Re: [Marxism] The downfall of HD-DVD now available on Blu-Ray

["Joaquin Bustelo" <jbustelo@xxxxxxxxx>]

David Walters wrote: "I think what put Blu-Ray over the top was that it
could holder more data on one side than HD-DVD, supposedly and that swung
computer users to Blu-Ray."

Toshiba's HD-DVD deserved to lose. It was basically a kludge, hacking
blue-violet lasers onto existing DVD technology (physical parameters)
instead of re-engineering the disks for the much higher potential capacity
afforded by the shorter wavelength.

Time-Warner --the studio that just gave the coup d'grace to HD-DVD-- was
among the original backers of this hack, basically for the reason that it
could be done fairly quickly and cheaply. Many/most computer and technology
firms backed Blu-Ray as superior. Microsoft, of course, backed HD-DVD not
just out of its general commitment to mediocrity but because Blu-Ray is
intimately connected to the Playstation 3 console, which is a rival to the
XBOX 360.

The technical issues involved are these: blue-violet lasers use shorter
wavelengths than those used in DVD's. This means not just that you can space
one's and zero's closer to each other on each track, you also can space the
tracks of data together more closely, in other words, have more tracks per
inch. But not if you have as thick a layer of plastic as current DVD's do
over the metallic foil that contains the actual data. The plastic protective
coat over the foil on Blu-Ray Disks is a fraction of that over standard
DVD's so that tracks can be closer together. But this also permits something
else, which is stacking many of these metal layers, which are so thin as to
be practically transparent, and to read a second or third layer you change
the focus of the reading head. 

Because of the fewer grooves per inch, each HD-DVD layer contains only 15GB
of data as opposed to 25GB for SONY's Blu-Ray, and HD-DVD maxes out at three
layers, for a capacity of 45GB, whereas SONY has 8-layer disks (200GB) in
the lab and 4-layer disks (100GB) in commercial development.

Which, of course, is NOT why Blu-Ray is winning. Blu Ray is winning because
of the Playstation 3. Both Nintendo and Microsoft made the decision to go
with last generation optical DVD technology drives in their next-generation
consoles, the Wii and XBOX 360. In Microsoft's case, this allowed the XBOX
360 to come onto the market a year earlier than the Wii and Playstation 3. 

SONY actually had to put off launching the PS3 for a half year because Blu
Ray wasn't ready. And it has had to set a high price, reducing sales.
Nevertheless, since launching in Nov. of 2006, SONY has sold world-wide
about six million consoles, and each one is ALSO a Blu Ray DVD player. This
created an instant user base for Blu Ray much larger than just the new
standard by itself would have. And because HD-DVD came on the market a
little earlier than Blu Ray and way more mature as a technology, probably
HD-DVD would have taken the lead early on. But as things stand now, in North
America there are four million Blu Ray devices compared to less than one
million HD-DVD devices. 

Already a year ago, this forced Warner Bros., which is the largest home
video distributor, with about a third of the U.S. market, to announce it
would support Blu Ray in addition to HD-DVD. 

A few months ago Toshiba got Paramount to go exclusively to HD-DVD for $150
million. But then after years of spectacular growth, DVD sales began to
taper off. This even though a LOT of money was poured by consumers into
large, flat, widescreen "home theater" digital televisions in the last year,
looking forward to Feb. of 2009 when analog broadcasts in the U.S. are
scheduled to be turned off forever. Even more homes are likely to change
over this year, which means this is the time to get high-def DVD's firmly
established in the market. But with the format war going on, that wasn't
going to happen.

So Warner --the biggest player in home video, and the studio that drove
through the creation of the DVD format in the first place (mostly in
alliance with Toshiba) decided to  throw its weight to settle the war.
Apparently, they went first to Toshiba, and asked them to get another studio
to release ONLY on HD-DVD, in addition to Paramount and Universal, and then
Warner would do the same. That would have created a situation where 2/3rds
or more of new releases would have been exclusively on HD-DVD. According to
press accounts now coming out, that other studio would have been Fox, but
they backed out, and cut a deal to go exclusively with SONY instead. Hence
Warner Bros.'s decision, which also affects New Line, HBO and a number of
other DVD imprints, and which will give Blu-Ray a 2-1 advantage.

Warner's offer was meant as a last chance for HD-DVD because Blu Ray disks
outsold the HD-DVD almost 2 to 1 (5.7 million versus 3.2 million). In Europe
the Blu Ray advantage is even more lopsided, but based on miniscule sales of
less than a million through the end of the third quarter. And it terms of
actual player (not including Playstation console) sales, those were split
50-50. This last figure is important because in the first few months of
ownership, player owners purchase an average of 4 movies, but console owners
less than one.

Warner's decision means that 70% of home video will be exclusively on Blu
Ray by the middle of the year. But Toshiba, instead of throwing in the
towel,  is throwing a Hail Mary pass instead. Basically, they've just cut
the price of their players in half, and are bundling them with up to SEVEN
free movies -- two in the box, five more by mail. The two in the box are the
300 and Bourne Identity, and the five by mail you pick from a selection of
15 current release titles. 

They're also making a strong pitch that these are great upconverting players
for normal DVD's.

The lowest price I've seen for HD-DVD is $129 at Tiger Direct, and the
normal price for the entry-level model is now going to be $149. That is,
high, but NOT an insanely high price for a DVD player, and actually, not a
bad deal if the movies on offer are ones you'd want to own, leaving HD-DVD
capacity as simply a bonus feature.

It smacks of desperation, but also, the deals that are cut to back one
format or the other are not a simple quid-pro-quo payment. These sorts of
deals tend to take the form of so much money for joint advertising, so much
for buying movies to bundle with players and so on. Toshiba may already have
committed to buying several million copies of HD-DVD movies from "their"
studios, as well as to many millions of dollars in joint ad buys. 

*  *  *

The most interesting thing about all this is the head of Warner's comments
that the window of opportunity for mass adoption of a high-definition DVD
standard may be closing. Many in the industry believe that future
distribution will be online. And the last couple of weeks brought major
breakthroughs in this regard.

One is that Netflix is now offering unlimited streaming movies --mostly
back-title, not the latest releases-- to subscribers of its three-DVD and
two-DVD at a time plans. They play only on wintel computers, although a
stand-alone under-the-set box is promised for later in the year.

The other is that Apple will be offering through its Apple TV box streaming
play of releases a month after the DVD's come out. From all the major
studios. $3.99 for new releases, $2.99 for older ones, and $1 more for
high-definition. 

Of course, Xbox live (Microsoft) also has online movie rentals, but a very
limited selection, as do the cable companies. 

The point is the online offerings are getting more robust and attractive,
and will soon be an alternative to DVD players.

Joaquin



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