Top 12 Film Industry Stories of 2008:
#2: HD-DVD Loses, Why Hasn't Blu Ray Won?

By David Mumpower

January 15, 2009

Half a billion dollars *is* serious.

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HD-DVD vs. Blu Ray was a war that raged on for over a year. BOP selected this nonsensical battle of wills as the ninth biggest film industry story last year. Flashing back to last January, these were the words I offered to summarize where we stood entering 2008: "At least three noted market researchers have recently stated that they expect this format war to go on for at least 18 more months, and they are beginning to fear neither side will ever truly conquer the other. So, you can probably look forward to this once again making the list of Top 12 Industry Stories of 2008." 12 months later, the loss of HD-DVD and the failure of Blu Ray to capitalize on its victory is in fact the second biggest story of 2008 according to the staff at BOP.

How did we get to this point? The key was a series of private negotiations between all the major players in the movie industry oligopoly. As a reminder for those of you who didn't spend endless hours arguing who would the format war on various Internet forums, at the start of 2008, the scorecard read like this. MGM, Warner Bros. and New Line Cinema were fence sitters, all choosing to release their major titles on both formats. This trio hedged their bets and, not coincidentally, they experienced the best overall sales relative to expectations. Meanwhile, the two biggest studios in the industry, Sony and Disney, both supported Blu Ray. They were joined by MGM, Fox and Lionsgate. Having the support of three of the largest media conglomerates in the world appeared to give Blu Ray the winning hand in the battle for next-gen DVD supremacy. Universal, Paramount and The Weinstein Corporation, however, refused to go along with their larger peers, instead agreeing with Toshiba that the key to next-generation technology was affordability for consumers. While the Blu Ray side tried to negotiate from a position of power, the HD-DVD group tried to sneak their way to victory by being cheaper to consumers. The end result was that at the end of 2007, the cheapest Blu Ray player was $299 while the cheapest HD-DVD player was $99.


All along, the expected rationale for Sony's Blu Ray technology to win out was the Trojan Horse tactic of installing the technology in the Playstation 3. Over 100 million Playstation 2 videogame systems had been sold by this time, and there was no reason to believe that the new, powerful hardware device would be any less successful. We all know how that turned out. Due to almost inexplicably arrogant pricing, Sony hemorrhaged the body of their market share in the videogame industry to first Microsoft and later Nintendo. As I type this, the Playstation 3 is not only losing the battle for videogame supremacy, but they're also not even competitive for second place. This much had became clear through holiday sales in late 2007, making all involved on the Blu Ray side very nervous about the coming year. The expectation all along had been that once the Playstation 3 had been released, its success would carry Blu Ray to next-generation DVD victory. Once such a scenario failed to materialize, a reboot was needed by all involved.

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