What does Paramount's defection to HD DVD mean for consumers? Nothing good.

Melissa J. Perenson, PC World
Wednesday, September 19, 2007 01:00 AM PDT

The ongoing tussle between backers of the two high-definition media formats--Blu-ray Disc and HD DVD--took a dramatic turn with the news that Paramount would release all future titles on HD DVD only. The studio's statement last month set off a spate of announcements from other parties as members of each camp tried to rally the troops and stake out their positions heading into the holiday season.

The news couldn't come at a worse time, what with consumers revving up to make a buying choice this holiday season--assuming they're ready to jump into the high-def fray at all. Suddenly, what had been a fairly clear advantage for Blu-ray became much more uncertain. And that's actually not a good thing for either fledgling format.

Before Paramount's announcement, Blu-ray appeared to have an enviable edge: Two Blu-ray discs were being sold for every HD-DVD disc, and the format's studio backing was wider than HD DVD's. For a while, more--and cooler--titles seemed to be coming out on Blu-ray (Pirates of the Caribbean, anyone?) than on HD DVD. Even retailers appeared to be voting for Blu-ray, with Blockbuster saying that it would stock HD DVD in only 250 out of 1700 stores slated to carry high-def titles (all will have Blu-ray), and with Target declaring that it would promote Blu-ray players in its stores.

The Paramount Decision
The Paramount announcement caught the Blu-ray Disc Association and its members off-guard. Even Andy Parsons, who heads the BDA's promotional efforts in the United States, expressed surprise at Paramount's move. Like many observers (myself included), Parsons would have understood if Paramount had taken the step earlier this year, before Nielsen sales data began showing stronger support for Blu-ray than HD DVD. But now?

Paramount CTO Alan Bell made some valid points, though, in explaining the reasons behind Paramount's decision. Many of the reasons he cited were technical ones; he didn't get into the business side too much, leaving that for other studio spokespeople. While I don't for a minute believe that the decision was wholly based on technical reasons, I do believe that Bell is right on one specific point: the Blu-ray specs mess.

Right now the Blu-ray Disc format is in transition, as new minimum requirements will go into effect come October 31. All players will need to support up to 256MB of storage and secondary audio and video decoding (which enables features such as picture-in-picture content). Additionally, players supporting BD Live--the much-touted Internet-connected interactivity that the Blu-ray Disc specification calls for--must have 1GB of storage and an ethernet connection as well as the secondary audio and video decoding.

The brewing confusion lies in the fact that the latest Blu-ray Disc players don't have those features; furthermore, it's unclear as to whether the manufacturers of the players announced at the giant CEDIA home-theater trade show earlier this month (LG, Pioneer, Samsung, and Sharp) will be able to offer firmware upgrades to those models to enable what's being referred to as the Blu-ray 1.1 profile (which encompasses all of the new specs that go into effect October 31).

I have no doubt that these new Blu-ray players, like the ones that have preceded them, will play all movies and TV shows in gorgeous high-def. But the players you can buy this holiday season most likely won't be able to deliver the full Blu-ray entertainment experience as movie discs ship with new interactive features. Next year, and the year after next, greater features and interactivity will be coming, assuming Blu-ray persists as an entertainment format. Do you really want to have to buy yet another player just to handle the cool, extra disc-playback features you read about in a review?

Following so far? If so, you're doing better than most folks I describe this situation to. And you're probably ahead of the masses of consumers who will converge on Best Buy and other retailers this holiday season.

No wonder, then, that the player specs might be an issue for a movie studio. How can studios author content without knowing the capabilities of the player? How can they market the extras, knowing that the early adopters who bought a player in the last two years probably won't be able to view that content? This is a huge marketing and educational hurdle that the Blu-ray camp must face as new players and new features start to appear. In this respect, HD DVD holds an advantage over Blu-ray: From day one, every HD DVD player has been able to handle the same level of interactivity. As time goes on, that could prove a winning strength of HD DVD.

Any Winners in the Room?
Maybe saying that no one wins here is too strong a statement. Certainly, the Paramount announcement is a clear coup for the DVD Forum and the backers of HD DVD (led by Toshiba, Microsoft, and NBC Universal Studios). Aside from Toshiba's price drops in the spring and summer, HD DVD had really had no momentum going. The Paramount announcement reinvigorated the HD DVD movement.

Assuming the rumors of a $150 million payoff are true, Paramount is likely the only other party that doesn't lose. Although Paramount's Bell told me that the studio's HD DVD exclusivity deal doesn't have a timeline attached to it, I've heard through the grapevine that the agreement may be limited to just two years. If so, my guess is that the payoff--whatever form it took (reports say that it wasn't a cash payment, but Paramount is officially mum on the terms of this arrangement)--more than offsets any of Paramount's potential losses from not having its movies and TV shows available in both HD DVD and Blu-ray.

Sure, consumers will get angry, but in the long run, if Star Trek fans buy Paramount-produced Star Trek titles on HD DVD, and if they ultimately need to buy them again in Blu-ray because Blu-ray becomes the industry's format of choice in the future, then they're going to end up buying the titles again. End of story.

