Warner Bros. Announces Blu-ray Exclusivity: Is HD DVD Dead?

Is HD DVD officially dead? Up until now, I've been leaning toward HD DVD in the high-def disc format battle based on a few different reasons. Number one, HD DVD player prices have been cheaper than Blu-ray players, especially in the last quarter of 2007, price being an important part of the consumer adoption equation that could make or break both formats. Number two, neither camp had a definite advantage in having exclusive access to studio titles, the rational being that if both formats produce a quality picture, one's much cheaper and has a similar number of movie titles compared to the more expensive format, the cheaper player will win. And number three, sales of standalone HD DVD players have been greater than standalone Blu-ray player sales in the US in 2007. Blu-ray takes the number one sales spot based on PS3 sales and most gamers don't use their consoles for movie viewing.

Yuriko Nakao/Reuters
Up until yesterday that was my argument for HD DVD, but how quickly things can change in one day...

Yesterday Warner Bros. announced they are jumping on the Blu-ray bandwagon exclusively, and being the biggest studio in Hollywood, essentially locking up about 70% of the movie market for Blu-ray. Other players in the blue camp include Walt Disney, 20th Century Fox, MGM, Lionsgate and, of course, Sony. That means reason number two above is nixed and it could be the defining reason in deciding the format war. Just think back to the VHS/Betamax battle of the early 1980's. Sony, the developer of Betamax, lost that war to VHS in great part because as consumers found more titles available on VHS, Betamax lost market share and eventually collapsed. It seems that Sony may now redeem themselves in a big way.

“Consolidating into one format is something that we felt was necessary for the health of the industry,” Barry M. Meyer, the chief executive of Warner Brothers, said in a telephone interview with New York Times writer Brook Barnes. “The window of opportunity for high-definition DVD could be missed if format confusion continues to linger.”

What makes this announcement even bigger is the fact that rumor has it that Warner was very close to going HD DVD-exclusive until sometime last week. The HD DVD Promotional Group was apparently offering some pretty hefty financial incentives to Warner for exclusive use of their movie titles, but Warner would only go HD DVD if Fox would go with. Remember that Fox is currently a Blu-ray supporter. Warner apparently figured that without Fox switching sides, no one format would have majority access to studio titles meaning that the format war would continue. Fox is rumored to have accepted an undisclosed payment from the Blu-ray Disc Association this week to remain exclusive to Blu-ray, meaning that Warner chose to accept a $500 million dollar payment from the BDA to go Blu-ray exclusive. Of course, this is all rumor.

At a post-announcement conference Warner Home Entertainment President Kevin Tsujihara flatly denied accepting any payment whatsoever from the BDA, saying that "this [decision] was one hundred percent around what makes the most sense for the consumer, the retailer and the industry. This was not a bidding war. This was all about what was best, strategically, for us". Fair enough. In the excitement that ensued following the announcement, a lot of people forgot about Apple hinting at banding with Blu-ray as well. If this was the case, we think Blu-ray would become portable within a couple of years. Just think, Blu-ray could possibly come in an iPod-friendly format. Saul Hansell of the New York Times Bits blog has even speculated at the possibility of Steve Jobs announcing a new Apple TV with a Blu-ray players at the MacWorld expo coming in mid-January. Wouldn't that be something?

Rumors and speculation basically are the engine of the blogosphere, but with the Warner Bros. annoucement, the real question we should be asking is:

Is HD DVD dead?

Read the official Warner Bros. announcement below:

(January 4, 2008 – Burbank, CA) – In response to consumer demand, Warner Bros. Entertainment will release its high-definition DVD titles exclusively in the Blu-ray disc format beginning later this year, it was announced today by Barry Meyer, Chairman & CEO, Warner Bros. and Kevin Tsujihara, President, Warner Bros. Home Entertainment Group.

“Warner Bros.’ move to exclusively release in the Blu-ray disc format is a strategic decision focused on the long term and the most direct way to give consumers what they want,” said Meyer. “The window of opportunity for high-definition DVD could be missed if format confusion continues to linger. We believe that exclusively distributing in Blu-ray will further the potential for mass market success and ultimately benefit retailers, producers, and most importantly, consumers.”

Warner Home Video will continue to release its titles in standard DVD format and Blu-ray. After a short window following their standard DVD and Blu-ray releases, all new titles will continue to be released in HD DVD until the end of May 2008.

“Warner Bros. has produced in both high-definition formats in an effort to provide consumer choice, foster mainstream adoption and drive down hardware prices,” said Jeff Bewkes, President and Chief Executive Officer, Time Warner Inc., the parent company of Warner Bros. Entertainment. “Today’s decision by Warner Bros. to distribute in a single format comes at the right time and is the best decision both for consumers and Time Warner.”

“A two-format landscape has led to consumer confusion and indifference toward high definition, which has kept the technology from reaching mass adoption and becoming the important revenue stream that it can be for the industry,” said Tsujihara. “Consumers have clearly chosen Blu-ray, and we believe that recognizing this preference is the right step in making this great home entertainment experience accessible to the widest possible audience. Warner Bros. has worked very closely with the Toshiba Corporation in promoting high definition media and we have enormous respect for their efforts. We look forward to working with them on other projects in the future.”

January 5, 2008

Warner Bros. Announces Blu-ray Exclusivity: Is HD DVD Dead?