With the festive season almost upon us, the battle for the future of optical storage is likely to enjoy a brief ceasefire. So who's winning and who, apart from the consumer, is losing out?
Update from the front line
Content is king. This long-held observation has often been cited by those who believe content availability could tip the scales in a format war. The most recent spate of content-related announcements from backers of Blu-ray Disc and HD-DVD - the formats competing for the throne currently occupied by DVD - appear to shift the balance between the two camps. At least, for the moment.
This time out, it’s the newsmakers are Warner Bros Entertainment and Hewlett-Packard. And, there's more to their announcements than initially meets the eye.
Warner joins team Blu-ray
The availability of content is a critical factor in determining which of the formats in this protracted war has the best chance of survival. Assuming equal pricing and availability of hardware, if more content is available for one format over the other, the format with the larger selection will have the edge. Likewise, the format most likely to prevail is the one that requires us as consumers to sacrifice as little as possible – for example, the format that lets us have all of our favourite films, regardless of which studio distributes them.
With Warner's mid-October proclamation that it would join the Blu-ray Disc Association, Blu-ray gained an edge over HD-DVD. Warner says it will release both current and catalogue content in the Blu-ray format as well as HD-DVD, if both go to market.
Warner's announcement means that five out of the six major studios are supporting Blu-ray - Paramount, Sony Pictures, Twentieth Century Fox, Walt Disney and Warner - that's 80 percent of the market. That's in addition to ESPN, Miramax, MGM (which announced its support earlier this month), Lions Gate Entertainment and Touchstone. Gaming giant Electronic Arts; and music powerhouses Sony BMG and Universal Music Group. In short, quite a spate of content providers have lined up now behind Blu-ray Disc - far more than HD-DVD has gathered at this juncture.
Like Paramount before it, Warner is covering its bases by making sure the company is positioned well, regardless of which format wins out. The harsh realities of a dual-format marketplace prompted Warner's switch from being a staunch supporter of HD-DVD to straddling the line between formats.
Warner's motive was simple. Says Jim Cardwell, president of Warner's home video arm, "We realised recently it was likely that both formats would go to market - and we didn't want consumers not to have access to our movies. We wanted to make sure all consumers with high-definition players could watch [our] high-definition movies."
However, Warner still had concerns about Blu-ray - namely, the cost of replicating discs. So the company tabled a proposition to the Blu-ray Disc Association.
"We knew Blu-ray was close to finalising its specification," explains Cardwell, "and we wanted certain things in the specification. It reached a point in time where we didn't want the ship to sail and miss the opportunity. We felt we could more effectively lobby for those functionalities if we were members of the Blu-ray Disc Association."
Given some of Warner's previous concerns about Blu-ray the additions to the Blu-ray spec that Warner sought were not surprising.
"We wanted the player to be capable of playing back a [9GB] high-definition red-laser disc, which we call BD-9," says Cardwell. "[The disc] would have a high enough capacity for our movies, and it would have a lower cost than the [25GB] BD-25. The advantage would be lower costs to manufacture the disc, because it could be manufactured on existing [DVD production] lines. Certainly, most of our movies will fit on a BD-9. The issue will be how much enhanced content will we put on there. For basic movies, most will fit on BD-9."
Although the Blu-ray Disc Association has not formally announced the format, Cardwell reports that it has "been proposed and accepted by the BDA."
A red-laser Blu-ray Disc
The resulting disc will be encoded with a high-definition video codec, and although it will be a red-laser disc (not a blue-laser disc as used by the other formats within the Blu-ray specifications), it will play back only in Blu-ray Disc players and recorders. Even though vendors will be able to manufacture the disc on existing DVD production lines, it is clearly not the same as an HD-DVD. (One of HD-DVD's strengths is its purported ability to be produced at a low cost on existing, albeit modified, DVD production lines).
Wolfgang Schlichting, research director for removable storage at IDC, agrees that using a red-laser disc could save vendors money - at least in the short term, until Blu-ray ramps up its manufacturing, which will in turn drive down costs.
"You could have cost savings if you go with red laser, because you're working with larger [data] pits on the disc," explains Schlichting. "The density is not as high as with blue laser. That could make it easier for [disc] mastering, which is still a challenge for Blu-ray because of its very fine structure."
In spite of Warner's decision to support Blu-ray, if both formats proceed to market, Cardwell stresses that Warner content will come out on both. "We're going to target getting the software out at exactly the same time as the hardware," he says. "We plan to put out major catalogue titles and major new releases in both formats; we have not decided exactly how many titles to put out at launch."
HP pushes for unity?
A format war is the one type of competition that hurts consumers. No one stands to benefit, neither the customer nor the manufacturer. That's apparently one of many reasons that Hewlett-Packard decided to take a position that's a bit contrary to the party line of the Blu-ray Disc Association, of which it is a founding member.
