Could Warner Bros. Abandon HD DVD in 2008?

[PRO-630HD]

For starters Sony and Columbia Tri-Star are not 2 seperate studios. They are one. For exclusive studios you have Paramount, Dreamworks, Universal and Wienstein for being 4 exclusives for hddvd and Disney, Sony, Lionsgate, Fox and MGM being 5 exclusives for bluray. So no it is not 6:2 it is 5:4 excluding Warner and New Line.

Okay so you have according to the BDA 2.7 million players compared to the hddvd prg. figures of 750,000 and only a 1.8:1 sales lead in disc sales. Think about that!!! You have 3.6 times as many potential bluray players and can only muster a sales lead of not even 2:1. Go thedvdwars.com and you will see some intersting results just as Lotus has stated many times. HDDVD is starting to take the lead! Warner has long said they will not rely on gamers for software sales. It is dangerous.

Warner has also stated the end result is profits not # of discs sold. Meaning that even with a sales lead due to the fact Sony is no longer subsidizing BD-50 production and BD yeilds are still at maybe 80% and that is at the 3 Sony facilities. Other BD manufacturing facilities have a success rate of around 10%. You do the math. Even with what was a 2:1 sales lead some months back Warner stated profits were about even between the 2 formats. That is why sales of hardware was deemed so important.

My local Best Buy has 2 pallettes of Sony BDP-S300's sitting in the aisles of the store. They are not flying off the shelves at $399. The HD-A3's are sold out. Amazon.com lists the HD-A30 is 21, HD-A3 is 33, HD-A35 is 59, XBOX add on 108, A2 is 479 and the XA2 is 1472. For dedicated bluray players the Sony BDP-S300 pops in at 1235 and the next closest the Samsung BD-P1200 at 5350. Enough said.

Now we get to format compatibility. HDDVD is fully backward compatible to include web enabled features and HDi interactivity on all discs. Mandatory DD+ and True HD decoding in the players, mandatory 2ndary video and audio encoders for PIP and soon to be released fully compatiblity with 34 and 51gb discs. Meaning all the features of hddvd work on all players from day one.

If the current class action lawsuit being prepped for bluray 1.0 manufacturers is any indication incomplete specs when you launch a format is bad business. How does Warner solve the problem of interactivity with the bluray 1.0, 1.1 mess. Do they run 2 encodes with burnt in PIP as with Terminator 3 or make them 1.1 compliant and alienate every bluray player owner out there except those with the new Panasonic. To run 2 encodes they need the original hddvd to be using less than 25 gb's of space. Most IME titles run closer to 30gb making this a real problem. Due they put 2 copies in the case, one with 1.1 compatibility and one with burnt in PIP. You can see where your profits go right down the drain from there putting 2 BD-50's in a $28.95 movie compared to 1 HD-30 which is far cheaper to produce to begin with. No wonder Warner hasn't released any IME discs on Bluray! Being Nov. 1st was the cutoff warner could have easily included the last 2 Potter foilms with IME. Irregardless of Warner when bluray owners find out they paid 2 to 3 times the cost for their bluray player and cannot access any of the advanced features from X Men 2 or other titles that are in the works they are going to be p!$$ed. From there the $#!tstorm will start as already indicated by the 1st sentence.

To me it is becoming increasingly clear there is only one way Warner can go!

[Lotus]

Originally Posted by gstarr

I have over 300 standard dvd's. For me, the price of the HD or Blu Ray dvd player is quite small once you have bought 50 to 100 discs. I'm sure Toshiba is taking a monetary bath selling machines at retail from $99-$399. Add that to the billion dollars they spent with Canon for SED research and having it turn into vaporware can't be helping their bottom line. I will either buy a 2nd generation combination machine in 2008 or both an HD and a Blu Ray.

If an OPPO standard upconverting DVD player, such as the 981 costs $229, it makes me wonder how cheap the parts on the Toshiba are or how badly a bath they are taking. They better sell a helluva lot more discs than BLU RAY to even break even.

