Blu-ray Wins The Battle,
But Will Lost The War


The war between the camps of HD-DVD and Blu-ray is finally over. But is it really?

So that you are prepared for what is to come, this format war is far from over. In fact, it wasn't really a war, it was simply a small, albeit costly battle. That's because since the manufactures and movie studios have taken so long in picking a format winner, they have lost momentum in what I considered the larger war - the war to get it in our living rooms.

While Blu-ray is now considered the official winner, my personal opinion is that there is no need to spend the additional dollars on the hardware and new DVDs to take advantage of this format. Let's face it, you'll be hard pressed, in a side by side demonstration to tell the difference between a movie playing on a basic DVD player to the images displayed on a Blu-ray player. I consider the differences nuances, not noteworthy improvements.

When the DVD first surfaced, it was a great improvement when compared to the then standard VHS format. Side by side, a DVD had the ability to make an average TV set display a movie in a noticeably higher quality. Also, DVDs promised to last a lifetime while images stored on a VHS had days that were numbered. It was noticeably smaller, meaning that it would soon make its way to computers and then spawn a new market for portable players. Marketing the concept of the DVD was a no brainer. The only early argument against DVD at the onset was that it was a play-only format...initially it could not record. VHS owners questioned the viability of the DVD as a catch-all home video format. Today, although DVD recorders are a dime a dozen, the recordable version never caught on with the U.S. consumer. It seems like Japan is the only market where DVD recorders are selling well. As a country, we typically only use recordable DVDs for computers, not for recording and watching TV shows.

Not long after the DVD was launched two new players entered the field vying for the home recording business: Replay TV and TiVO.

Instead of tapes or discs, these marvels used hard drives for storage and slowly became the desired method of home recording. They were (and still are) easier to program, eliminated that dreaded flashing 12:00 and played content instantly. The slow success of home hard drive recording forced the hand of the cable companies to offer its versions of the PVR or DVR. While so far, the cable companies DVR offerings pale in comparison to those from TiVO, this will soon change as they have learned that customers want this
product. But, I digress...

The problem with Blu-ray becoming the new generation of DVD players is not only do they not show a dramatic increase in image quality, the additional features they include only appeal to a small audience of movie buffs. Most
home movie viewers simply want to watch a movie and don't desire to pay extra to see the actor's and director's commentaries. Personally, I could care less about seeing the behind the scenes tricks with actors in front of a blue or green wall and I'd be happy if they remove the trailers for future offerings from the discs and just allow me to buy (or rent) only the movie. But there's more to my reasoning of why Blu-ray is only a short term format and that's simply that technology will pass it by before it becomes a standard.

Whether it's Apple TV or some other soon to come magical device, with the proliferation of home Internet there is no need to buy physical software. Soon, with increased download speeds and more compatible devices that take advantage of new technologies, the middleman will soon be out of the picture. Or, there will be a new breed of middleman.

Let's face it, with just about any question, the answer can be found by "following the money." Much of the cost of home movie watching is in the distribution of the software...in this case, the physical DVD. When we're able to easily and legally download movies, we have in essence cut out the
Blockbusters and Best Buys of the world. This means that movie studios
will soon have the ability to sell its products (yes, movies are products and are based on a for-profit business model) directly to the consumer. When this happens, does this mean that we'll be able to buy and or rent movies at a lower cost?

Probably not as the movie studios will take the additional profit for themselves. I don't blame them as they made the initial investment and are entitled to the profit on a well made movie.

I've learned in the past that when a product can be made at a lower price, it doesn't guarantee the consumer will be paying less. This was proven to me many years ago when I attended the first press introduction of the CD. Forgetting what Sony says, it wasn't them who held the first press conference touting the Compact Disc, it was Philips. I know, I was there.

The press took Philips seriously as Sony was still bruised from it's loss to Matshushita of the Beta/VHS format war. Philips on the other hand had invented the Compact Cassette and made a fortune in royalties on that audio format. For some odd reason, as the CD was starting to capture the attention of the world, Sony began claiming they had invented this format. I've had this discussion with Sony brass in the past, and it was fruitless. I don't doubt they had a level of early involvement, but it was Philips that first brought it to the eyes of the press at a packed, standing room only event at the CES.

At that time, the vinyl LP record was the standard for home audio. The cassette was the standard for home recording. At the Philips CD introductory press conference, a major point was made that CDs would be produced at a noticeable cost reduction compared to the LP record and this savings would be passed onto the consumer. This raised a round of applause from the drooling press members. These guys were basically clueless to basic economics and were mesmerized by the presentation, not by business models. Remember, in most cases reporters are employees, not entrepreneurs.

The problem was, the savings was never passed onto the consumer, the additional profit went somewhere other than into our wallets. The promise of savings to the consumer promised at the introduction was never fulfilled. That's business, that's life.

The reason I digressed is that we learn from history. If my theory is correct, there is no need for a new DVD format as it doesn't offer substantial improvements over the existing standard DVD format to warrant the additional cost to the consumer. In my mind the only way Blu-ray will become dominant is if the movie studios stop producing movies on standard DVDs...and that's not going to happen as it would alienate too many consumers and place potential income to the studios at risk. Many movies lose money at the box office and the investment is recouped with the DVD after market. Instead, the next big thing will be fully electronic delivery of movies, but for that to happen
the studios need to agree on an encryption scheme that will protect its products from piracy.

They will also have to come up with a method of allowing consumers a way of only buying a movie once, not once for each format. To me, buying a movie on a DVD and another copy for a portable player is ludicrous. It's not my fault that movies are open for piracy, so why should I pay the price twice or in some cases three times or more for a single title?

In my perfect world, movies we purchase will go to hard drives. The hard drives will send movies to any TV in the house. Movies will be able to be easily transferred to our portable players for use while traveling or anywhere. Trust me, this will happen and it will happen sooner than later.

Soon afterwards, the hard drives will be replaced by solid state storage. The cycle will continue.

So Sony, enjoy your Blu-ray victory today as in my mind it will last just a bit longer than the bubbles in your champagne.

The bottom line is simple: It's not the right technological environment to become an early adopter of Blu-ray. Technology is on a rampant roll. Sit back, relax and watch what happens before you open your wallet. A new DVD player is useless without the necessary software. Are there any bets that the price of Blu-ray discs won't increase in price now that Sony thinks they have no competition?

Allow me to add, there is only one place where Blu-ray will succeed and that's for the home gamer. This is a huge industry and games on a higher capacity discs makes sense.

I'm wondering what's going through the minds at Microsoft now?