The Retailing of HD-DVD and Blu-ray

Evan Powell, September 1, 2006

So--what is the consumer to do?

This format war is not about image quality or the best technology. It is a struggle for money, power, and market share among the Hollywood studios and major consumer electronics firms. We as consumers have been dealt a hand, and it is up to us to play it to our advantage.

We have several options. First, we can do nothing and sit on the sidelines. That is certainly a reasonable choice for a lot of people who are not that motivated to get into the viewing of films in high definition. It will be years before most of the titles just mentioned above actually appear in either HD-DVD or Blu-ray. And not only that, the price of the HD-DVD and Blu-ray players will come down significantly as time goes on. Today's $1000 Blu-ray player is likely to cost $200 three years from now. So what is the rush?

Of course, the early adopters and videophiles are not going to sit by and miss out on the grand experience of HD video and HD audio now that it is available. For these folks, there are three choices?buy HD-DVD, buy Blu-ray, or for those with unlimited funds, buy both.

For those who want to get the maximum bang for the buck, one practical strategy may be this: buy HD-DVD today, and plan to buy Blu-ray in another year or two when the prices have collapsed and more titles are on the market. By doing so you will end up spending less for both technologies than you would by spending $1000 just for Blu-ray today. At this writing, Amazon is selling the Toshiba HD-A1 HD-DVD player for $450, with free shipping included (click here for current price). That is a manageable investment for most home theater enthusiasts. It lets you step into the world of HD today with a minimum outlay of cash, with an open option to pick up Blu-ray when it becomes a better value proposition.

There are several benefits to this approach. First, there are more HD-DVDs to choose from at the moment. Second, you can play all of your standard DVDs in upscaled 1080i format with digital output. If your current player does not have these features, regular DVDs are likely to look better than they do on the player you currently have.

Another advantage is that the HD-DVDs that have been released so far are generally superior to the current crop of Blu-ray discs due to the use of VC-1 and MPEG-4. In addition, all of the HD-DVDs have high definition audio tracks on them. Many of the Blu-ray discs have uncompressed PCM, which certainly delivers excellent audio quality. But about a third of them have no advanced audio capability. For example, Warner Bros.' HD-DVD release of Training Day is in VC-1, and it includes Dolby Digital-Plus and Dolby TrueHD, whereas its Blu-ray edition of Training Day is in MPEG-2 and has only standard Dolby Digital. Early adopters and videophiles will prefer the HD-DVD as the collectible edition of this movie.

On the other hand, if you have more money available and want to upgrade your projector or TV to a unit that can recognize a 1080p/24 signal, then you might want to choose one of the new Blu-ray players to be released this fall from Pioneer, Panasonic, or Sony (make sure to verify the final specs upon release). The advantage is that you'll be the first on your block to have a full 1080p/24 system in operation. The downsides are (a) you will pay a lot more than your neighbor with the HD-DVD rig, (b) many of the current Blu-ray discs being released are not quite what they should be in terms of video and/or audio quality, and (c) you are betting that Blu-ray will get its fundamental problems worked out in a timely fashion. However, if and when we begin to see 50GB dual-layer Blu-ray discs in production, many of the current quality issues stemming from the use of MPEG-2 with a 25GB limit should be mitigated.

Overall, we would like to see both HD-DVD and Blu-ray survive and thrive. There is plenty of room for both of them in the marketplace, and there is no reason for either one to monopolize it. Currently HD-DVD has its act together and is delivering tremendous value at prices most consumers can easily afford. It is a shame that retailers are not more motivated to show HD-DVD to the public in its best light. But if Blu-ray gets high performance players with 1080p/24 output to market before HD-DVD does, and if it gets its quality problems resolved, then it will be offering a real value proposition to videophiles that would justify its existence as well.

The major studios have always been happy to release their movies on DVD in both Widescreen and Full Screen editions to accomodate the consumer's TV and viewing preference. There is no reason that all studios, once the two formats are firmly established, could not ultimately follow the lead of Warner, Paramount, and New Line Cinema by releasing their films in both HD-DVD and Blu-ray for the same consumer-friendly reasons.

Ultimately, a vigorous competition between the formats will hasten the collapse of HD player prices, and bring consumers closer to the day when both technologies are available at nominal cost. Keep in mind the rapid collapse of pricing in progressive scan DVD players over the last five years. Today's $150 DVD player will outperform players that cost $1000 five years ago. We can expect to see the same price erosion in the HD player market going forward. Once HD-DVD and Blu-ray players are widely available for $200, it won't matter which technologies the studios decide to support. The consumer will have won the war.

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