Blu-ray Wins: A Bittersweet Celebration

[pmalter0]

Dale and Henry,

I don't understand why you guys cannot understand the difference between the lawful establishment of standards by a public interest group like SMPTE and competitive market results such as VHS defeating beta, as opposed to unlawful monopolization by an industrial cartel. The fact that SMPTE did not establish a single HD disc format, is strong evidence that the public interest did not require one. Moreover, how many times do I have to undescore that we would not have any problem if BR won because the public preferred it. However, the evidence strongly supports the conclusion that had the studios agreed to license both formats, HD DVD would have rapidly vanquished BR in the competitive markets.

Phil

[pmalter0]

Let me modify that. We probably would have ended up with HD DVD becoming the de facto standard for the player market, while BR remained in business for the game and computer markets.

[akirby]

Come on, Phil. Nobody WANTED 2 formats. No studio in their right mind WANTS to publish the same movie in 2 different formats. No retailer or rental outfit WANTS to carry movies in 2 formats. Customers don't WANT to buy 2 players or an expensive combo player and if they buy only one type of player then they can't freely swap movies with friends or buy movies without specifying the format. You can't buy HD discs as presents without knowing the type of player someone owns. Electronics MFRs don't WANT to build players for both formats.

If you continue to think that HD DVD players would remain under $200 once it was clear that BD wasn't going away, then you don't understand retail marketing. HD DVD might have had a small price advantage over BD players but nothing like the Toshiba give-aways.

You say consumer preference should decide the format war? Most consumers couldn't care less about the format as long as they get a 1080p picture. Only a small number of enthusiasts care about the relative differences. Most people will buy a player due to brand loyalty or price or because it's bundled with a game platform they want.

Consumers have already spoken on the format war with their checkbooks - they weren't buying either format (players or discs) AND they even stopped buying regular DVDs. I don't understand why you keep ignoring that fact.

I have absolutely no doubt that had HD DVD won then we wouldn't be having this conversation. You think HD DVD is better and should have won and you hate Sony and it's marketing tactics (while ignoring that Toshiba did the same thing but was simply less successful).

[Richard]

The fact that SMPTE did not establish a single HD disc format, is strong evidence that the public interest did not require one.

SMPTE has NOTHING to do with the research and development of formats, never has. SMPTE is a specifications and standards body only so audio and video content and signals maintain hi fidelity through out the industry from capture to processing to reproduction.

[pmalter0]

"akirby"]

Come on, Phil. Nobody WANTED 2 formats.

I certainly do; competition is always better for the consumer than an unregulated monopoly.

No studio in their right mind WANTS to publish the same movie in 2 different formats.

A consumer oriented studio would want to publish in both formats -- it would produce lower overall prices for the consumer. However, a single format would probably make it easier for the studio to maintain higher HD disc prices; hence greed might cause the studios to prefer one format.

No retailer or rental outfit WANTS to carry movies in 2 formats.

A rental outfit should be fairly neutral about stocking 50 HD DVD and 50 BR as opposed to 100 BR. Retailers will stock anything that sells well (I have addressed this before).

Customers don't WANT to buy 2 players or an expensive combo player and if they buy only one type of player then they can't freely swap movies with friends or buy movies without specifying the format. You can't buy HD discs as presents without knowing the type of player someone owns.

You are really just nibbling at the edges here. I think most people do not swap movies that much. The "extra work" of specifying a format when purchasing a disc is a joke.

Electronics MFRs don't WANT to build players for both formats.

See, retailers above.

If you continue to think that HD DVD players would remain under $200 once it was clear that BD wasn't going away, then you don't understand retail marketing. HD DVD might have had a small price advantage over BD players but nothing like the Toshiba give-aways.

Sony probably lost far more money with the PS3 then did Toshiba with HD DVD players. But far more significant is the fact that the Chinese made Ventura HD DVD player marketed in Canada had a MSRP of $199. China has standardized on HD DVD, and if there is a market for them in the West can have many available in the $100-$200 price range this year.

You say consumer preference should decide the format war? Most consumers couldn't care less about the format as long as they get a 1080p picture. Only a small number of enthusiasts care about the relative differences. Most people will buy a player due to brand loyalty or price or because it's bundled with a game platform they want.

Other then the significance of 1080p and brand loyalty, I agree with you. That is why I would anticipate that if the studios had remained neutral we would have ultimately seen a HD DVD dominance in players(lower prices), with BR remaining popular for games and computers.

Consumers have already spoken on the format war with their checkbooks - they weren't buying either format (players or discs) AND they even stopped buying regular DVDs. I don't understand why you keep ignoring that fact.

There is no evidence that the reduction in DVD sales was caused by the format war. The evidence suggests that it has been price (particularly for discs)that repressed HD sales -- when HD DVD player prices fell below $200, their sales took off.

I have absolutely no doubt that had HD DVD won then we wouldn't be having this conversation. You think HD DVD is better and should have won and you hate Sony and it's marketing tactics (while ignoring that Toshiba did the same thing but was simply less successful).

You have no reason for saying that I hate Sony. I have pledged much of my professional life to opposing combinations or conspiracies in restraint of trade; and in this case Sony just happens to be a part of them. Moreover, I have fully acknowledge that had Toshiba done what Sony had done, that would have been every bit as unlawful. Yes, I think HD DVD is a less expensive and more efficient technology for watching movies; but it would nonetheless be unlawful and against the public interest had HD DVD done what BR did.

Phil

[akirby]

I certainly do; competition is always better for the consumer than an unregulated monopoly.

