HD Disc Format War Not Over By a Long Shot

[prerich]

Originally Posted by Robinson_A

Apple does care about HD and is taking the necessary steps to ensure they are in the HD game plus, Apple is the only company with complete studio support for their efforts. While we can bicker back and forth about HD DVD vs Blu-ray Apple has gone and done with neither of the two camps can do and that is get everyone on board with this new iTunes video roll out. Yes it's only 720p and it's going to be a gradual roll out but it is HD and as soon as those iPod viewing consumers get their hands on it, they're going to change the video market place just as they did with music.

Love it or hate it, iTunes and Apple are here to stay and maybe, just maybe, snuck into this little format war through the back door while the rest of the industry was fighting over bragging rights . With complete studio support and with 20th Century beginning to include digital playback files (copies of the movie you can drag into iTunes for viewing without the disc) on all new releases, it wouldn't surprise me in the least if we woke up one day and went where did HD DVD and Blu-ray go?

You are so right sir!

[Vinyl Rules!]

Originally Posted by TheMoose

Because I want 1080p with Lossless audio.

This mass market your speaking of is mostly under 25 & they don't have the buying power of us over 40 & we do care about high rez video & audio & most of us don't do iTunes!

Moose,

I respectfully disagree.

There is buying power and then there is BUYING POWER. I teach Business Ed and Marketing courses now after a very successful Marketing and Advertising and Consulting career, and the discretionary income of the 25 and under segment is much, much greater than those of us in our 40's and 50's. And this is not new news: Advertisers covet the 25 and under segment because they have so much discretionary income, but their media viewing and listening habits are much more fragmented than those over 40 and they are very, very difficult to reach with traditional advertising. Professional Marketers are still searching for a cost-effective way to reach this group of consumers. If you don't believe me, just watch the convoluted marketing efforts the major brewers are making to try and recapture the market they have lost to micro-breweries and specialty imports.

As for the "buying power" you cite, those of us over 40 who have the buying power to purchase a Blue-Ray or HD-DVD player and pay double the price of regular DVD's for the software also have the following expenses most of those under 25 DO NOT HAVE:

1. We have mortgages - They do not: They still live at home or have roomates.
2. We have to put kids through college, pay for braces, etc. - They do not.
3. We have health insurance and life insurance and home owners insurance premiums to pay
- They generally do not.
4. We set aside contributions to our 401(k) or Roth accounts, if we are smart - They do not.

I could go on ad nauseam, but I think you get the point: The group of consumers 25 and under is not weighted down with the fixed living expenses those of us over 40 generally have, and don't forget, this group of consumers is also not weighted down with large collections of physical music media either - They store it on their iPods and MP3 players and think it's great.

So consumers like you who can buy a Blue-Ray or HD-DVD player and buy the appropriate high rez discs are truly an insignificant market compared to the "great unwashed young masses" who grew up on music downloads. If you think they are NOT going to follow the same downloading behaviour with video, then you are living in an alternative universe, like the Sony execs.

And Apple has got this figured out. Go back and read the previous posts.

Another factor driving Apple's strategy is the simple fact less than 5% of Americans have an HDTV with a screen size larger than 42". And it's almost impossible to see any difference on a 42" screen between 720p and 1080p. So if you are Steven Jobs, or any other CEO who is going to maximize shareholder profits, you are going to go where the money is.

And the money is with the video downloaders who will be perfectly happy with 720p. I can respect the fact you want 1080p with lossless audio, but the brutal fact of the marketplace is that you represent an insignificant group of consumers that no mass marketer gives a rat's tutu about.

I am not against 1080p and fully lossless audio - I, too, would prefer it to downloads, but 5 years from now, IMHO, this will be an even smaller market than those of us who still purchase newly pressed vinyl records. Were I the CEO of a video hardware or media content company, I would be wasting my time chasing 1080p physical media products - A smart CEO, like Mr. Jobs, will be looking how to get more of the 25 and under consumers to buy more iMovies and iTunes, because that is where the money is going to be made.

Yes, a few specialty manufacturers will likely continue to carry the torch for 1080p hardware, and maybe even a couple the content companies will offer 1080p physical media for a few more years, but the marketplace reality is that it is much, much less expensive to ship electrons to your home than to manufacture and ship a high-resolution DVD to your home.

Verizon has also figured this out with their FIOS service that runs fibre directly to the home. They are once again the US's largest telephone company and their foresight in investing in fibre to the home is going to allow them to sell many, many movie downloads whilst the other telcos and cable companies scramble to upgrade their infrastructure. Even Consumer Reports ranks FIOS as the best of all of the integrated voice/broadband/video services, and it is the fibre to the home that makes Verizon the 800 lb. gorilla right now.

Like I said in my first post, Blue-Ray may have won the battle, but both high-resolution physical formats have lost the war - They just don't know it yet.

