their favorite movies...almost all of which are not yet available in Blu-ray.
Sure, they all WILL be. I'm not Joe Kane, but I've been using his tools for 15 years. Between that and working for companies whose major development is focused on HD, I feel comfortable saying that my eyes are in the “golden” category.
And in my A/B testing, I don't see enough difference between my uprezzed SD disks and straight-up Blu-ray to get me excited. A difference? Yes. Enough of one? No.
I'm far from the only one to feel this way: 213 5-star reviews and 53 4-star reviews out of 292 for one such player at Amazon. Ron “Boomie Ho-Tep” Lindeboom, who introduced me to the concept. Then there's this ZDNet columnist, a hardcore technology guy (he introduced both DLT and the first Fibre Channel array, among other achievements) who bought a Blu-ray disk and wishes he'd gone the upscaling route instead.
There are many more examples for many brands if you poke around, but you get the idea.
One more bit of irony that distresses our boy Joe Kane. Gorgeous 4K images are increasingly being viewed on “handheld playback devices.” Even on television, the HD images are massively compressed...leading to the possibility that the HD experience for many consumers is degraded beyond their SD experience, which requires so much less compression.
Just as for the original “A Video Standard” and the audience for the new "HD Basics" he's about to release is consumers, to show them how good their HD can look, and to educate them about the image quality they should be demanding from broadcasters.
He's not feeling very optimistic this time around.
“The last physical format”
Here's something that both Gates and Jobs agree heartily upon.
In 2005, Bill said, "For us it's not the physical format [that matters]. Understand that this is the last physical format there will ever be. Everything's going to be streamed directly or on a hard disk. So, in this way, it's even unclear how much this [all] counts.”
Just this week, MSFT has also been clear that the Blu-ray victory won't affect them. The game content is driving Xbox sales they say, and their HD DVD player is an external add-on. While they haven't announced such a thing, an external Blu-ray add-on is surely within their grasp.
More important, they say, is that the Xbox is well-equipped for – wait for it – digital downloads of HD content.
Following MacWorld, Jobs said something similar. With the Warner Brothers announcement in January, “Clearly, Blu-ray won, but in the new world order of instant online movie rentals, in HD, no one will care about what format is where.”
Add Netflix to the party. They've announced their intention to enter into hardware partners to build set-top boxes for streaming delivery. The first of those partners is LG, leading Netflix Ceo Reed Hastings to say:
“We want to be integrated on every Internet-connected device, game system, high-definition DVD player and dedicated Internet set-top box. Eventually, as TVs have wireless connectivity built into them, we’ll integrate right into the television.”
Oh, and this news was breaking just as I was proofreading this article, the second Netflix hardware partner is likely going to be....Xbox.
(The story's from MSNBC.com. So's the tasty picture at right.)
The Netflix-Xbox connection has been rumored since Netflix's Hastings joined Microsoft's board of directors just about a year ago.
And if you're a Netflix member, you may even remember this recent survey question they sent out: “If, as part of your Netflix membership you could instantly watch movies and TV episodes on your TV with your Xbox 360, how likely would you/anyone in your household be to do that?”
I'm not very good at math, but this may well be adding up.
Fun with money
Money's always fun, right?
Rumors have been swirling for the better part of a year that various format choices by studios might sometimes have been motivated by the subsidies that they received from one side or the other.
Michael Bay says that Microsoft, uhm, subsidized studios to stay with HD DVD. “That is the dirty secret no one is talking about. That is why Microsoft is handing out $100 million dollar checks to studios just [to] embrace the HD DVD [format] and not the leading, and superior Blu-ray. They want confusion in the market until they perfect the digital downloads.”
Not that the Blu-ray folks weren't in on the fun. Sources have cited a figure as high as $500 million for “the real reason why Warner went Blu.”
Business Week says it's more like $400 million for Warners, and more than $100 million for Fox.
Final fun with numbers: as I write this, Toshiba's shares are up 6.3% on the news that they're dropping HD DVD as quickly as they are.
It ain't over 'til...Scratch that. It ain't ever over.
I come not to bury Blu-ray, but to praise it.
Blu-ray has won. Period. It looks fantastic. Period. It sometimes even takes my breath away.
We have no idea what's going to happen to the Blu-ray scene when authors can create Blu-ray disks without slapping yourself on the head with your shoe. Walter Biscardi has a fantastic blog entry here at the Cow, describing the series of flaming hoops that FCP editors in particular have to jump through. Gruesome. He rightly believes that it just shouldn't be this hard.
To put it another way, how much more quickly will Blu-ray titles be delivered when they can be authored as easily as SD DVDs are today?
That doesn't change the fact that there are still hundreds of thousands of HD DVD units out there. That means that we're about to enter a wild buyer's marketplace as retailers sell down their stock. Even though new HD DVD titles are scheduled through at least June, the time is soon coming when you'll be able to pick them up for a song.
I saw the same thing with laserdiscs, where, at the end of the run, I picked up dozens of new releases for a buck apiece. Some of those, especially those with special features, weren't available on DVD for most of a decade.
On the pro side, it's not like all those U-matic machines disappeared when Sony stopped making new ones.
Gear doesn't tend to leave as quickly as it possibly can. It tends to stay around as LONG as it possibly can.
More important for the reconstruction phase of the format war victory is that quite a few HD DVD-only releases are in the pipeline, and could be be exclusive to that format for a long time to come as original transfers to Blu-ray have to start from scratch.
(No ports, please. This is HD. We'd rather wait for fresh mastering than settle for hasty marketing.)
In any case, these are just a few reasons why those HD DVD players, and those upscaling SD DVD players, will be around plenty long enough to earn their keep. Maybe even long enough for "the next thing" to come along.
Last word on “never over.” The news I've reported here has changed several times in the time I've written this, ending on Tuesday afternoon, February 19. It will surely change again before you read it. I've documented my sources as best I can, but they were all very much moving targets.
Fortunately, almost all of the facts were posted in several places, and you'll be able to track down any missing pieces if you're so inclined. Any additions or corrections to the citations I captured will be gratefully incorporated.
So stay tuned for further updates. In the meantime, comment away.