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Thursday, March 20, 2008

Blu-ray: No-Competition Atrophy Attrition

Mar 20 2008 10:51AM | Permalink |Comments (9) |

Market competition may be a supreme hassle for participants on a day-to-day basis, but from a long-term-view perspective it tends to be supremely beneficial, for competitors and consumers alike. Suppliers are motivated to improve their products faster than they otherwise would, and customers benefit from competition-fueled plummeting prices...thereby resulting in a much larger market (measured in unit sales) than would otherwise be the case.

Ideally, as I pointed out in response to a recent reader comment, such competition would take place on a standards-based playing field. However, incompatible dueling standards such as Blu-ray and HD DVD can also cultivate a healthy competitive environment. Which is why, even though I understood why the movie industry sooner-or-later needed to settle on a single format, and I was aware that both camps were bleeding substantial amounts of cash, I was disappointed to see the end of the blue laser optical disc wars play out as soon as it did.

The effects of HD DVD's demise are unfortunately already appearing. Blu-ray player prices are actually rising (more). And Sony's long-time patent partner, Philips (who partners with Lite-On for computer optical drives), is predictably beginning to rattle its saber, touting its beneficial early access to Blu-ray technologies. What the Philips/Lite-On release doesn't explicitly tout, but what I strongly suspect will occur, is that a number of companies that might otherwise broaden the Blu-ray ecosystem won't be given timely patent access to the technologies needed to implement format support.

Take Toshiba, for example. A large worldwide consumer electronics manufacturer, the company will, I'd wager, likely be "punished" for its longstanding HD DVD advocacy. Microsoft's Xbox 360, similarly, won't be warmly welcomed to the Blu-ray ranks, although the company will likely use the threat of Windows O/S non-support as a wedge to garner console support. Chinese player manufacturers who were key to the red laser DVD rapid price drop likely won't be able to work their same magic this time 'round.

And what of historical HD DVD content advocates such as Paramount and Universal? I 'spect there's an interesting tug-of-war currently underway in the Blu-ray camp; hardware manufacturers keenly aware that at end of day "it's the content, stupid" welcome additional movie studios, while competitive studios such as Disney and Sony Pictures are less enthusiastic. Meanwhile, Internet-based movie distribution services gain momentum...

In other Blu-ray news, the BD+ encryption circumvention I mentioned back in late December has now arrived in the form of SlySoft's AnyDVD HD v6.4.0.0 (more on BD+...AnyDVD HD cracked the base AACS encryption scheme common to both Blu-ray and HD DVD more than a year ago). The company's running a 20%-off promotion through end of month via coupon code 'easter'; certain pages (none of which I found via a quick click-around) on the company's site reportedly promote a 25%-off coupon code.

Also, for any of you who doubted the wisdom behind my longstanding advocacy of Sony's PlayStation 3 as the ideal Blu-ray player, note that an upcoming firmware release will implement BD-Live support (along with eliminating the current 2 GByte filesize limitation on WMV and DivX playback, and making other enhancements). I can't resist pointing out that BD-Live mimics functionality that's been implemented in HD DVD from the format's very first day....

Followup: Classic comments from SlySoft, via BoingBoing...

Reader Comments

at 3/20/2008 2:19:51 PM, Tom said:
So Brian would you venture a guess all of this will mean BluRay will go the way of DCC or the MiniDisc? If they play this pricing game it could easily spell doom for BluRay

at 3/20/2008 2:31:09 PM, Brian Dipert said:
Dear Tom, DCC and MiniDisc were predominantly Sony-only standards (I know that, for example, Sharp made MiniDisc players and recorders, too, since I used to own one, but....). Admittedly, Blu-ray support is more broad than that for either DCC or MiniDisc (or DAT, or MemoryStick, or....), although certainly not (yet) to the degree that red laser DVD's industry embrace was. Perhaps a better analogy might be comparing red laser DVD vs Blu-ray to the audio CD vs either DVD-Audio or SACD (see www.edn.com/blog/400000040/post/970004697.html). We all now know, as I suspected from the start, that neither high-res audio format made a noticeable dent in audio CD sales, as well as the impact that online music has had on the audio CD. The analogy isn't perfect, of course, because nobody wants only a piece of a movie, like they want only one song off an album. And of course, a movie is a much larger download payload than a music track or two (or even a dozen)...which is why I find progressive video download-and-playback such an intriguing workaround. At end of day, Blu-ray's success or failure depends a great deal on how speedy cost-effective broadband gets in the next year or few.

