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Why the Format War is Beneficial.

Discussion in 'Home Theater Lounge' started by CJ, Jun 5, 2007.

  1. CJ

    CJ Well-Known Member Admin War Zone Member

    Why the Format War is Beneficial

    CJ Paul and Larry Borden (06.05.2007)

    The so-called format war between Blu-Ray and HD-DVD has been the subject of considerable discussion, debate, and prognostication. While the negative aspects are apparent, we feel that they are outweighed by the benefits. Additionally, the naysayers of this format war have focused on the very near term, decrying both formats before they were even released in many cases. The complaints included lack of content, incomplete specifications, high prices, and the fact that there was a format war in general. All of these issues are or will be addressed over time so it is important to note that our position is that the benefit of the format war will be realized over the long term.

    In an ideal world, the market would have released one format at a low price point, with plenty of HD media and all of the ideal specifications, video codecs, audio codecs, finalized supporting technology (i.e. HDMI) etc. However, economic theory and historical precedence in the consumer electronics industry suggest that his is an unrealistic expectation. Even the most successful consumer electronics product to date ? the DVD ? didn't work that way. DVD launched with high prices, poor transfers, limited software and DIVX in the wings. So why are we not that upset about the format war? Our position relies on three main points.

    ? The other main "segments" of consumer electronics indicate that multiple formats can be successful, and may in fact be the way of the future
    ? Competition has forced improvement in both formats
    ? Competition has driven down prices

    For the sake of argument, we will (admittedly somewhat arbitrarily) divide the consumer electronics market into three large segments: home computing, gaming and A/V. Home computing and gaming have already gone multi-format and are unlikely to revert; examples include Apple vs. PC, USB vs. Firewire, and Compact Flash vs. Memory Stick vs. SD vs. variations on all of these formats. There are also DVD-R/RW vs. DVD+R/RW vs. DVD-RAM, and Palm vs. Windows CE. In the realm of down-loadable music, we observe iPod vs. Zune vs. all the others. Are those computing devices or A/V devices? Yes. We're sure there are many more examples which don't immediately spring to mind. Perhaps we need to throw Linux in there somewhere for some geek "cred". On the gaming side we have PS3 vs. Xbox 360 vs. Wii vs. Nintendo DS vs. PSP; in fact, divergent formats have existed since the early days of Atari and Intellivision.

    Both of these segments ? computers and gaming ? have flourished (especially the later, which industry sources often cite as one of the fastest growing segments of the CE industry), despite competing formats for nearly all types of devices. This is largely because competition improves the quality and feature set of CE devices, as well as driving prices down. The same thing is transpiring with HD-DVD and Blu-Ray.

    Competition between HD-DVD and Blu-Ray has driven the manufacturers of both formats to include more features, and to improve overall product quality and desirability. These improvements come in the form of interactive content provided by BD-J and iHD, better security features ? which admittedly may serve the studios more than the consumer ? as well as potential improvements yet to come such as "managed copy," or even the possibility of HD-DVD adding a third layer to increase capacity. Some of these features are admittedly speculative but that is exactly the point; the formats are still jockeying to one-up each other with features and areas to add value a year after launch. And what is the big deal about everything not being finalized? Geeks are busy buying "Draft N" routers without worrying that the specification may change because they're willing to take a chance to get better performance now. In the meantime A/V geeks are grousing that the HD-DVD and BD groups are still adding features? We should be ashamed of ourselves.

    Competition has also driven down prices. One of us (CJ) paid more for his first DVD player in August of 2000 (over three years after DVD launch) than for his first two HD-DVD players which were purchased within months of launch and about a year after launch. As a poor college student, the DVD player was one of the less expensive models, costing in the neighborhood of $360. Granted that the the first HD-DVD was purchased as a refurb, but it clocked in at slightly less than $360, and a second unit was just purchased for $299 with a rebate for over $100 (MSRP) worth of free media.

