Thursday, February 21, 2008

Well That Was Fast

I've been really remiss in following the HD DVD meltdown of recent weeks, which came to a spectacular close a couple days ago. I wish I had some insight into what happened, but I don't, really. I'm like the aid to Walter Mondale who, on election night in '84, famously turned to a friend and said, "I don't understand--everyone I know voted for him."

Seriously: I know maybe two-dozen people who've bought hi-def players. Only one of them bought a Blu-Ray. The HD DVD was superior as a set-top box, had a better set-top intalled base, had a better tie-rate with discs, was selling for half or a third of the price of Blu-Ray, and, as of early December, looked to have about equal software support. Oh, and its discs were cheaper than Blu-Ray, too. That was the state of affairs as of December 1, 2007. If I had told you then that Toshiba would be announcing their abandonment of the format 10 weeks later, you would thought I was crazy.

Heck, it really is crazy.

So what happened? Toronto's Globe & Mail has some good reporting on the subject, including a claim that Sony paid Warner Bros. $400 million to switch sides.

(If that figure is correct, I wonder why Sony didn't just lop $200 off the price of the PS3 to start with. That would have had the same effect of ending the format war AND it could have preserved the health of its game division. As things stand now, Sony may have sacrificed this generation of game console to win the hi-def format. I'd be interested to know, from a dollars-and-cents perspective, if that was a good trade off for them. Particularly if digital downloads like Apple TV really are both soon and next. Something I'm not convince of, btw.)

But there must be more to the story than this. The Blu-Ray shift seems to have started with the Christmas shopping season, before WB switched. And the rapidity with which Netflix and Wal-Mart jumped is also kind of startling. Particularly Wal-Mart, a mega-company that isn't accustomed to turning on a dime like that.

I'm sad to see HD DVD go. I was fortunate not to get burned too badly--I only bought it because I needed a new player and if I had bought a Blu-Ray, it would be obsolete already anyway (another fact which amazes me). Yesterday's USA Today carried a story which reported that the Blu-Ray camp was trying to figure out some sort of program to help HD DVD owners switch over. I can't understand what their incentive would be to do that, unless they see the victory over HD DVD as only the first war and are already gearing up to fight digital downloads.

If you see more on this, please drop me a note or leave a comment; it's all very interesting.

P.S.: Galley Friend B.W. says, Je ne regrette rien!

Toshiba's deputy general manager of HD DVD Olivier Van Wynendaele stated that it "wouldn't change anything that it did," and continued on to say that "circumstances saw to it that [Toshiba] had to make the decision not to continue, but that doesn't mean [the company] did anything wrong."

Really? Something tells me that Olivier may find that the culture of Japanese business executives takes a somewhat different view.

Update: CNET has some interesting numbers on disc and player royalties, hinting at how much Sony has to gain from Blu-Ray. So that's a fuzzy look at one side of the picture. Next we'd need some good guestimating at how much the PS3 flop has cost them.


Anonymous said...

For what it's worth, I had a similar reaction. The only person I know with a Blu-ray bought it as part of the PS3 (he's also the only person I know with a PS3). And I know lots of people who bought HD DVD players.

The only two people I know who thought Blu-ray was going to win this battle were:

a) a lawyer who advised me never to be against Sony on these type of things. He said they always win. He also said that's more the result of vertical integration than superior product; and

b) my dad. Immediately after he bought an HD DVD player, he reminded me that he'd also bought a Betamax VCR. He suggested that the smart money is always betting against whatever he's got his money on.

-- MattM

Anonymous said...

I can sum it up in a sentence. "Blu-ray" is cooler. No, I'm serious. HD DVD is a technical moniker, not to mention it only reminds the knucklehead consumers that you need an HD TV to fully benefit. Although, to be sure, many people are switching to HD TV, how many folks do you think rented or bought "Blu-ray" discs thinking they'd be, I dunno, somehow better? A lot, I'm sure. C'mon, man, it's futuristic! "Blu-ray"! Say it with me!

Anonymous said...

The lawyer who said Sony always wins on this sort of thing apparently has a short memory and a bad education. Betamax? Trinitron? ATRAC? Memory Stick? Hell, even their original DVD format. Sony loses more often than they win in the proprietary-format game. In fact, it's been a consistently losing proposition for them almost every time out, which is why smart consumer were surprised by the Blu-ray victory.

Anonymous said...

For what it’s worth, I really don’t think PS3 is going to lose this video game console war either. Apparently, PS3 outsold Xbox 360 last month for the first time ever, and now with this news, gamers now have a clearer choice than they previously had. The logic will work his way: Do I want a next generation video game console? Do I want a Hi-Def DVD player? Why not both with one shot? In addition to that, there is a distinct possibility that the 360 will find itself hamstrung by the limited storage capacity of DVDs as games begin to grow in complexity as this generation of games move forward.

I should say also that I owned a 360 from November 2006 until December 07. I was moving overseas and new that the DVD region coding and different power source would make things too difficult to hang on to the 360. My intention was to get another 360 over here, but when I started to investigate, I went ahead and decided to switch to a PS3 for a couple of reasons. The first is that PS3 is like a laptop in that it will accept both 120 volts AC and 240 volts AC so I could take it back and forth between Singapore (where I’m living now) and the States. Also, I can buy video games from the States and have them shipped here and still be able to play them, since PS3 games are not region coded like the 360. And finally, blue-ray movies are region coded, but Singapore shares the same region as the States (surprisingly).

Having said all that, I’ve been very pleased with the PS3. The games load fast and the machine is extremely quiet, as compared to the 360. The game selection is not as good as 360, but it looks like there are some good ones coming out soon that will even things up, like Gran Turismo and a few others I’m interested in. The only thing that the 360 definitely has over PS3 is the internet connection service. Xbox live is far superior to the Play station Network. The few games I’ve tried to play on-line with the PS3 have been terrible, laggy and sort of bizarre with characters popping up out of nowhere, etc. Hopefully Sony will church that up as things move forward. So, anyways, I like both products, the 360 and the PS3, but I think PS3 now has a compelling reason for people to choose it over the 360, whereas the whole Blue Ray thing seemed like a gamble even a few months ago.

All of that is ignoring the Wii, which I think is a phenomenon all to itself. It is an amazing piece of entertainment, but shouldn’t (in my opinion) really be considered part of the “Next Gen” console war. The Wii uses last gen hardware, standard definition graphics, its own stand alone media discs, and has an extremely limited online network. The only thing unique about it is the interface and the library of Nintendo specific games, which, don’t get me wrong, are two really compelling reasons to own one, but I ultimately think that the Wii is competing for a different clientele than 360 and PS3. The people who are buying a Wii are people who would not be buying either a 360 or a PS3 if the Wii didn’t exist.

I would also like point out that I really appreciate JVL discussing these issues on this blog. It’s a fun subject and I love to read a nonbiased opinion on this stuff. It seems like too many of the video game specific blogs have already taken sides or get bogged down in minutia (the World of Warcraft patch is coming out soon! Woopee!!! Guh.) that they get hard to take after a while.