at 3/20/2008 3:02:52 PM, Nathan said:
I think it's interesting how many people think that the competition for BluRay will be downloadable content. I believe that there are still too many people out there without access to broadband, or have limited options for anything faster than dial up, to make it a realistic competitor (at least for now). Frankly, by today's standards of broadband, I don't know too many people who'd be willing to wait 4 or 5 hours for the movie to download before they can watch it. Yes, it can be streamed while it's downloading but you'd still have to wait a while. It's one thing if someone is illegally downloading something, they'll wait for almost anything, if it's free, but will the average paying person? That doesn't include whether or not I can make a copy of the content so that I can watch it another time at, say, a friend's house.

As far as analogies go, this is more of a VHS vs DVD situation than anything else. The difference between all of the aforementioned formats (i.e. SACD, DVD-Audio, MiniDisc, etc.) is that BluRay discs will be made by all the same major movie companies making DVD. So, the consumer will have a choice if they want to buy the old standard DVD or the new improved BluRay. In the other formats' cases, there wasn't a large variety of choice in content to push consumers to make a choice. There was really only the enthusiast (I admit that there would be others, but I can't really think of any that would make up a large portion of the sales).

For me, I decided to wait to see how things played out. Frankly, I'm happy to see that HD-DVD lost out. I'd rather see products that are innovative win-out over products that simply improve on existing technologies.

at 3/20/2008 3:19:48 PM, Brian Dipert said:
Dear Nathan, see my earlier progressive-download and cost-effective broadband comments. A standard-def film on Apple TV was ready to play less than 2 minutes after I pressed 'rent', over my 2.5 Mbps downstream DSL link. All the stats are here: www.edn.com/blog/400000040/post/1420022742.html. No, it wasn't high-def, but for what percentage of consumers is high-def a must-have, versus a preference, esp. if the high-def version comes at a price increment? Moreover, what percentage of optical disc viewings are of purchased, versus rented, content? And what percentage of purchased content gets watched more than once...except, of course, for families with small children who watch one or two Disney movies over and over and over? Regarding your 'innovative i.e. revolutionary vs evolutionary' comments, I'd only respond 'revolutionary, granted, but at what costs?' For more on that thought, see www.edn.com/article/CA6517962.html.

at 3/20/2008 4:43:57 PM, Nathan said:
Brian, I understand what you're saying. And I would agree that for a lot of people, they wouldn't care much about the quality of the video content. But, then again, I think most of those same people wouldn't have moved from VHS to DVD if it were not for the fact that the market place forced them to (it's pretty hard to find a VHS tape nowadays). Is that a good thing? Maybe, maybe not. But the only way that we can continue to make technological innovations is by pushing the standard. If sufficient or adequate was the standard, would we have cars today (for example)? A horse sufficient in most instances (some might argue better in certain cases). Personally, if I'm paying for something, I'm willing to pay a little bit more for a better quality product. In regards to the cost issue, new technologies are always expensive and those who are interested or enthusiastic about the technology will be the one's who'll pay the initial high prices. After a few years, the prices will come down to where DVDs are. Which, coincidentally, will be when the average person starts considering adopting the new technology, be it from lower prices or, perhaps, to replace an old DVD player. I was one of the early adopters of HDTV (back in 2000). I was willing to pay a lot of money for something that would have a high quality. Now, you can buy cheaply priced LCDs and PDPs. If it wasn't for companies making these expensive technologies and people like me willing to shell out a lot of cash for them, we wouldn't have such cheap TVs right now. Now I may have shot myself in the foot for bringing up HDTV and I realize that it's a little different because HDTV has now been mandated, but if the price hadn't considerably dropped. Don't you think that the US 2009 deadline would have been pushed back. As I recall, one of the stipulations for the mandate was that the cost per unit would drop to a certain threshold (base on big screen TVs of the time). I get where you're coming from, I just maintain that, in the end, we're better off. Even if the technology ultimately fails in the market place. Based on what you've said, it sounds like those who would have a problem with the higher price (for right now) aren't really the people who are likely to buy a BluRay disc or any other disc anyways. It always takes time for a new technology to become 'reasonably' priced. As I recall, DVD prices were about the same as BluRay discs are now (about $25-35). I have looked over some of you previous articles and would like to say keep them coming. Just because I disagree, doesn't mean that I'm not open to hearing another perspective. Have a good holiday weekend.