    Finally, we'd offer some points not specific to the format war, but rather a general statement on why we see one or both of the formats ultimately succeeding. First, people are in love with technology. The industry as a whole is booming. Despite common arguments, you don't have to understand the technology to buy it. Send your mother/grandmother to Best Buy for a "camera memory card" without providing any details. If she comes home with the right one, it was luck. Yet the digital camera industry is booming despite customers not understanding the differences between cameras, memory cards, zoom levels, lens quality, feature sets, etc. Another common argument is that people won't appreciate all the improvements of HD because their systems aren't calibrated, or even set up properly. Neither of these is a requirement for opening your wallet. Having a display device calibrated and properly setup wasn't a prerequisite for buying that 60" plasma in the first place, why is it suddenly a requirement now? Consumers ? including many who are affluent ? are reading about this technology in Maxim, GQ, Stuff and Playboy, and they want it simply because it was in the gadget section of Maxim, because it is cool, and because they can afford it.

    An important new addition to the market place is Universal players, more members of which are likely to soon enter stores. One universal player has already been released and though it does not support all the features of each format, another universal player is expected this year that reportedly will. When this happened with DVD-R and DVD+R on the PC side, it made the format war effectively moot. The universal drives came out relatively quickly, before many people had purchased a single-format drive. When it came time to buy a new PC, it came with a universal drive and people bought whichever burnable media was on sale.

    The format war has also driven convergence products. Both Microsoft and Sony support HD-DVD and Blu-Ray respectively in their current generation of gaming consoles. This is the result of two concurrent format wars, one in the gaming segment and one in the A/V segment. These products, equipped with their respective HD drives, represent amazing convergence products at amazing prices. For about $600 one can buy a device which plays games as well as streaming audio, video and pictures from a home PC, as well as high definition movies on disk. This is an amazing amount of technology in a reasonably priced package. As icing on the cake, the picture quality from these devices is at least on par with the stand-alone units, unlike the DVD playback quality of prior generation game consoles.

    In conclusion, the competition in the "HD on disk" market not surprisingly follows the basic rules of economics. While instability and uncertainty in the beginning might be the price to pay, the consumer ultimately benefits certainly in the long run, which is not so far off.
     
  2. Steve Tannehill

    Steve Tannehill New Member War Zone Member Top Poster

    Wow, deja vu.

    - Steve
     
  3. Jack

    Jack Well-Known Member Donor War Zone Member Top Poster

    Interesting point. Thanks
     
  4. Alfer

    Alfer New Member

    Interesting read indeed..I don't buy into a lot of it but hey none of us truly know how this will all play out so we're all free to speculate and theorize until the hammer comes down and one or both die.
     
  5. CJ

    CJ Well-Known Member Admin War Zone Member

    Yes, admittedly, this has been discussed a lot, as we mentioned. It is merely an opinion piece but there is certainly some economic theory behind it.

    Alfer, do you have specific points you disagree with or is it just your gut that no one wants this HD junk and its too expensive? I'd be interested in an intelligent debate.
     
  6. NathanP

    NathanP New Member

    It's Capitalism. Best product for the cheapest price thru competition. :)
     
  7. Alfer

    Alfer New Member

    Certain points, to me, just don't even relate well to the format war.

    For example you talk about digital camer cards etc...thing is if someone buys a camera needing and SD card...they buy the card and can take pictures all day long...there is nothing stopping them from enjoying the camera. Sure there are lots of different cards..so what...one brand uses one type, another uses another...no biggie..if I buy a camera I don't worry that I won't be able to take pictures because my camera uses SD and my neighbor's camera uses CF...

    DVD+/-....most consumers don't even bother with this since many probably rarely utilize their PC dvd recorders...they are more concerned about recording say a music cd via a CD-R...it's mostly just techies who utilize DVD-/+ discs...like me when I make backup DVD movies....none of my friends or families get into DVD burning...they just want to burn cd's.

    As for Ipod vs. say Zune...we all know Ipod is in fact THE player to beat...odds are that current and future owners will be able to get any and every song they like onto the player...pretty much same goes for NON-Ipod's...other than different methods of obtaining the music, all players CAN get the music the owner wants onto the machines...they can then enjoy all the music.

    Gaming..who knows since I'm not a gamer...but my nephew is and when we were at BB looking at the shelves full of games, I did notice a lot of the same games being made available on multiple formats...sure a LOT aren't, but that hasn't stopped tons of folks from getting into their games....and odds are the percentage of players are kids...

    Now lets talk HD/Blu.

    Odds are pretty much everyone (not al) has a DVD player(s) in their home...they can in turn walk into ANY store that sells DVD's, grab a movie they like, go home, and guess what, it plays...

    Now look at what HD/Blu would do to them...

