DVD FORMATS

http://www.theglobeandmail.com/servlet/story/LAC.20080220.RBLURAY20/TPStory/?query=Toshiba

DVD FORMATS: HOW SONY'S BLU-RAY TRIUMPHED OVER TOSHIBA'S HD
Stringer makes his mark
Sony's CEO led his company to victory in the high-definition sweepstakes by convincing the major studios to come aboard
BARRIE MCKENNA AND MATT HARTLEY
February 20, 2008

WASHINGTON, TORONTO -- Howard Stringer made history in 2005 for being the first non-Japanese executive to take the helm at Sony Corp. But he may be better remembered as the one who won the high-definition war, erasing the stain on the electronics firm's image ever since it lost the videotape war two decades earlier.

Although celebrated yesterday, the victory was sealed last month when Sony swayed Warner Bros. to back Sony's Blu-ray technology and quit producing movies using Toshiba Corp.'s rival HD DVD format.

What remains a mystery is just how big a push Warner needed to pick sides. Analysts say Sony only prevailed following a heated bidding war against Toshiba, with the reward reaching as much as $400-million (U.S.). Neither side has confirmed the size of any bids or payments.

It was supposed to be the technology equivalent of First World War trench warfare: A prolonged battle to the death between Toshiba and Sony for global domination in high-definition DVDs.

In the end, the denouement was more like Germany's swift 1940 end run of the Maginot line.

Less than two years after its first HD DVD player hit the market, Toshiba president Atsutoshi Nishida raised the white flag, declaring yesterday that it would stop making and selling the devices altogether within a month.

Toshiba's unconditional surrender leaves the spoils to Sony, maker of the rival Blu-ray disc player - a technologically superior format that had the backing of virtually all the major movie studies and retailers.

"We simply had no chance to win," Mr. Nishida acknowledged bluntly.

The final straw, he said, was Warner's decision last month to exclusively release movies in Blu-ray. The decision by Warner, with about 20 per cent of the movie market, put a critical mass of the industry in the Blu-ray camp.

With billions of dollars in global sales at stake, experts had predicted the Toshiba-Sony battle would go on for years - not unlike the 1980s battle of videotape formats between VHS (Matsushita) and Betamax (Sony). That war lasted a decade, leaving Sony battered and humiliated.

So how did this epic battle come to such an abrupt end?

The answer lies in part with the bruising Sony experienced with Betamax, which, like Blu-ray, was also the better product on paper.

For more that 20 years, Sony has been "haunted by Betamax" and was fiercely determined not to let history repeat itself, explained Xavier Drèze, a marketing professor at the University of Pennsylvania's Wharton business school.

"Sony was much smarter," Prof. Drèze said. "They understood this time they couldn't do it alone. They understood that they needed strategic partnerships with industry players."

The war was over when Sony managed to line up a critical mass of partners - in Hollywood, Silicon Valley and on Main Street.

The tipping point was Warner Bros. But Sony Pictures, Walt Disney Co. and News Corp.'s Twentieth Century Fox Film Corp. had already done the same - signing exclusive sealed deals with presumably rich royalty arrangements.

"This was heavy hitters in a back room talking about what the royalty structure was going to be and how much money they were willing to put on the table to be exclusive with one camp or the other. That was the determining factor here," concluded Van Baker, an analyst with market research firm Gartner Inc.

Until last month, Warner had been backing both technologies.

Last Friday, Wal-Mart Stores Inc. announced it would sell only Blu-ray DVDs. Officials said "customer feedback" prompted its decision.

Netflix Inc., Best Buy Co. Inc., Blockbuster Inc. and Target Corp. had earlier done the same.

"Everyone was tired of the format war, the retailers were tired of it, the consumer electronics vendors were tired of it and they just wanted this thing to get settled," Mr. Baker said.

"Consumers and the industry learned the hard way with Beta and VHS that a prolonged format war was disastrous. There was a lot of motivation to get one or the other to win and the only thing that protracted it was the amount of money flying around."