Toshiba will likely see some uptick in player sales thanks to Paramount. And because the company's players are relatively inexpensive (the new HD-A3, due out in October, will retail for $300), it won't surprise me if some consumers end up opting for HD DVD just because they can afford it.

[...]

September 10, 2007, 13:19

New Medium Enterprises enters the format war with a candidate of its own: the Versatile Multilayer Disc, HD VMD for short.

There are three things to back HD VMD's claim to the crown: familiar technology, similar quality and, perhaps most important, a cheaper price.

We may stretch things a bit and call the HD VMD an “updated DVD”. The new format is based on red-laser technology, the same one used for current DVDs. Both Blu-ray and HD DVD use blue-laser technology, which is more expensive. Cheaper technology automatically means cheaper discs and players and, as Pc World reports it, HD VMD players will retail for “around $150 - about half the cost of the least-expensive 1080p HD DVD player”.

So it's definitely cheaper, but is it worth the price? On the technical side the answer seems to be positive. The HD VMD disc can store up to 30GB on a single side and features and encoding of 40 mbps, thus sitting right between HD DVD (36 mbps) and Blu-ray (48 mbps). The 1080p resolution, MPEG-2 and VC1 video formats are included in the pack, and so is the support for 7.1-channel Dolby Digital, Dolby Digital Plus, and DTS audio output. The H.264 format hasn't been included, but, it's only a matter of time before it makes its entrance, claims New Medium Enterprises.

[...]

Ben Furfie Today, 12:18pm

According to reports, the 51GB version displayed at CES is officially approved by DVD forum

According to reports, the DVD forum has approved a triple-layer 51GB version of its HD-DVD format – however the group has not yet officially confirmed this.

However, EngadgetHD's Ryan Block did warn: "this might mean consumers will need new players to read 51GB HD-DVDs, which could potentially damage the format more than help it."

The news comes on the same day that China announced its intentions to enter the high-definition format wars with a slightly modified version of HD-DVD.

The format, which the newly formed China High Definition DVD Industry Association (CHDA) – composed of globally recognised manufacturers as well as the DVD forum itself, uses China's encoding standard, AVS – a variant of MPEG2 and one that is technically better than it in many respects.

[...]

DreamWorks and Paramount choose the high-definition discs over rival Blu-ray. By Josh Friedman and Alex Pham Times Staff Writers August 21, 2007 The format war over next-generation DVDs appeared to have a clear winner, but the picture just got fuzzier.

Paramount Pictures and DreamWorks Animation SKG Inc. said Monday that they would offer movies exclusively in the HD DVD format rather than in that of the better-selling Blu-ray -- a surprise move that complicates the technology battle that Blu-ray had been clearly winning.

"I am very late to this party because I was skeptical about high definition," said Jeffrey Katzenberg, chief executive of DreamWorks Animation, "but what is happening in the marketplace is a game changer."

Not included are director Steven Spielberg's films, which the companies said were "not exclusive to either format." Spielberg, Katzenberg and mogul David Geffen sold their DreamWorks SKG live-action operation to Paramount parent Viacom Inc. last year.

Both HD DVD and Blu-ray players produce much sharper pictures than conventional DVD players. Because most people still have standard machines, high-definition discs are just a fraction of the overall DVD market. From Jan. 1 through Aug. 12, consumers bought 2.1 Blu-ray discs and 1.1 million HD DVD discs, compared with nearly half a billion standard DVDs, said Judith McCourt, research director of Home Media Research.

But HD DVD players now retail in some cases for $299 and could be headed as low as $199 by the holiday season, Katzenberg said, making them affordable to families just as a diverse group of hi-definition movies is going on sale. He further predicted that this summer's Hollywood blockbusters -- including installments of the "Shrek," "Pirates of the Caribbean" and "Harry Potter" franchises -- would make the fourth quarter the biggest ever in home entertainment.

[...]

By Barry Levine
August 20, 2007 12:16PM

News of Paramount and DreamWorks backing HD DVD instead of Blu-ray is undoubtedly a relief for the HD DVD camp, which has weathered a flurry of announcements favoring Blu-ray. In June, Blockbuster said it was going with Blu-ray for 1,700 stores, with HD DVD to be offered only through Blockbuster.com and the 250 Blockbusters that carry both.

The battle lines for the format war between the two high-definition DVD formats reformed once again as Paramount and DreamWorks each announced that they will back HD DVD -- exclusively. Previously, Paramount had been hedging its bets by backing both HD DVD and Blu-ray.
The announcement includes all movies from Paramount Pictures, Nickelodeon Movies, and MTV Films, as well as the Paramount Home Entertainment-distributed DreamWorks Animation.

The companies said they conducted an "extensive evaluation" of the formats, and decided on HD DVD instead of the competing Blu-ray format because of "its market-ready technology and lower manufacturing costs." Brad Grey, Chairman and CEO of Paramount Pictures, described the format as "the affordable high quality choice for consumers."

[...]