High-Definition DVD War: Over Before it Starts?

Sept. 22, 2006 — -- Warner Bros. recently filed a patent application for a new type of DVD that could end the next generation DVD format war before it begins.

Blending aspects of the new HD DVD and Blu-ray technologies, the proposed discs would be playable in both types of players, eliminating the need for consumers to invest in one format over the other.

"If they can come up with the technology and figure out a way to create a hybrid disc, that would go a long way with consumers unsure about which direction to go in," said Michael Gartenberg, vice president and research director for Jupiter Research.

Proponents of high-definition DVDs argue that the improved picture quality and increased storage capacity of the discs make them a worthwhile investment for HD TV owners, and justifies the price of having to invest in updating their DVD libraries.

But others argue that a high-end current generation DVD player, which costs significantly less, will generate a picture that's just as good, without forcing one to repurchase movies consumers already own.

The discs are only in development right now and are not likely to be released anytime soon. For consumers unsure about which technology to invest in, though, the introduction of a hybrid DVD format could ease concerns and confusion.

A New Format or Vaporware?

Because high-definition DVD formats require new players and new discs, the price tag associated with jumping into the next generation can be staggering.

Current Blu-ray and HD DVD players range in price from about $500 to $1,000 with discs generally costing over $25.

"Until something shakes out in the marketplace, consumers for the most part are going to wait this one out," Gartenberg said.

The keys to success for the two formats are support from movie studios and retailers, and the ability to manufacture the players and discs to keep the price low and store shelves stocked.

"Either we'll see the center of gravity tilt in one direction or specific titles will draw interest or studios will throw weight behind one format or the other or price point will drop," he said.

But Ted Schadler, an analyst with Forrester Research, says his company has already crowned a prospective winner -- Blu-ray -- and doesn't think we're going to see a universal disc like the one Warner Bros. is working on.

"I think we'll see a universal player before we see universal disc," Schadler said. "It's very hard to produce Blu-ray and HD DVDs, so it must be even harder to produce a hybrid disc."

Though he thinks it's a good idea, Schadler points out that Warner Bros. engineers have only filed a patent application and that it can take years for a product to be granted a patent and get to market, and that many don't make it there at all.

He says that aside from having a great deal of support from studios, retailers and manufacturers, one big reason Forrester believes the Blu-ray will rule the high-definition DVD market is Sony's Playstation 3.

When the PS3 hits retail stores in North America on Nov. 17, the video game console will feature a built-in Blu-ray player.

"They plan on selling a couple of million of those by the end of January," he said. "No way they can sell a couple of million HD DVD players within the same time frame."

Though Microsoft plans to release an HD DVD add-on for owners of the Xbox 360, Schadler doubts it'll give HD DVD the push it needs to overtake Blu-ray.

A Fourth Competitor?

Apple's recent foray into the movie download business may have some of the studios banking on creating a new revenue stream from next generation DVDs a little on edge.

Earlier this month, the Silicon Valley trendsetter announced the company's plan to offer movies for download via its popular iTunes online store.

Less than a week later, Disney -- whose various movie studios were the only ones to offer films initially -- announced that it had already sold 125,000 films.

With Amazon's Unbox movie download service already online and others following suit, it's possible that consumers will choose to pass on high-definition DVDs altogether, sending them the way of the laser disc.

"Consumers have been through VHS and Beta," Gartenberg said. "They've been through 8-Track, and they've come to recognize generally that they're better off waiting for better and cheaper."

Though movie downloads are still not significantly cheaper than DVDs and there is not yet an intuitive way to get downloaded movies onto TV sets, there are some products on or close to market that could change that.

When Apple announced movie downloads at the iTunes store, it also announced an as-of-yet unreleased product nicknamed iTv that can stream video from iPods and computers to television sets.

In addition, Windows Media Center offers a way to view media saved on computers on a TV.

Because of the sheer size of a high-definition movie file, and the amount of time and effort it could take to get one from the Internet, to a computer and then to a TV, some are not convinced that digital downloading will catch on quickly enough to keep the next generation DVDs from taking over our living rooms.

"I think that consumers will grow to love high-definition DVD formats and HD quality," Schadler said. "They can't really get that in a download."