    Say they only have a minimal budget BUT decide they want hi-def DVD....which do they chose? Do they buy the cheaper player and get just a few of the movies they really like and sit back and hope the other movies will migrate over to their chosen format? Or do they go with the player that's a bit more but has more of their fav movies...? But if they do, they STILL will be without the wifes favorits chick flicks for example....now they have doubt planted in their heads...is it worth the hassle? Do they want to spend even more to get ALL movie studios? If they do, do they have enough room on the tiny entertainment rack...do they have enough cabling, power outlet space, inputs on their TV etc? Wow, now it's getting really annoying to them, especially when the fam has all the movies they like already and they can play them on any machine and the can buy many more movies for $5-6-10 any given day at numerous stores.

    I think the enthusiast community has put on rose colored glasses and pretty much decided that you'd (Mr. COnsumer) would be absolutely foolish not to buy Player X because "hey it's only $200!"...but they forget all the end consequences...lack of titles, pricey movies, more cables, etc etc...

    I don't think the two can co-exist at this point in the evolution of HT electronics...the customer base who has SD and is plenty happy is too huge and the arguements to switch up to a new format are just not compelling enough.

    Oh sure there will be some who are natural upgraders and will try it all out...but I still say this "war" has mucked things up way too much and unless one format explodes to the front and center and is super cheap like current SD stuff, there's no way it will ever get past a niche toy for HT geeks.

    Phewwww....now I will await the instant rebuttals.

    :)
     
  8. Pete Apruzzese

    Pete Apruzzese New Member

    I'm thrilled at the competition that allowed me to get into HD-DVD for only $250 as I had been planning on completely sitting out the format war. If the competition forces Sony and others to lower the BluRay players to that level, I'll go for one of them too. I don't care who wins - watching HD on disc is addictive, and I only have three discs so far. What I'll do to avoid worrying about the format war is to do a lot of renting from Netflix of HD-DVD titles, other than classics I want to own (Robin Hood, Casablanca, Forbidden Planet, GoodFellas, etc.)

    And Steve, your piece on Mike's HTT e-zine about "what are you waiting for" pushed me over the edge to buy the player - thank you!
     
  9. CJ

    CJ Well-Known Member Admin War Zone Member

    Steve's article is one of the elements that prompted me to write this because it spurred some conversation with both Larry and Mike yesterday about what enthusiasts could possibly be bitching about. If the stand-alone Sony player comes out at a reasonable price, I'll get one of those and not look back.
     
  10. Ken McDaniel

    Ken McDaniel Active Member War Zone Member

    Lump me in the quit bitching category. There really is nothing to bitch about at this point. I'll throw Alfer's comments also in the "meh" category. As for why we're all so passionate about the subject, I think it has more to do with the lack of overal broadcast HD programming than an affinity for one format or another. People want more HD and they want it now, they see the format war as prolonging the satisfaction of that need.

    It's just another marketplace process and in the end everything will be fine.
     
  11. Graeme

    Graeme Active Member War Zone Member

    Your essay, like many arguments I've read regarding technology, makes a generalization that is somewhat flawed. You refer to the A/V geeks (along with the Home Computing and Techno Geeks). And then you refer to the over-used "Mother/Grandmother" segment. You ignore the middle segment (which is the largest IMHO) and by doing so you ignore the core of why I worry about a format war.

    That segment is the "somewhat educated about technology segment." We all know them. The guys who read Best Buy flyers and Wired magazine and use those types of sources as the basis for their technology decisions. These are the ones who know enough to say "HD-DVD vs. Blu-Ray is just like Beta vs. VHS" but don't know enough to realize that it isn't exactly the same. And my only worry is that little knowledge is dangerous enough to keep them on the sidelines. And we all know that an enthusiast group alone is not adequate to support a new technology. We need that middle segment in order to provide the revenue back to the studios and technology company to keep things moving forward as we want.

    I do agree that for an A/V enthusiast to grumble too much about two formats is somewhat the anti-thesis of being an enthusiast. However, given the required based for home video, I cannot see the scenarios playing out the same. When Grand Theft Auto III and Gran Turismo III came out solely on the PS2 the casual gamers complained. The gaming geeks bought a PS2 so they could play them. When Disney films only come out on Blu-Ray, the enthusiasts go and buy a Blu-Ray player so they can watch them. Do you really expect the majority of the technology buying public, no matter how much they love technology, to go and buy a second player?

