Blu-ray appears to have won the high-def DVD format war, as Paramount announced on Monday that it would dump HD-DVD in favor of Sonys Blu-ray format. Last week, Warner Bros. also threw its weight behind Blu-ray.
The developments likely mean the end of HD-DVD as a viable format. Based on the studios decision, Japanese content producers and hardware manufacturers said they would likely leave the HD-DVD Promotion Group, according to published reports.
Pony Canyon, a content producer that is part of Fuji Television, predicted it would "choose Blu-ray in the end." Some 20 members of the HD-DVD coalition said their continued membership was "under review." Universal is the only remaining U.S. studio backing HD-DVD, along with one other major corporation that continues to support the format: Microsoft.
CONVERGENCE PICKS UP STEAM
When the current DVD format was released, consumers rushed to replace their VHS video collections with the superior digital format. But will consumers care about a better DVD format -- be it Blu-ray or HD-DVD -- when online delivery of TV shows and Hollywood movies threatens to make physical media obsolete?
In the weeks leading up to the Computer Electronics Show in Las Vegas, industry players were busy cutting deals and rolling out new ways to converge content, the Internet and consumer TV sets. For example, Netflix announced a deal recently with LG to deliver on-demand movies to Internet-connected TVs. Its rumored that Apple will announce deals with Fox and other studios to sell movie downloads via its iTunes Store. At CES, JVC announced a TV set with an iPod port for playing iTunes video purchases on the big screen. And Google and Matsushita announced plans for a flat-screen TV that can display online videos from YouTube and other sites.
Perhaps most significantly, Comcast Tuesday unveiled Project Infinity, a technology to improve the quality and performance of online video, as part of an effort to deliver its huge catalog of TV shows and movies on demand via the Internet and cable. At CES Tuesday, Comcast CEO Brian Roberts demonstrated the technology by downloading the film Batman Begins in four minutes, a download that would take six hours with a standard broadband connection.
WILL CONSUMERS CARE?
Online on-demand "is going to be the dominant way people consume television and movies at home," Greg Sterling, principal analyst at Sterling Market Research, said in a telephone interview. "Its really a question of when rather than if."
Blu-ray may turn out to be the winning format, but "the case hasnt been made to the public. No one would know what Blu-ray is or the difference between Blu-ray and HD-DVD or why they should buy these players," Sterling said. "People arent going to go out and replace their machines or collections."
The competition from online comes not just from the eventual delivery of Hollywoods products over the Internet but the availability of Net content, such as YouTube videos, on TV sets, Sterling said. "A lot of the CES announcements have this convergence quality. Theres a blur of online and TV content." With Internet-connected sets, both kinds of content will move from the computer to the home entertainment center, resulting in a further degrading of networks brand identities.
Even so, Sterling said, consumers wont be throwing out their current DVDs anytime soon. "I would say for the foreseeable future, DVDs will not be made obsolete. It will take a few years for these technologies to be made mainstream and reliable. Eventually, people will get movies online through a set-top box or via AppleTV and will probably boost revenues for content owners."
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