HD-DVD vs. Blu-Ray: The Next Format War

First came the battle between VHS and Betamax for the home video market. Betamax tapes had superior image quality, but were more costly than VHS; the Betamax format is now extinct. Next came the much quieter battle between Sony and Philips' MMCD format and the SD format backed by a host of companies, including Toshiba, Matsushita (Panasonic) and Time-Warner. The first of these "format wars" ended with a clear victor after years of costly struggle; the second ended in a compromise which gave birth to the DVD format as we know it today.

We are now in the midst of another format war, this time over the future of in-home high-definition media. On one side is HD-DVD, a format created by Toshiba and NEC; on the other side is Blu-Ray, created by Sony, Matsushita, and Philips. Each format has significant backing, and the first consumer units are scheduled to be released within months. It is no longer a question of which format is "better." The debate now is about which format will catch on faster, and therefore win.

The HD-DVD format, developed and proposed by Toshiba and NEC, was introduced to the DVD Forum in November of 2003 and approved as the next-generation DVD format. The DVD Forum was founded by the companies involved in the original DVD format war to make sure that compromises could be reached regarding the future of the format. Since Blu-Ray was never submitted for consideration, it could not be approved or rejected by the DVD Forum.

HD-DVD discs, at the time of this writing, promise a single-layer capacity of 15 gigabytes, or over three times that of single-layer DVDs. They accomplish this by using a blue-violet laser with a shorter wavelength than the red laser used in current DVD drives. This means that discs can have information more tightly packed on the disc, enabling far greater storage capacity on the same size disc. Dual-layer discs are capable of holding 30GB, and Toshiba has announced a prototype three-layer disc with a capacity of 45GB. These discs are capable of holding between two and five hours of high-definition video with audio track.

The primary advantage of this format is a low manufacturing cost. Since HD-DVD media is so technically similar to standard DVD media (it uses the same layer thicknesses as DVD, made of similar materials), the discs can be produced with only a slight modification to existing manufacturing lines. This appealed to many companies, and led to an early rush of support from several large studios. Current supporters of HD-DVD include Toshiba, NEC, Sanyo, and Microsoft, in addition to New Line Cinema, Paramount, Universal, Time-Warner, and the official approval of the DVD Forum.

Blu-Ray Disc, or BD, was developed by Sony, Matsushita, and Philips, with the first stages of development commencing back in 1995. Rather than propose the format to the DVD Forum, Sony appealed to major electronics companies, and many signed on in support of the format, creating the Blu-Ray Disc Association (BDA). Critics occasionally cite the fact that Blu-Ray did not go through official approval channels; however, at the time of this writing, at least seven of the DVD Forum's original ten founders now support Blu-Ray.

The potential capacity of Blu-Ray discs is, in a word, staggering. A single-layer disc can hold between 23 and 27 gigabytes of data, enough for four hours of high-definition video; a dual-layer disc can hold between 46 and 54GB, easily enough for eight full hours of high-definition programming*. Furthermore, since the layers on a Blu-Ray disc are so thin, there is potential for multi-layer discs with up to eight layers holding upwards of 200GB. TDK has announced a working prototype of a four-layer 100GB disc, but commercial availability of these high-capacity discs is several months away, at the least.

Blu-Ray's two main advantages are capacity and expandability, the potential for which has not yet been matched by HD-DVD. To add some perspective, most entry-level computer hard drives do not hold 200GB. 200GB is the equivalent of forty-five single-layer DVDs, or twenty-three double-layer DVDs. There is enough capacity to store over twenty full-length standard definition DVD movies on one disc, complete with special features and full digital audio.

Blu-Ray discs also have an advantage in durability, thanks to a special hard-coating developed by TDK. While CD and DVD media (and, presumably, HD-DVD) can be scratched by wiping with a tissue, Blu-Ray discs can reportedly withstand attack from a screwdriver.

This technology comes with a significant price. Manufacturing Blu-Ray discs requires significant costs in updating DVD fabrication equipment, and would be a sharp manufacturer cost increase over HD-DVD. This initially led to slower adoption of support for the format, though later developments in the technology have recently enabled it to gain wider support from major electronic and PC manufacturers.