What is also amazing is that many of the same people that want expensive video chipsets, from Realta, Gennum, Anchor Bay, or Marvell in their receivers, not to mention Wolfson or Burr & Brown top rung DACS in their receivers, not to mention great feature sets somehow gon't hold these players to the same standard. We all know how many people will wish someone will give them an HD or Blu Ray from Lexicon, Meridian, Levinson, etc. as a gift:-)

Just some observations to be taken with a grain of salt.

Greg

SED has always been projected for a 2008 launch if memory serves. I may be wrong there. It is an extremely interesting technology.

To reiterate the A3 is not losing money at a $299 price tag. If Toshiba were to lower it to $199 MSRP they'd still not be losing money. The last time Toshiba lost money on a player was the A2 for $98. They did sell 90,000 of them and they needed to do it. I'm not going to mention company names but there are a lot of BD branded players out there that their manufacturer wished they could have sold them for anything instead of being forced to take back their stock because the items wouldn't sell.

BDA manufacturers were selling 16,000 players combined a month for 2007. In November they saw a 40% increase. 22,000 players combined is still not a number that anyone is proud of. Panasonic, Sony, Sharp, Samsung, Phillips, and Pioneer can only muster up 22,000 players? How many are they building? How many are they shipping?

How many are getting tossed at the end of a cycle?

What do you think those companies are going to do in 2nd half of 2008 when their exclusivity contract is up with Sony? I know of 2 companies that currently make combo players that are planning to make HD DVD players because they're cheaper to make. They can put out a $199 MSRP on a unit and it will make them money. Also Toshiba won't get mad at them for a "dump sale," to get rid of old product.

A 1080i HD DVD player can be manufactured right now for around $110 packaged. A 1080i BD player could be made for around $190 packaged. Those are real internal price points I've read for a major CE. I'd be surprised if the A3 is built that cheaply, but I'm sure it's not too much more. It's a 3rd gen player and they have yields controlled and parts mass produced now.

The $220 Oppo is most likely built better than the Venturer or possible true low end HD DVD players can be built for.

[Lotus]

Originally Posted by Dave Moritz

WB may have made that statement for Blu-ray supporters benefit but one thing is for certain. And that is if and that is a big if, if WB goes Blu-ray only it will not be good for HD-DVD. Toshiba is most likely losing alot of money on players and so far Blu-ray seems to be outselling HD-DVD 2:1 on software titles. And if I heard correctly I believe that Toshiba spent around 1.5 million to sway Paramount to become HD-DVD only. Toshiba is getting desperate IMHO and even though HD-DVD is a good format. And from what I understand and I could be wrong, Sony had there own format when DVD was being introduced. And Toshiba asked them to back the format they where pushing instead of what Sony wanted to bring to market. And Sony gave in and went along with DVD instead of starting a format war. Fast forward to today and we have Toshiba and Sony going at it over format revenue. Only this time Sony asked Toshiba to come on board with Blu-ray and Toshiba basically told Sony to got to hell. I fell that Toshiba did not want to give up there revenue and is doing everything they can to accomplish this goal. Can you blame them for wanting to keep there revenue stream intact, no. But what they should have done was return the favor and went with Blu-ray and we would not have this format war right now. And IMHO Blu-ray sales would most likely be alot stronger now then they currently are. The format war was good at first because it help drive down the cost of hardware so in that respect it was good for consumers in the short term. In the long term the format war only serves to hurt the adoption of HD media. And keep consumers away because they are afraid that they might buy the format that looses.

Toshiba about broke even with their first player and made money on the high end player. Since then manufacturing improved, parts were being mass produced and their were competitive outlets for some more parts. This made it possible to build the A2 at a much cheaper price point. When the A2 was being sold for $299 Toshiba was still making money if barely. The $98 sale was an obvious loss. However they had around 100,000 units that otherwise were just going to not be sold at all. So they got some money for them and increased the market size by 25% in one weekend. Not a bad move.