The groundwork for Sony's stunning victory, however, came months, even years ago. Prof. Drèze said Blu-ray had several things going for it that helped it to build loyalty with consumers and the industry.

Six years ago yesterday - and years before the first Blu-ray disc or player was sold - Sony had lined up most of the other computer and electronics makers, including LG Electronics, Panasonic, Samsung, Apple and Dell.

Sony also owned a major movie studio. So it could push its own technology.

Third, the company sold Blu-ray to rival movie studios with the promise of superior digital copyright protection.

Sony also used its PlayStation video game console, which also works as a Blu-ray player, as a sort of "Trojan horse," Prof. Drèze said.

Sony has already sold 10.5 million of its PS3 consoles, compared with roughly one million HD DVD players. PlayStation buyers, he said, unwittingly embraced Blu-ray and undermined HD DVD.

Ultimately, the technology is superior. Blu-ray can hold up to three times more data (200 gigabytes versus 60) and offers higher resolution.

In the end, it could be a pyrrhic victory for Sony. The age of hard copy discs is already giving way to digital downloads, stored and played from PCs, iPods and other portable devices.

"I don't think the heyday of DVD is going to return," said Mr. Baker, the analyst. "For most consumers, digital downloads are going to be very appealing."

How Sony lost Betamax

1 QUALITY OVER

QUANTITY Despite better picture quality, Sony's original Betamax tapes could record only one hour of video, while rival VHS tapes could store double that.

2 SECRET RECIPE

Sony initially failed to license its Betamax technology to a sufficient number of manufacturers, thinking it could go it alone. This led to a situation where VHS players competed against one another for share, driving down prices and making the format more attractive to consumers.

3 BUYING V. RENTING When both systems arrived in the United States in the mid-1970s, VHS machines were less expensive to rent. When consumers began to purchase rather than rent their video players, they tended to go with VHS machines. 4PORN CONUNDRUM Sony refused to license the Betamax technology to adult film companies, who turned to VHS tapes and ended up creating a multibillion-dollar industry.

How Sony won Blu-ray

1 BIGGER IS BETTER

Sony's Blu-ray discs can store upward of 50 gigabytes of data on a single disc, while HD DVDs hold about 30 gigs.

2 PLAYSTATION 3

By including a Blu-ray drive in its next-generation video game console, Sony was able to drive sales of both the PS3 and its new DVD format.

3 SOLID PARTNERSHIPS Not wanting to duplicate the Betamax mistake, Sony took the initiative to license its Blu-ray technology with as many partners as possible. When Blu-ray was first announced in 2002, Sony had already signed up eight partner companies committed to producing players.

4 CONTENT IS KING

By signing exclusive deals with more studios and content providers than Toshiba, Sony was able to squeeze its competitor to the sidelines. Warner's defection to Blu-ray was the fatal blow.

Matt Hartley

Dead technologies

Media formats we have used, loved and discarded for the next best thing

The cassette tape

A Walkman and roller skates, anyone? Tapes were the original portable format and made music pirates of us all. (Can I tape your Fleetwood Mac Rumors?) But they were hated by record companies. The sound quality tended to go tinny after a few dozen plays, and many tapes wound up melting in a car on a sunny day.

Eight tracks

Developed by plane maker Bill Lear, eight-track tapes were large and couldn't be rewound. And because of their high tape speed, didn't sound great. Nevertheless, they were popular in the 1970s, thanks to the auto industry, which installed thousands of eight-track players. When sales slipped, companies eager to pare formats quickly dropped the eight track. Vinyl

Cumbersome to play and easily damaged, albums faded out in the late 1980s. But album covers managed to become a genuine art form and another way to grab music buyers' attention. Lately, albums have a enjoyed a comeback, thanks to collectors, club DJs and scratching (ask your kids).
Compact discs

CDs are dead? They will be soon. Who needs all those plastic cases and discs when you can fill your hard drive and iPod with thousands of songs? Using a credit card, of course. Downloading music for free is wrong, isn't it?