at 3/20/2008 5:19:06 PM, Brian Dipert said:
Nathan, thanks for your flattering feedback. I find myself unable to draw a parallel between VHS-to-DVD and DVD-to-Blu-ray. VHS was substantially lower resolution than DVD, and in a fashion that was immediately noticeable with the screen sizes and viewing distances of the times (DVD-to-Blu-ray is much less so, although the ATSC-fueled HDTV ramp will improve things in this regard). VHS also had all the disadvantages of any tape-based format; media fragility, very slow random access, no high-level index capability, etc, all areas in which DVD made great strides. See, for example, www.edn.com/blog/400000040/post/1030006103.html. The VHS-to-DVD transition was, I firmly believe, driven primarily by customer pull. Blu-ray, conversely, seems predominantly to be a supplier 'push'.

at 3/21/2008 12:27:37 PM, Ed C said:
You''re absolutely correct in the VHS to DVD analogy. DVD provide a lot of additional benefits that made VHS poor by comparison. When the prices were low enough, DVD started to outsell VHS. Other than a better picture, does Blu-ray provide additional benefits people want? In the current state of economy, Blu-ray is way too expensive for most people while not providing sufficient benefits for most consumers. I''m personally guessing that the players would have to go down to $100 and the movies go down to $20 before mass adaption takes place. The BDA has instead increased player prices. I guess it''ll be a while before I purchase one. Everyone please keep in mind on not how much DVD players and movies where then they first came out but rather how much they were lowered to before it outsold VHS.

at 3/21/2008 2:44:47 PM, Bill Sheppard said:
Brian, do you really think patents can be wielded punitively in this context? There is a patent pool intended to cover all patents required for implementing Blu-ray technology. These patents are licensable to all on common terms; no one gets to pick and choose who gets access. Further, I'd guess that Philips stands to profit more from their patent position than they're likely to lose due to Blu-ray products competing with their own, given their relatively modest market share worldwide.

With regards to studios, Disney, Sony Pictures, and other long-time Blu-ray studios have no reasonable ability to prevent Paramount or Universal from releasing content. The only possible barrier would be replication capacity (for which another division of Sony is the largest provider), and Sony Corporate stands to gain more from a robust Blu-ray content market than does Sony Pictures to lose. Further, third-party replication capacity is rapidly expanding, and I'm guessing those third parties would trip all over themselves to gain Paramount and Universal as customers.

Note: While I'm professionally affiliated with the Blu-ray Disc Association, this post represents my personal viewpoint.

at 3/21/2008 2:57:57 PM, Brian Dipert said:
Dear Bill Sheppard, regarding your 'patents wielded punitively' query...yes I do. If I didn't believe this was possible (probable?), I wouldn't have written it. Unlike some people, I don't write stuff just to be controversial/contrarian and thereby drive blog traffic, etc; I write what I honestly think. I see punitive behaviour happen all the time, throughout the industry I cover.

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