The A3 is built much cheaper than even the A2. Again manufacturing facilities are running much more smoothly (more working players off the lines) and parts are much more mass produced and cheaper. I know the A3 isn't built as cheaply as possible but it is still pretty cheap. The $299 price point is a money maker for them. If they officially lowered the MSRP to $199 I'm told they'd still make a little above breaking even. If that increases market size for them then it's worth it.

What were seen as desperation moves (Paramount/Dreamworks purchase) may have been. Even the $98 sale may have been desperation. However it worked. Transformers showed that HD DVD could be strong. The 90,000 players increased their market size by 25%. Then a strange thing happened. People started buying HD DVD players for $199. What they sold in a month they were now selling in a week. While they were barely selling more players than BD all of a sudden they were selling 4 to 1. This has held now for 4 weeks and most certainly a 5th week.

There is no reason to believe that they won't be outselling BD 4 to 1 through December.

That is until the $299 BD players came out. Those are being sold at a loss. How much they help Hardware sales are hard to tell.

Plus there was last weeks software sales... I believe it was in BD's favor by 1.6 to 1. Those players are starting to eat away at the sales lead and much earlier than I would have anticipated what with holiday sales numbers. To be fair the numbers werent completely in and perhaps a BD heavy retailer hadn't given Nielsen their numbers yet.

Still looking on Amazon shows that HD DVD is doing much better than before and those players are starting to make software waves.

They may have been desperate but it worked.

[PRO-630HD]

I am going to have to disagree Dave. You are right back with DVD Sony and Phillips were behind a different disc with every one else behind dvd. Sony is why the disc is only 4.7gb instead of 5gb as was initially intended.

The dvd forum picked the successor to dvd and that was hddvd. I think Toshiba was more than willing to work with Sony on this, but Sony thought they had this so in the bag with movie studio and manufacturer support they refused to combine the 2 formats when they had the chance. The Sony president more or less just stated this a few weeks ago. If he had the ability to go back he would have pushed harder for 1 unified format. Which leads me to believe the problem was on the arrogance of Sony. He would have had no leverage with Toshiba to unify whatsoever as he didn't work for them.

[DaViD Boulet]

I am going to have to disagree Dave. You are right back with DVD Sony and Phillips were behind a different disc with every one else behind dvd. Sony is why the disc is only 4.7gb instead of 5gb as was initially intended.

This has to be one of the most misleading statements I've read in this HD DVD/BD FUD debate... EVER. To spin the history against Sony on this issue is so rediculous that it's hard to suppose the poster is anything but a paid HD DVD agent. Pro630, if this conclusion is false, please illuminate us to your profession and rationale for favoring a 5-gig-per-side format over an 8-gig-per-side format.

Just so everyone knows... the reason Sony's version of DVD is 4.7 gigs per layer... is because they wanted DVD to be a dual-layer format so you wouldn't have to flip movies for long play. T2 was the first DVD to take advantage of it (early Warner titles like Color Purple and Amadeus made you... you guessed it... flip your movie in the middle just like a laserdsic). Today, just about every DVD on your shelf is dual layer... giving you effectively 8 gigs of continuous play.

Thank Sony. And thank goodness that we didn't end up with Toshiba's proposal instead:

Guess what Toshiba wanted. You got it... a single-layer *** Flipper *** disc with only 5 gigs per side (as opposed to the 8 gigs per side possible with Sony's dual-layer approach). No dual-layer. Know why? Because they insisted that dual-layer continuous-play would be "too expenseive" and "too hard to manufacture" and they wanted to base DVD on existing laserdisc-manufacturing techniques that just glued to discs back-to-back.



Starting to sound familiar? If you were smart enough to see the similar trend with Toshiba backing HD DVD for the same reasons, while Sony pushes for a *better* solution that, initially, would cost a little more, you win a gold star.

Anyone want to go back in time and pick Toshiba's dual-sided DVD solution over Sony's more expensive and difficult to manufacture dual-layer solution? Didn't think so. Some consumers have the vision to apply the same principle to the HDM options at hand.