HD-DVD Death Made Official

http://blog.wired.com/gadgets/2008/02/hd-dvd-death-ma.html

HD-DVD Death Made Official. Downloads To Kill Blu-Ray Next.
By Rob Beschizza
February 16, 2008
Categories: High Def

Toshiba put HD-DVD out of its misery today. Reuters confirmed this afternoon that it will cease manufacturing HD-DVD equipment, following earlier reports from Japan's NHK public broadcasting network.

This leaves Blu-Ray as the presumptive victor in the irrelevant optical disk format war. It now must face up to the real competition: the continuing success of DVD and the growing popularity of downloads, both on the internet and on-demand cable TV.

The end comes only a day after Wal-Mart announced it would no longer carry HD-DVD stuff. This will go a long way to confirming the view, long-held by cynics, that the mega-retailer always held the executioner's axe to begin with, and was merely waiting until it was clear which format's camp had the most densely-stuffed brown envelopes to throw at Hollywood.

Wal-Mart dumps HD DVDs to back Blu-ray

http://news.yahoo.com/s/nm/20080215/tc_nm/walmart_dvd_dc

Wal-Mart dumps HD DVDs to back Blu-ray
By Franklin Paul
2-15-8

Wal-Mart Stores Inc (WMT.N) has decided to exclusively sell high-definition DVDs in the Blu-Ray format, dealing what could be a crippling blow to the rival HD DVD technology backed by Toshiba Corp (6502.T).

The move by the world's largest retailer, announced on Friday, caps a disappointing week for HD DVD supporters, who also saw consumer electronics chain Best Buy Co Inc (BBY.N) and online video rental company Netflix Inc (NFLX.O) defect to the Blu-ray camp.

In a statement on its Web site, Wal-Mart said that over the next few months it will phase out sales of HD DVD systems and discs. By June, it will sell only products in the Blu-ray format which was developed by Sony Corp (6758.T).

"We've listened to our customers, who are showing a clear preference toward Blu-ray products and movies with their purchases," said Gary Severson, a Wal-Mart senior vice president.

The move affects 4,000 Wal-Mart and Sam's Club stores in the United States, as well as related online sites. The stores will continue to sell traditional DVD players and movies.

The so-called format war between HD DVD and Blu-ray has been a thorn in the side of retailers, which have had to commit shelf space to devices from both camps even as they field complaints from frustrated and confused customers.

Next-generation DVDs and players, boasting better picture quality and more capacity, were expected to help revive the $24 billion global home DVD market. But Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on a consumer's DVD machine.

Like the Betamax-VHS battle in the 1980s, having two DVD standards has dampened sales of both and put retailers in a conundrum of having to either choose sides or sell products that have a chance of becoming obsolete very quickly.

The balance of power, however, tipped toward the Sony camp in January after Time Warner Inc's (TWX.N) Warner Bros studio said it would only release high-definition DVDs in Blu-ray format. With that, studios behind some three-quarters of DVDs are backing Blu-ray, although some release in both formats.

Blu-ray also has support from News Corp's (NWSa.N) 20th Century Fox, Walt Disney Co (DIS.N) and Lions Gate Entertainment Corp (LGF.N). Sony's PlayStation 3 game console can also play Blu-ray films.

"So if you bought the HD player like me, I'd retire it to the bedroom, kid's playroom, or give it to your parents to play their John Wayne standard def movies, and make space for a BD player for your awesome Hi Def experience," Wal-Mart's movie and gaming blogger, Susan Chronister, wrote in a posting.

To be sure, Toshiba has secured agreements with studios including NBC Universal's Universal Pictures, Viacom Inc's(VIAb.N) Paramount Pictures and DreamWorks Animation SKG Inc (DWA.N).

Microsoft Corp's (MSFT.O) Xbox 360 also currently works only with HD DVD. However, Microsoft said in January it could consider supporting Blu-ray technology at consumers' behest.

Toshiba could not be reached to comment on Wal-Mart's move.