In October HP issued a statement requesting that the Blu-ray Disc association make two changes in its draft spec. First, that Blu-ray back what's referred to as "mandatory managed copy" - a guarantee that people who buy Blu-ray Discs will be able to make legal copies of content to other devices and media. (Competitor HD-DVD has already touted this consumer-friendly capability as one of its strengths.) The second change that HP asked for was that Blu-ray Disc adopt Microsoft's Interactive HD, or iHD, as the programming language that will govern the disc's menu creation and other interactive capabilities.
Josh Peterson, HP's director of strategic alliances, optical storage solutions business, noted that with this announcement the company hopes to give new life to discussions about uniting the two next-generation optical formats.
The announcement came just weeks after the company stood alongside Dell and staunchly supported Blu-ray in the face of the above-mentioned Microsoft and Intel announcements supporting HD-DVD. The genesis of this reversal, says Peterson, was a meeting with Microsoft after the Redmond and Seattle behemoths threw their collective weight behind HD-DVD.
"We sat down with Microsoft to compare notes on the PC implementation of the various application layers," says Peterson. "Based on that discussion and technical reviews, we decided iHD is a must, if you will, for the PC implementation of next-generation optical discs."
The iHD advantage
The advantages to iHD, an XML-based format developed by Microsoft, Disney, and the DVD Forum, will more clearly benefit content producers more than consumers. For content producers, iHD will be easier to use for authoring and testing discs. For consumers, iHD will be integrated into Microsoft's Windows Vista OS, which will make playing an iHD-based disc easier than playing a disc using a different platform that would require installing third-party software.
The second key element of HP's request was for mandatory managed copy. "We envision having high-definition content being streamed from room to room, and iHD is part of the equation that will allow that to happen. These two features together really enable the digital connected home, and we feel the value here especially from a PC perspective is unquestionable. We'd like to make the digital home centred around the PC and PC technology," Peterson says.
"At the end of the day," he adds, "we're doing this for consumers. We want to allow consumers to move their HD content - including the interactive features - throughout the house, and iHD together with managed copy really enables that vision."
Both the HD-DVD and Blu-ray Disc groups have stated that their respective formats will use AACS (Advanced Access Content System) to protect the discs. And AACS, in its current preliminary spec, has provisions for managed copy. However, this summer Blu-ray added BD Plus and ROM Mark security features. Blu-ray representatives say these features won't hinder managed copy. However, Peterson notes, "The additional features add a level of complexity. What we're proposing is that we make sure that those features don't inhibit mandatory managed copy."
The HD-DVD camp has been vociferous in its support of mandatory managed copy. Blu-ray Disc Association representative Andy Parsons did note that "BD Plus is a different layer of content protection that should not have any direct impact on that. All of the members of BDA are fully committed to the idea of managed copying. It's just a case of getting a final copy of AACS in our hands to announce anything. It's just a question about implementation."
Peterson admits the method of HP's request to Blu-ray Disc was dramatic, and the timing late - but not impossibly so. "Given the timing, we felt we had to make a bold request, so there was no question about how serious we were about these features," says Peterson. "We won't switch camps - that would be a pretty dramatic move - but we would support both."
The Blu-ray Disc Association had no comment in response to HP's very public request.
The analysts weigh in
Some analysts who have been following the saga have already predicted a winner. Ted Schadler, vice president at Forrester Research, released a report that proclaimed, "Blu-ray Will Win a Pyrrhic Victory Over HD-DVD."
Schadler says he's long believed that Blu-ray held the edge due to its superior capacity and the fact that Sony's PlayStation 3 will play Blu-ray movie discs. "The longer the format war continues, the worse off the industry is going to be. As long as they're battling each other, they're not focusing on selling the benefits of the next-gen formats, and that will leave consumers even colder," observes Schadler.
IDC's Schlichting thinks it's too early to declare a clear victor. "From a perception point-of-view, I think Blu-ray has made more progress, especially in Europe and the US," says Schlichting. "But I don't think we've seen the knockout blow for HD-DVD, even though the Paramount and Warner announcements have taken quite a bit of wind out of the sails of HD-DVD."
Schlichting believes HD-DVD will still have an edge, given that products using this format are currently slated to make it to store shelves before Blu-ray-based hardware. "I think if they are able to show a 30 percent price advantage over Blu-ray products, [HD-DVD], in my view, still has a good chance to keep their format viable," Schlichting says.
And, as Schlichting rightly points out, none of these content deals are exclusive arrangements. "If HD-DVD could generate momentum, that would prompt other studios to consider publishing content, so I don't think it's a total commitment [to Blu-ray] yet," he notes. "Ultimately, the studios will build what consumers demand. The studios are more and more just following where the market is going, and are not interested in leading the market and being kingmaker in this format war."
And so the Blue Laser World turns. What's next in this format soap opera? With the holiday season upon us, I suspect the next big round of announcements won't be until the start of next year, when the annual Consumer Electronics Show descends upon Las Vegas. Stay tuned.