High-def optical discs: A critical weekend?

Some of you know that I’m covering the rollout of high-definition optical discs (that is, DVD-equivalents with high-def resolution) on an ongoing basis in Cites & Insights, not because they’re ready for most libraries to acquire yet–they’re not, and might never be–but because I think it’s worth tracking what happens and how it happens. The most recent installment appears in the current issue (or, if you detest PDF and don’t care what else I have to say, as this separate HTML piece).

I offer my current take on the situation with HD DVD and Blu-ray (the two competing and so far incompatible forms of high-def optical disc) as of early October:

If there’s any life at all in this marketplace, Blu-ray is the likely winner–even though the initial players are absurdly overpriced.

I thought that was true because Sony and its Blu-ray partners were (and are) running lots of magazine ads in the magazines aimed at people who will buy a $1,000 player to make their $3,000+ HDTV (at least 42″ diagonal, and 1080i/1080p capable, to get the most out of Blu-ray) more interesting, even if there are only a few dozen movies. Toshiba and HD DVD partners occasionally show up with an ad, but not often. I also noted that HD DVD’s edge (the first HD DVD player appeared two or three months before the first Blu-ray and was half the price) was wasted because the players didn’t show up in the Sunday flyers that tell us what’s actually being promoted.

The last two or three weekends of November are critical for holiday marketing: If stuff doesn’t have a high profile by then, it’s not going to matter. That made today’s Sunday flyers particularly interesting, to an extent I would never have expected:

  • Standalone (set-top) players: Four of the chains had Blu-ray players, and one of them had players from two brands (Samsung and an even more expensive Panasonic, $1300). None of the chains had HD DVD players. Not one. Four to zero: That’s impressive.
  • Players as part of game consoles–which turns out to be the cheapest way to buy either format: Five chains, including Target (one of the mass-market bellwethers), advertised the Sony PSP3, which includes a Blu-ray drive (and costs either $400 or $600, making it by far the cheapest way to get into Blu-ray, gaming aside). One chain advertised the $200 HD DVD external drive for the Xbox360–but the fact that none of the other chains advertising the Xbox360 showed the HD DVD drive makes me suspect its availability. Even if it exists, we’re talking five to one.

How did this happen? According to some reports, Toshiba was losing a couple hundred dollars on every $500 HD DVD player it sold–and it looks as though Toshiba sold enough to get their name out there, then stopped promoting the player. Meanwhile, Sony, Samsung, Panasonic and others were gearing up…late to the ball, but with the marketing muscle to stay there.

Frankly, I’m surprised. I would never have expected four chains to be promoting the Blu-ray drive at this point–not at a $1,000 price point. Nor would have I expected HD DVD to do such a thorough disappearing act. The PSP3 is a wildcard: If reports are right, there are “only” half a million of them available for this season in the U.S.North America, and it’s fair to assume they’ll be gone within a week after they go on sale (11/17). But that puts half a million Blu-ray drives into consumers’ hands, along with whatever (probably small) number of set-top drives Samsung and Panasonic sell. That’s almost certainly an order of magnitude more than the HD DVD drives that have been sold in the U.S.

Does this mean Blu-ray will succeed in the mass market and HD DVD will fail? No–and maybe Blu-ray (if they’ve fixed the quality problems) will become a large niche market, selling to those who have the big, high-def, high-quality TVs, sit close enough to them to know the difference between upconverted DVD and true high-def, and care enough to spend the money. In which case, maybe the $999 player price isn’t absurdly high. But if it becomes a large niche market, it’s not clear that most public libraries will need to care…although some might choose to get involved.

I’m still certain 2006 won’t tell the tale. The extent of the one-sidedness this weekend surprises me, and certainly reinforces my earlier prediction. Will 2007 show some real success? I’m no longer ready to discount the possibility.

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