Current support for Blu-Ray includes PC makers Apple, Dell, Hewlett-Packard, and Sony, and electronics giants Hitachi, LG, Mitsubishi Electric, Matsushita/Panasonic, Pioneer, Philips, Samsung, Sharp, TDK, and Thomson. Add to this the support by movie studios such as Columbia TriStar, Sony Pictures and MGM (all three owned by Sony), 20th Century Fox, Lions Gate Entertainment, and Disney, as well as video game makers Electronic Arts and Vivendi Universal Games, and the bastion of support for Blu-Ray looks formidable indeed.

The situation as it stands today is complicated. On one hand we have the HD-DVD format, which holds less data but is, at the time of this writing, cheaper to produce**. On the other hand is Blu-Ray, with the potential for exponentially more capacity and durability, but with a significant manufacturer cost increase. Both players will offer features to ease the transition to HD, such as backwards-compatibility with standard CD and DVD media. While there were talks earlier this year to see if a possible compromise could be reached that ended in combining the two formats, these discussions collapsed with very little in terms of results. With equal studio support for each format, this war becomes a race to see which format gains wide adoption first.

HD-DVD had planned to gain an early advantage by widely releasing its products in 4th quarter of 2005, thereby saturating the market with HD-DVD drives and discs before Blu-Ray was released. At CES 2005, the makers of HD-DVD promised 85 titles released before the end of the year, while Blu-Ray has been planning a release in early-to-mid 2006. However, recent announcements have revealed that hardware and software shipments of HD-DVD material are smaller than expected. Paramount, which promised a release of 20 titles this year, is not releasing any until 2006. NBC Universal is now releasing 12 titles instead of 16, and Time Warner says that its plans are not definite yet, as it is waiting to see whether the two formats can compromise (source: "HD-DVD Rollout, Set for Holidays, Gets Scaled Back," The Wall Street Journal, August 2005). The result of this delay is that both formats' major releases will occur sometime in 2006.

Blu-Ray is expected to gain a major sales boost through Sony's Playstation 3 game console, for several reasons. The console will feature a Blu-Ray drive, and will be the first video game console to hit the market featuring a next-generation drive. While first-generation HD-DVD drives are estimated to cost nearly $1000, and first-generation Blu-Ray drives have already been released in Japan for nearly $2000, the Playstation 3 is rumored to feature a price tag between $300 and $600, making it more affordable to the average consumer. At least initially, Blu-Ray drives may be more accessible due, in large part, to the Playstation 3.

Also, consider this. When Sony's Playstation 2 was released, a majority of Playstation 1 owners rushed out immediately to attempt to buy the new console. While there was a supply shortage in the US, the stock that made it to the States sold almost immediately. Sony deliberately kept the price of the new console very low so that it would be more accessible to more people. The result is that 100 million people worldwide own Playstation 1 consoles, and 90 million people worldwide own Playstation 2s. If this strategy is repeated once more with the Playstation 3, and if Sony can keep up with demand, Blu-Ray could gain an enormous amount of market share in a very short time.

With the support of major computer manufacturers, consumers could start to see PCs with Blu-Ray drives as early as the end of 2005, according to Hewlett-Packard. In PC applications, the larger capacity of Blu-Ray is alluring simply from a data storage standpoint.

No one knows what the outcome of this format war will be - it all depends on which format consumers can get more cheaply, more quickly, with more movies available for it. Blu-Ray is technologically superior, true; however, the VHS and Betamax war shows that the technologically superior product does not always win. Sales of DVD drives and media only really took off after DVD player prices dropped below $300, and with HD-DVD's lower manufacturing costs, this could prove to be a large benefit. However, Sony claims that within a few months of launch, Blu-Ray media will be priced within 10% of current DVD prices. With the first products set to hit the market by Christmas of this year, 2006 is going to be an interesting year for High Definition.

* The amount of high definition content that can be stored on a disc is entirely dependent upon the codec used to encode said content. Using standard MPEG-2 DVD compression, a single-layer Blu-Ray disc could hold two hours of HD programming, but with MPEG-4 or VC-1 compression this roughly doubles.

** Due to the speed at which these technologies are changing, a discussion of consumer pricing would be premature. It is certainly possible, however, that higher manufacturing costs may lead to higher end costs for consumers.