Earlier on Friday, the Hollywood Reporter quoted unidentified industry sources as saying Toshiba was widely expected to pull the plug on HD DVD in the coming weeks.

Toshiba spokeswoman Junko Furuta said none of what was reported in the magazine had been decided. She declined to comment further, saying: "We cannot comment on speculation."

(Reporting by Franklin Paul; additional reporting by Kiyoshi Takenaka in Tokyo; editing by Phil Berlowitz and Gerald E. McCormick)

Porn Providers Rethinking Next-Gen DVD Plans

Robalini's Note: Who would've guess the battle for for DVD standards would turn on "Jenna Haze Oil Orgy"?

http://www.pcmag.com/article2/0,2704,2247595,00.asp

Porn Providers Rethinking Next-Gen DVD Plans
01.10.08
by Chloe Albanesius

LAS VEGAS—The adult film industry is still taking a wait-and-see approach to the Blu-ray /HD DVD wars. But while Blu-ray's perceived costs have pushed some companies into the arms of the HD DVD camp, Warner Bros.' decision last week to exclusively support Blu-ray has some thinking that the end of HD DVD is nigh.

Executives in the adult-film industry spoke Wednesday during the opening day of the AVN Adult Entertainment Expo 2008, which briefly overlaps with the more mainstream Consumer Electronics Show ending Thursday.

"It could be a real sign that things will shift," Jeff Thill, director of video operations for the Hustler Video Group, said about the Warner decision. Thill said he sees no advantage of one format over the other, but is "leaning Blu-Ray" after Warner's announcement.

The Blu-ray camp, led by Sony, has been fighting Toshiba and its HD DVD format for years in a battle reminiscent of the VHS versus Betamax battle. In that fight, Betamax maker Sony's refusal to work with the porn industry helped usher in a VHS victory when the adult industry capitalized on the burgeoning popularity of VCRs and video rentals.

Hustler had some success recently with the Blu-ray release of Jenna Haze Oil Orgy, said Thill, who was on hand to showcase Hustler's latest releases at the annual AVN Adult Entertainment Expo.

The company packaged the "Jenna" disc with an HD DVD and standard version in case users had trouble with Blu-ray, but has thus far not received any complaints. In March, Hustler will release its latest "Barely Legal" DVD in the Blu-ray format, he said.

Hustler has released two titles using the HD DVD format, Thill said. The company expects to release between 15 to 25 high-definition videos in 2008, most of which will probably be Blu-ray, Thill said.

Blu-ray is "a little bit of a headache" because of royalty fees, but it's "six of one, a half dozen of the other" with the format wars, he said. Blu-Ray also "sounds sexier," according to Thill, and there's "an important base in the gaming world" because the popular PlayStation 3 runs Blu-Ray while Microsoft has released an optional HD DVD drive for its Xbox 360 console, Thill said.

Vivid Entertainment, home to porn star Jenna Jameson, has also released videos on Blu-ray and HD, said David Peskin, Vivid's national sales manager. It currently has two Blu-ray titles and three HD DVD titles on the shelves.

Vivid was initially "conservative" with its high-definition re-order numbers, but is "starting to stock a little heavier" since sales have been promising, Peskin said. Vivid has seen Blu-ray sell more units online while HD does better in retail stores, he said.

The company doesn't yet have a format preference. "Both have surpassed expectations," he said, though Peskin also pointed to the PlayStation 3 connection as a plus for Blu-ray.

Some companies have had to bypass Blu-ray altogether. Jackie Ramos, vice president of DVD production for Wicked Pictures, "looked to Blu-ray" when the company was first exploring high-definition about a year ago, but had trouble finding a provider that would produce Blu-ray discs for the adult industry.

Wicked has since released about a half dozen HD DVD titles, but Ramos managed to track down some porn-friendly Blu-ray producers and is now "aggressively" looking at those options.

With the Warner decision, things are "a little more serious," Ramos said, and, to him, it makes sense to examine Blu-Ray should it become the industry standard.