The dvd forum picked the successor to dvd and that was hddvd. I think Toshiba was more than willing to work with Sony on this, but Sony thought they had this so in the bag with movie studio and manufacturer support they refused to combine the 2 formats when they had the chance. The Sony president more or less just stated this a few weeks ago. If he had the ability to go back he would have pushed harder for 1 unified format. Which leads me to believe the problem was on the arrogance of Sony. He would have had no leverage with Toshiba to unify whatsoever as he didn't work for them.

Either that, or Sony wanted a HDM solution better than the one that the DVD-forum was willing to approve. What you call "arrogance", I call "a better solution for high-fidelity audio/video reproduction", though I agree with you that not submitting BD to the DVD forum for possible approval leaves room for subjective interpretation about the political motivations that were at play. And arrogance has certainly reared its ugly head in my opinion on the part of the BD camp: Sony's first batch of horrid 25GB MPEG-2 BD disasters, which they defended at the time as problem-free, left BDs launch in the mud and quite possibly contributed to the consumer division in the format war we see today. I will give them points for having addressed their corporate culture on this point, going so far as to become one of the reference-studios with 1080p transfers as of late and even offering replacement discs for one of their fabeled early-MPEG2 screw-ups.

[Lotus]

Originally Posted by DaViD Boulet

This has to be one of the most misleading statements I've read in this HD DVD/BD FUD debate... EVER. To spin the history against Sony on this issue is so rediculous that it's hard to suppose the poster is anything but a paid HD DVD agent. Pro630, if this conclusion is false, please illuminate us to your profession and rationale for favoring a 5-gig-per-side format over an 8-gig-per-side format.

Why must you BD people act like everything is "FUD?" which btw is just an extremely rude thing to say to someone. It's childish behavior.

Was his statement true or not?

Yes it was true. The arguement about was it good for us or not is not really a part of the aforementioned discussion. It was just that Sony and Phillips were behind something the others were not. They did get their disc in and honestly the rest of the DVD forum approved it because it was actually better. David implied that history was different. Whether or not a DL disc was better than the 5GB disc is a red herring.

Starting to sound familiar? If you were smart enough to see the similar trend with Toshiba backing HD DVD for the same reasons, while Sony pushes for a *better* solution that, initially, would cost a little more, you win a gold star.

This would be as you call it FUD. You've now stated you know why Toshiba backed HD DVD and that makes you smart when in fact you have no clue why they made their decisions. You also hide the fact that "initially," seems to really mean perpetually. While the word "little," really means 30 to 300% more. Replication costs have lowered but they're still much higher than HD DVD. While Sony is at 76% yield rates the other BD replications facilities are in the low 60s. Those HD DVDs are in the high 90s. Manufacturing costs are still considerably lower for HD DVD. The Laser unit in BD machines costs nearly three times as much as HD DVD. Sure both are blue, but one reads at extreme angles while the other can actually have a DVD unit with just a blue laser on it (practically).

You can go online and point out "replication," costs that it would cost you or me to have 10,000 units printed of something. You may find a place with it only costing .30 more for BD. Guess what? They're profiting much more on the HD DVD. The thing is the major replication facilities like the Sony units are charging much more than .30 for a DL BD vs what it would cost at another facility for a DL HD DVD.

Comparing the two situations is kind of pointless. Because they did go with the better choice at the time. This time was a lot different. The yields on BD were horrible and the costs for manufacturing and replication were to Toshiba and many others too high.

Warners, Universal, and Paramount were very vocal about how they didn't believe that consumers would adapt a technology that was going to be so expensive. Disney was also very much concerned about player costs.

Then Sony went and said "The PS3 will be BD!" That move won them the support of major studios and small ones. The only Studio that made a choice for any other reason was FOX and theirs was strictly due to BD+ copy protection.

18 months later and 12 months into the PS3s life cycle and two things seem apparent:

1. Nobody is winning, in fact all are losing.

2. BD is too expensive for the consumer.