    The last point I want to make is most worrisome to me. There seems to be a tone to the essay that to be an A/V enthusiast one needs to be willing to spend money frivolously. I disagree completely. A motorcycle enthusiast with low funds can buy an old bike and spend his weekends tinkering to make it rideable. A music enthusiast with low funds can scour the used music stores to find the hidden gems. But an A/V enthusiast should be ashamed for grumbling that they need to spend money on two different machines to get the best playback of their movies? Please, who should be ashamed?

    Graeme
     
  12. CJ

    CJ Well-Known Member Admin War Zone Member

    Valid points Graeme, though I feel like we address the average person with the comments about people who get their technology "news" from the cool gadgets section of Maxim or, like most of the population, can't get removed from Crutchfield's mailing list for the life of them. The average person will make their decision the same way the people who post here are. They will decide that HD-DVD is what they can afford, they will decide that the movies they want are on Blu-Ray, or they will decide to sit on the sidelines. I don't think non-enthusiasts with money are fundamentally different from enthusiasts with less money (I'm just assuming an enthusiast WITH plenty of spare money isn't worried about the format war at all).
     
  13. Rich Kraus

    Rich Kraus Active Member

    cj, thats why i bought HD DVD. i could afford it.

    aside from disney (who backed divix IIRC) movies, there isnt much im missing right now.
     
  14. Alfer

    Alfer New Member

    True...but you do admit that for sure down the road you will indeed have to buy yet another machine to enjoy the movies you DO like that end up being Blu only...that is the part that gets me...so many say "oh I'm fine with format "X" because I don't like any of format "Y"'s movies.." Well that's all well and good and you can stand your ground for a while, but in time, if this all survives, you are looking at having to buy and hook up TWO machines...
     
  15. Michael

    Michael Junior Geek

    The same argument could have been made back in the days of DVD and DIVX. If enough people vote with their wallet, then studio support will follow.

    Short term, I have a great choice of movies right now on HD DVD and the players are priced right. Long term, if BD gets their hardware act together (both specs and price) then I will look at adding either a universal player or a stand alone BD player.

    Either way I am happy. I simply can't see HT enthusiasts not getting their feet wet at this point when the buy in price is so low and you get kickstarted with 5 free movies.
     
  16. Dan S.

    Dan S. New Member

    Alfer- Replace dvd with vhs and BD or HD-DVD with dvd and I've read your statements, almost verbatim, a few years back. Time will tell and looking back in 5 years we could all be wrong.
     
  17. Alfer

    Alfer New Member

    See you're assuming $250+ is "low" for everyone and that money grows on trees specifically to buy every new HT gadget... :wink:

    In our house we just don't toss around $100..$200...$300 around like it's candy...we much rather use it to make a car payment...or buy a boatload of groceries.

    I love the whole HT experience just like the next guy, but some items, like these DVD players, just don't make financial (or common) sense at all for us.

    p.s.

    Don't forget today almost every household has a DVD player..back when DVD started DVD was a big big leap for many folks who LOVE(ED) their VCR player/recorders...today most common folks are plenty happy with SD DVD and will be quite content going to Blockbuster for a weekend movie or grabbing up a $5 movie at Target and it won't phase them a bit that yet another DVD format is trying desperately to knock on their door..
     
  18. Alfer

    Alfer New Member

    Very very true...downloading of HD content (via net/ cable box etc) seems to be looming MUCH much faster than any of the DVD formats.
     
  19. CJ

    CJ Well-Known Member Admin War Zone Member

    Alfer all of your points are valid but I just don't get it. Yeah, a lot of people don't have $250 but guess what, a lot of people do. What is the need to keep saying it over and over and over again when its so obvious. Do you think we've forgotten? "Oh shit, I JUST remembered, not everyone has $250. Disregard the entire commentary, I'm closing the forum, there is nothing to discuss."
     
  20. Alfer

    Alfer New Member

    Just pointing out that folks OUTSIDE this tiny world that's called HTL, HTF, AVS folks aren't jumping up and down to toss away $250 like it's candy like some here and elsewhere assume...sure folks here like to use their play money for gambling on new gadgets, but outside this bubble, many many folks don't. ANd you need those folks to hurry up and get things going or we're entering into year two of stagnent sales...heck, SD DVD started selling way more by it 2nd, 3rd year than either of these formats...and that means many more folks back then saw value in DVD and were willing to take the leap of faith...today...not so much.
     

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