[Lotus]

A note on Apple:

They do not have full Studio Support for downloads. Far from it actually.

They have full support for their RENTAL service. The Downloads can only be watched for a certain time frame then they go bad.

[Vinyl Rules!]

Originally Posted by Lotus

A note on Apple:

[snip]

They have full support for their RENTAL service. The Downloads can only be watched for a certain time frame then they go bad.

This concept has been tried and failed miserably in the market. It was marketed by Circuit City and was called DIVX.

It cost CC over $100 million in wasted $$$ and they fired the idiot president who was the supporter of this concept and technology.

The lesson that was learned at the time is when consumers buy something, they expect it to be theirs AND ACCESSIBLE for as long as they own it and want to view it.

The studios thought otherwise and most of them were rabid supporters of DIVX - The hidden agenda of the content providers is for you to pay each time you access the content.

Does anyone here remember when Disney test-marketed DVDs that were marketed in a special nitrogen-filled package? They were priced beween $8 and $12 and after being opened, they would only play for about a week, until exposure to air oxidized the exposed surface of the DVD and made it unplayable. This was yet another really idiotic effort by a major content provider to sell you something, then limit the number of times you could access it.

Consumers will NOT accept this limitation on content purchases - They proved this with their rejection of DIVX, and of course the Disney trial of the self-destroying DVD was a complete fiasco.

Trying to limit the time of the viewing window didn't work for DIVX/Circuit City, it didn't work for Disney's test, and it won't work for the studios providing time-limited viewing to Apple, IMHO. I guess there's no one left at any of the studios that remembers the disaster that was DIVX or the failed Disney market test.

Just like DCSS was developed by a kid in Norway to unlock DVDs, some kid somewhere will figure out a way to unlock the Apple downloads and the studio's efforts to keep continually screwing the consumer will once again be thwarted.

[TheMoose]

Originally Posted by Vinyl Rules!

As for the "buying power" you cite, those of us over 40 who have the buying power to purchase a Blue-Ray or HD-DVD player and pay double the price of regular DVD's for the software also have the following expenses most of those under 25 DO NOT HAVE:

1. We have mortgages - They do not: They still live at home or have roomates.
2. We have to put kids through college, pay for braces, etc. - They do not.
3. We have health insurance and life insurance and home owners insurance premiums to pay
- They generally do not.
4. We set aside contributions to our 401(k) or Roth accounts, if we are smart - They do not.

It sucks that a bunch of pimply faced kids that have no idea of what quality audio & video is have so much power!!

Originally Posted by Vinyl Rules!

Like I said in my first post, Blue-Ray may have won the battle, but both high-resolution physical formats have lost the war - They just don't know it yet.

This is where we disagree, IF the format war ends soon Blu-Ray will have time to become entrenched if not close to mainstream before the downloads kick into overdrive.
I hope HDM doesn't go the way of vinyl with only a few boutique labels.

[Robinson_A]

Originally Posted by Lotus

They have full support for their RENTAL service. The Downloads can only be watched for a certain time frame then they go bad.

This rental thing is a test to see if it takes off which it will. I think it's a smart move however, in true Apple fashion (and because Jobs hates limitations) there is a way around the time limit. Setting your computer's internal clock back will allow you to keep the video basically forever. Honestly, it is only a matter of time before the rental idea changes to outright purchase.

As for the Divx argument, you can not compare Apple iTunes to Divx. For one, iTunes didn't exist when Divx was trying to get off the ground and people hadn't truly experienced the convenience that downloads brought to them. Two, Divx was still a disc and asking people to pay for something like looked like a DVD, played like a DVD and in some instances cost like a DVD only to not be a DVD is NEVER going to work. Frankly when's the last time anything good came out of Circuit City. That chain is depressing and among the worst of the big box stores in terms of products, knowledgeable sales staff, etc etc.

Someone was talking about the under 25 crowd controlling the market. YOU ARE ABSOLUTELY RIGHT! For ages it's been the baby boomers and such that have had the last word and frankly I think they're starting to whine a bit because that is no longer the case. Love it or hate it, what my brother and his friends latch onto is going to be what I have to write about and understand and at least learn to love for they are the new target market. Truthfully, my brother has no interest in Blu-ray or HD DVD. He has interest in DVD because he can afford it but he has total interest in downloads because he can use them.

These next gen formats have a battle on their hands because DVD is so entrenched in the mainstream and frankly Apple is going after that market and mindset which is WAY SMART. Why compete with a format (Blu-ray and HD DVD) that has such a small percentage of the marketplace when you can challenge the norm and get SD DVD users over to Apple and iTunes. Do that and even with 720p downloads or 'rentals' Apple will effectively make HD DVD and Blu-ray irrelevant, or simply cement it as a fringe product much like vinyl is now.