Robin on Tech

Everyone loves a prize fight. And many commentators love analogies: the sillier the better. So the ‘war’ between the two next generation DVD formats – Blu-Ray and HD-DVD – has had many commentators falling over themselves in breathless anticipation of the ‘battle’ as the two ‘competitors’ slug it out for our cash. And of course, a tiresome slew of identical (and identically silly) analogies has followed, as comparison is made with 1980s ‘battle-to-the-death’ between VHS and Betamax for the home videotape market.

The theme underlying most of these articles is that “the consumer will lose out”. The conventional wisdom goes as follows. Consumers will unwittingly purchase overpriced players that will only play content from the movie studios which happen to have signed deals with the relevant ‘side’. Consumers will then be unable to play any content from the ‘other side’. Worse still, one side may come to dominate the market, leaving the other one a dismal failure – a la Betamax – and leave millions of consumers stranded with expensive but obsolete players.

Fortunately, that kind of forecast is wrong on every level. It’s predicated on two false assumptions

• It assumes that consumers are both ignorant and stupid

• It assumes that hardware manufacturers and content providers will endlessly put politics and pride ahead of making money.

And it ignores some pretty salient facts:

• Most consumers are happy with the current DVD standard and are in no particular hurry to upgrade. They’re willing to wait for prices to drop, especially as the advantages of next-gen DVDs are much slimmer than the benefits of, for example, DVD against VHS or CD against audio cassette.

• For all intents and purposes, HD-DVD and Blu-Ray present identical value propositions i.e. they’re equally good, but they’re also equally incompatible and equally expensive. As neither is better than the other, there’s nothing to persuade consumers to pick one over the other (apart from slick marketing).

HD-DVD and Blu-Ray players are expensive right now. If we’ve learnt anything from our experiences of first generation DVD players, it’s that few standalone players (i.e. excluding the PS3) will be sold until the price drops below £200. This is unlikely to happen until 2008, at which time dual-format players (i.e. compatible with both formats) will be hitting the market at similarly affordable prices. LG’s dual-format player was the first out of the gate, but at $1,199 it’s hardly a commoditised device yet.

In other words, most consumers are likely to ignore next-gen DVDs throughout 2007 because the players are too expensive and widespread media coverage has highlighted the compatibility issues. But 2008 will see prices plummet and dual-format players become the norm (because most consumers simply won’t accept a device which only plays half the available content).

Meanwhile, the movie studios would never accept a situation in which they knowingly and deliberately froze themselves out of half the potential market. Fortunately, they also know that affordable dual-mode players are on the way, and can safely cut deals with whichever side it’s politically expedient to do so.

The only real question is whether the technology ‘champions’ for Blu-Ray and HD-DVD (Sony and Toshiba respectively) will produce dual-format players of their own, or continue making single-format standalone players that no-one will want to buy.

Sadly for sports fans (and anyone who enjoys the analogy) we’re unlikely to witness a real prize-fight. Instead, it’ll be more like a prolonged stare-a-thon, as each side gazes menacingly at the other, and everyone else just gets on with business.