OPINION: Two better than one?
By Paul Sweeting -- Video Business, 4/20/2007
APRIL 20 | SONY PICTURES Home Entertainment released some data on Blu-ray and HD DVD software sales the other day, courtesy of Nielsen/VideoScan’s retail point-of-sale data collection system.
Paul Sweeting is editor of Content Agenda
Given studios’ typical reticence to release that sort of information, we can assume Sony felt the numbers tell a story it wants the world to hear, namely that Blu-ray releases are outselling HD DVD releases by a large and growing margin.
That would fit with the Blu-ray camp’s No. 1 talking point at the moment: The format war is over, and Blu-ray has won.
Indeed, of the Top 25 next-gen releases in 2007 through the middle of March, 23 were Blu-ray releases. The only straight-up HD DVD release to crack the Top 25 was Warner Home Video’s Batman Begins.
Yet it’s the one other HD DVD release to appear in the Top 25 that hints at the real story in the numbers, and it’s probably not the one Sony intended.
Warner’s The Departed was ranked No. 1 and No. 3 on Blu-ray and HD DVD, respectively. Combined, the sales to date of The Departed more than double sales of Sony’s Casino Royale, the biggest selling Blu-ray-only title to date. And Departed did it with $30 million less in domestic box-office behind it.
The Departed isn’t the only dual-format release to beat the best-selling single-format releases, either. Superman Returns, released in 2006 against a smaller hardware base, also outsold Casino Royale, according to sources familiar with the data. So did Happy Feet, released in March.
The point is not that two formats are better than one. Everyone unquestionably would be better off if either Blu-ray or HD DVD “won” the format war and there were only one high-def format.
But given the current market realities, the best high-def strategy for a studio is to release movies in both formats.
IT’S NOT HARD to understand why Sony is pushing the “Blu-ray has won” line.
But from the perspective of a studio without a direct financial stake in a particular format there’s no clear victor in sight.
Toshiba has dropped the price of its entry-level HD DVD player to $399 in anticipation of competition from low-priced players from China by the fourth quarter. And on Friday, a news report out of Asia indicated that Wal-Mart has placed orders for 2 million HD DVD players from Chinese manufacturers to be delivered this year with a target retail price of $299.
Sony said last month it would slash the price of its stand-alone Blu-ray player from $999 to $599 later this year. Last week, it confirmed it is eliminating the low-end PlayStation 3 model, which, among other things, will clear the field for stand-alone Blu-ray players from other manufacturers in the $500 to $600 price range.
Clearly, both of the principal format backers are committed to fighting it out at least through the fourth quarter of this year. As a practical matter, that means there will be product from both in the market through the end of the first quarter of 2008, no matter what happens over Christmas.
Samsung also plans to start shipping its dual-format player in time for the fourth quarter, which means it will still be selling it well into 2008.
Meanwhile, with Blu-ray embedded in PS3, the Blu-ray hardware base continues to grow inexorably, while Microsoft’s HD DVD add-on for the Xbox 360 continues handily to outsell any stand-alone player in either format.
At a minimum, the hardware format war will be with us for the next 12 to 18 months. Even if one side or the other were to stumble badly this fourth quarter, neither will vanish from the market until the middle of next year at the earliest.
In the face of those ground-level facts, it’s hard to see a basis for continuing to release movies only in one format.
At this point, a single-format strategy by any given studio is not affecting the course of the hardware format battle, which is moving under its own internal momentum.
The only measurable result—as the Sony data makes clear—is that single-format studios are leaving money on the table and getting nothing in return.