Ramos also had concerns about the Blu-ray price point. There's a copyright aspect you can't get around with Blu-Ray, whereas HD DVD allows you to choose whether or not you want that copyright protection, he said. "With adult industry, HD DVD was friendlier price wise."

Ramos expects to select a Blu-ray producer in the next few weeks and hopes to release Wicked's first Blu-ray title in the next few months, he said. But he was not convinced that the porn industry was driving the debate as it did with VHS and Betamax.

"What really drives it is the availability of players" and what the consumers want, Ramos said. HD capitalized on that by selling cheaper players, but now that many of the major studios have jumped on the Blu-Ray bandwagon, "we'll have to see," Ramos said.

Albert Lazarito, vice president of Silver Sinema, also believes the consumer is key to winning the DVD battle. "With the Warner Brothers decision, the market will direct the outcome," he said. Lazarito is "more than confident that it won't be the adult realm" that selects a final DVD format.

Silver Sinema has been filming in HD because Blu-ray is too expensive, Lazarito said, but his company is "ready to go depending on how the market shifts."

Pink Visual was also turned off by the cost of Blu-ray, explained director of marketing Kim Kysar. "HD DVD was affordable; it was doable. Blu-ray was too expensive," she said.

Pink Visual will release its first HD-DVD video next week.

"Everybody's going to want to have both options," Kysar said. "Blu-Ray could be the next step, but not if nobody uses it and it stays too cost prohibitive."

Kysar also expressed concern about how much the camera would capture in high-definition, a sentiment echoed by Lazarito.

"Imperfections are modified," Lazarito said.

Paramount in HD-DVD blow

http://www.ft.com/cms/s/0/ea637496-bd8d-11dc-b7e6-0000779fd2ac.html

Paramount in HD-DVD blow
By Matthew Garrahan and Mariko Sanchanta in Las Vegas
Published: January 8 2008

Paramount is poised to drop its support of HD-DVD following Warner Brothers' recent backing of Sony's Blu-ray technology, in a move that could sound the death knell of HD-DVD and bring the home entertainment format war to a definitive end.

Paramount and DreamWorks Animation, which makes the Shrek films, came out in support of HD-DVD last summer, joining General Electric's Universal Studios as the main backers of the Toshiba format.

However, Paramount, which is owned by Viacom, is understood to have a clause in its contract with the HD-DVD camp that would allow it to switch sides in the event of Warner backing Blu-ray, according to people familiar with the situation.

Paramount is set to have a bumper 2008 with several likely blockbusters, including the latest instalment in the Indiana Jones franchise, slated for release.

Paramount joining the Blu-ray camp would leave HD-DVD likely to suffer the same fate as Sony's now obsolete Betamax video technology, which lost out to VHS in a similar format war in the 1980s.

Warner's decision last week to throw its weight behind Blu-ray saw it join Walt Disney, 20th Century Fox and Metro-Goldwyn-Mayer as backers of the Sony format.

The Warner move gives Blu-ray about 70 per cent of Hollywood's output, although the format's grip on film content will increase further when Paramount comes aboard.

It is unclear whether DreamWorks Animation has the same get-out clause in its contract with the HD-DVD camp. However, Paramount and DreamWorks have a close relationship, with Paramount distributing DreamWorks Animation films.

The two companies also signed their HD-DVD contracts at the same time.

Meanwhile, Universal has declined to comment on its next- generation DVD plans following the Warner move.

Sir Howard Stringer, chief executive of Sony, yesterday held out an olive branch to its rival in the next-generation DVD format wars following Warner's decision to back Blu-ray.

Sir Howard said the company would be "open to dialogue" with the rival high-definition HD-DVD camp to "grow the market". The move came as new figures showed that Blu-ray had opened up a decisive lead over the rival home entertainment format.

Sir Howard said: "We are not going to push people around. We'll talk to anyone . . . we have a lot of work to do to grow the market. We'll be systematic and open to dialogue at all times."

He added that Sony still had "a lot of work" to do to get Blu-ray "widely accepted" among American consumers.