With one swift stroke this month, the Blu-ray Disc format appears poised to win the long-running high-definition format battle to succeed DVD.
Whether or when rival HD DVD will withdraw from the race, or whether the long-sought-after single format is too little, too late in the face of competition from other distribution sources, remains to be seen.
As the giant Consumer Electronics Show rolled into Las Vegas early this month, Warner Bros., Burbank, Calif., a video market leader which previously had supported both formats, said it would release only Blu-ray DVDs as of June 1. The two remaining HD DVD backers, Paramount Home Entertainment, Hollywood, Calif., and Universal Studios Home Entertainment, Universal City, Calif., continue their support of HD DVD, but are expected by many industry observers to eventually accede to the inevitability of the Blu-ray format. All the other major studios now release on Blu-ray.
Many consumers — and supermarkets — stayed on the sidelines as the high-definition stalemate continued, but they are now expected to come on board as more titles, hardware and promotional support appear. Lower hardware and software prices are expected to come with economies of scale and an industry anxious to achieve critical mass. Blu-ray is principally backed by Sony, and is included in its PlayStation 3 game console, while Toshiba backs HD DVD with support from Intel and Microsoft.
B&R Stores, Lincoln, Neb., placed an early bet on Blu-ray, said Bob Gettner, video buyer/coordinator. “We brought Blu-ray discs into our rental section with a soft introduction a few months ago. We haven't given it a lot of presence, but it seems like the studios are going in that direction too, which is hopefully good.”
Generally, Gettner thinks it is early for most grocers to decide on a format. “I felt we should dabble and see how it works in our high-volume stores.”
At Publix Super Markets, Lakeland, Fla., spokesman Dwaine Stevens agreed: “We believe it's too early to tell.”
Warner, which had been supporting both technologies, hopes that by backing just one, consumer confusion and resulting indifference to the high-definition technology will be overcome. “The window of opportunity for high-definition DVD could be missed if format confusion continues to linger,” said Barry Meyer, chairman and chief executive officer, Warner Bros.
The surprise announcement was made prior to the Consumer Electronics Show, and a likely shocked North American HD DVD Promotional Group abruptly canceled its planned two-hour press preview the night before the show's kickoff.
Just over a week later, Toshiba said it will launch a major ad campaign promoting its HD DVD players and slash prices by 50%, taking them to $150.
Meanwhile, Marty Gordon, a spokesman for Philips Electronics and the Blu-ray Disc Association, Hollywood, told SN, “Given the clear content advantage behind Blu-ray — the sheer number of blockbuster titles that will only be available in high definition on Blu-ray — we expect more and more people will make the transition to Blu-ray Disc to build their high-definition collections.”
The studio lineup now looks like this: Blu-ray has Sony, Warner, Fox, Disney, MGM (owned by Sony, but distributed by Fox) and Lionsgate, or about 70% of the studios. HD DVD has Paramount, Dreamworks (owned by Paramount's parent Viacom) and Universal. However, media reports said Paramount may be able to break its contract with HD DVD, and others speculated that Universal would not be able to continue as the lone backer of HD DVD.
If what Gordon says is true, supermarkets that are generally proactive about stocking their video and electronics sections might prepare to carry the technology that has to date been too volatile to consider.
JUST A LITTLE BIT LONGER
For supermarkets, it's not about the format war as much as it's about consumers understanding why they need the next generation of DVD at all, according to Russ Crupnick, vice president and entertainment industry analyst for the NPD Group, Port Washington, N.Y.
“The next-generation formats are very nascent, less than 1% of DVD unit sales, so it may not make sense [for supermarkets to carry them] yet from a demand perspective.”
For example, consumers are confused about the overall high-definition message, according to Understanding and Solutions, a research and consulting company based in the U.K. Earlier this year, the company stated that whatever happens, continued competition between the two groups will lead to confusion and uncertainty, and therefore delayed consumer purchase decisions.
However, that confusion is precisely what Warner hopes to dismiss. “A two-format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry,” said Kevin Tsujihara, president, Warner Bros. Home Entertainment Group.
Given that reasoning, it seems Warner could have gone with either of the two formats; however, according to the studio, consumers made the decision. “Consumers have clearly chosen Blu-ray, and we believe that recognizing this preference is the right step in making this great home entertainment experience accessible to the widest possible audience, Tsujihara said.
Shortly after the announcement, The New York Times reported that some analysts have said Blu-ray titles are outselling HD DVD titles by as much as 2 to 1. Blu-ray hardware sales also have exceeded HD DVD, largely because the format is included in PlayStation 3, according to media reports.
For B&R's Gettner, the decision to test Blu-ray over HD DVD was all about the capability of Sony's PlayStation 3 video game console to play Blu-ray discs.
Although Bashas', Chandler, Ariz., is not yet carrying high-def DVDs for rental or sell-though, Ray Wolsieffer, video specialist, said he'll be willing to do so when the time is right. “I have not had any requests from customers for high def, but will certainly be in line through Ingram [distributor Ingram Entertainment, La Vergne, Tenn.] when the time comes to consider adding high-def product.”
That time may not be far off. “As we stand today, Warner Bros.' decision to shift from its dual-format position has brought much-needed clarity to the market and strengthens Blu-ray's hand considerably,” said Jim Bottoms, co-managing director at Understanding and Solutions. “We should see an end to the format war within the year,” Bottoms said.
“Consumer demand for high-definition discs is growing as more consumers are buying televisions that are both high-definition-capable and larger in screen size, and as the price of players has gotten much lower,” said Mark Fisher, vice president, membership and strategic initiatives, Entertainment Merchants Association. Over the holiday season, Toshiba reduced the HD DVD player to below $200 and Sony dropped Blu-ray players below $300, according to Understanding and Solutions.
“However, the decision to support the category now may be more a matter of whether a retailer's stores are intended to be destination locations for entertainment products,” Fisher said.