Switched On: Seeking neutrality in the hi-def format war

Each week Ross Rubin contributes Switched On, a column about technology, multimedia, and digital entertainment:

Paramount's recent announcement that it would (again) release future titles only in HD-DVD shifted that format's position in the high-definition disc war. HD-DVD had been resting on Universal's shoulders in terms of exclusive studio support. Paramount made sure to point out that Dreamworks' animated features would be exclusively on HD-DVD because it knows that parents don't want to have to tell their kids that they can't watch Shrek on that device, at least not in the full resolution of his flatulence jokes.

The Blu-ray Disc Association fired back to this blow after a few mixed retailer wins with Blockbuster, Target and BJ's by noting the strong supply of Blu-ray titles in the queue and the planned Blu-ray release of Disney's "platinum" titles, the crown jewels of the Magic Kingdom. Transformers Director Michael Bay then became one of the Bad Boys by dropping a Pearl Harbor-sized bomb on Paramount regarding its decision in a blog post since deleted and retracted, leading to speculation it was really the Decepticon version of Michael Bay that made the original posting.

The resulting world order has Disney, Lionsgate, Fox and of course Sony Pictures all exclusively on Blu-ray, Universal and now Paramount/Dreamworks exclusively HD-DVD, and Warner backing both putting its "Total HD" two-sided wonder on the back disc burner as it ponders exclusivity. As one PC vendor recently told me, "There are a lot of big checks being written."

At this point, studios have a lot of power as their announcement of support can shape consumer opinion as to which product is the "safe choice." As time goes on, though, and if the installed base of one side grows so that the war becomes lopsided, studios start to lose power and have to come to terms with the relative size of a format they don't back.

Now, with studio support split, dual-format is starting to look like a more viable option. Many comparisons have been made between the high-definition disc format wars and VHS vs. Betamax in which one format prevailed, but the analogy is poor because Sony, Betamax' main backer, had the more expensive option. In the case of the high-definition video disc war, Toshiba has been selling the less-expensive option and it can call upon a group of even lower-priced lesser-known brands that drove great volumes in the DVD market.

Additionally, the packaged movie industry was a small fraction of what it has become since the birth of the global $25 billion DVD industry, In the early days of VHS, there was no legacy format that consumers could default to continue buying as there is today with DVD. Finally, the different physical size of VHS and Beta tapes made building dual-format decks impractical.

That leaves two other precedents, one of which was the dual-format audio disc war fought between SACD and DVD-Audio. Neither format succeeded in supplanting the CD, but ultimately several playback devices on the market supported both standard. Similarly, the recordable DVD drive, which became mostly a PC burner phenomenon, ended in a practical draw between DVD-R/W and DVD+R/W with nearly all products on the market offering both formats.

For now, the bigger challenges around high-definition DVD players lie in low HDTV penetration and the impressive quality of particularly upconverted DVD on high-definition televisions. However, HDTVs will become more prevalent, high-definition titles will continue to roll out in both formats, and the prices for high-definition disc technologies will fall to a point where they can compete with standard-definition DVD as a replacement device. If studios remain split as other barriers fall away, dual-format drives will look like a better bet until such a time as digital distribution can match the reach, convenience and capabilities of physical media.

Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group,. His blog can be read at http://www.rossrubin.com/outofthebox. Views expressed in Switched On are his own.