Where is this "unregulated monopoly" you claim? Last I checked LG, Samsung and Panasonic already make BD players and I guarantee you that all the other mfrs (including Toshiba) will have them out within the next 12-18 months if not sooner. The studios own the content and can choose to publish it in any format they like (or not to publish it at all, like Disney). And I've never heard of a monopoly on Blu-Ray disc manufacturing, either. So where is it Phil?

A consumer oriented studio would want to publish in both formats -- it would produce lower overall prices for the consumer. However, a single format would probably make it easier for the studio to maintain higher HD disc prices; hence greed might cause the studios to prefer one format.

Studios are not non-profit enterprises - they only do what consumers want if it makes them money. You keep ignoring the fact that HD discs (regardless of the format) have plenty of competition from HDTV DVRs, internet downloads and even upconverting SD DVD players. If BD was the only way to get HD movies then I might agree with you, but that is far from the case. And all of the HD and BD discs sold last year combined were less than the number of regular DVDs sold for ONE title like 300.

So ditch the monopoly and no competition theories. They're simply invalid.

A rental outfit should be fairly neutral about stocking 50 HD DVD and 50 BR as opposed to 100 BR. Retailers will stock anything that sells well

That is absolutely wrong. No smart rental outfit would simply assume that HD and BD rentals would be 50/50. In fact I would bet it even varies by title - some might be 75/25 and others 25/75 based on the demographics of the player owners. If I stock 50/50 and the demand turns out to be 75/25 then I've lost 25 rentals. Why do you think Blockbuster threw out all the VHS tapes and went strictly DVD even when there was still demand for VHS tapes? It's called maximizing your inventory. And you can't do that with 2 formats.

Sony probably lost far more money with the PS3 then did Toshiba with HD DVD players. But far more significant is the fact that the Chinese made Ventura HD DVD player marketed in Canada had a MSRP of $199. China has standardized on HD DVD, and if there is a market for them in the West can have many available in the $100-$200 price range this year.

But game console manufacturers don't have to make money on the hardware. In fact it's a known fact that the early PS2s were sold well below cost. They make it up in game licensing over a number of years. So while I agree that Sony was subsidizing the PS3 player costs, they at least have the opportunity to cover those costs in future game sales and licensing. Toshiba has no such opportunity with their players and free movies.

And you can't compare Canadian prices on anything to U.S. prices. Apples and oranges. BD players will follow a steady decline in prices just like DVD players and VHS players before that. There are too many major mfrs for that not to happen, especially since now they know which format to concentrate on.


It's obvious you don't understand the free market system and how it works. You are still hung up on the fallacy that competing formats would provide cheap players and cheap discs ad infinitum.

A lot of people preferred HD DVD for technical or financial reasons or because they like Toshiba. Others prefer BD because of future potential and availability in PS3s or because they like Sony.

You are the only one I know who actually thinks keeping both formats was the best solution for consumers.

It's a moot point now, so why not just move on? Nobody's going to file a lawsuit and I don't see anyone in the government stepping in.

[pmalter0]

A,

Your arguments are starting to get too tedious for me to spend more time on. An Audioholics editor has already done a better job than I could in dispatching them:

Free Markets vs. Corporate Greed - Analysis of the HD Format War
http://www.audioholics.com/news/editori ... rate-greed

[akirby]

Excuse me for not recognizing an Audioholics editor as some type of expert in economics and anti-trust legislation. The author is clearly in favor of HD DVD and is upset that some studios are only publishing BD discs.

It all boils down to this simple fact: nobody can force a studio to publish in a particular format. If Sony decides to stop making DVDs for their movies - that's their choice. Disney has an entire business model built around NOT publishing DVDs or tapes of some of their classic movies except for specific periods. If a studio decides they like one format vs the other or (more likely) that they can make more money from one vs the other then that's their prerogative as a business. Surely you can agree with that.

Therefore the only way that this becomes illegal is if the BD licensing agreement prohibits a licensee from also licensing HD DVD technology or vice versa. I think we can rule this out entirely since we know for a fact that Warner Bros. was publishing movies in both formats and LG and Samsung are/were building combo players.

Even if Sony provided financial incentives to the studios for using the BD format, as long as they did not exclude HD DVD licensing then it's not illegal. Besides - don't you think that Toshiba and the other HD DVD members would file their own lawsuit if they believed that anything Sony did was illegal and legally actionable?

Just because the end result is a format monopoly does not mean that it's illegal. The studios obviously thought BD was a better investment and since it's their content that's being published then they control what we get.

If consumers dictated the products that are manufactured and sold then I'd have a brand new Tivo HD that works with DirecTV, DISH and Cablecards. But they don't and I don't because DirecTV chooses not to make one.

There would also be a DTS soundtrack on every standard DVD. But there isn't.

[Richard]

From the article

All of this comes about because the two sides could not agree and follow the DVD Forum, of which all the parties are members, everyone participated, and none had an unfair advantage related to licensing fees and royalties.

If that is what he believes then he is ignoring history and the trail of money.

It all boils down to this simple fact: nobody can force a studio to publish in a particular format.

Gee, that's what I told Phil on another thread a long time ago...

[pmalter0]

Excuse me for not recognizing an Audioholics editor as some type of expert in economics and anti-trust legislation.

As opposed to who.... you? What of the following you do feel is inconsistent with antitrust law and economics?:

Free market economics, to function properly, requires that economic entities, companies, act independently to forces applied by the marketplace. With the goal of maximizing profit, companies do not always act in concert with the free market concept and will seek ways to minimize or circumvent free market action upon their business and eliminate competition. When successfully implemented, such actions will lead to monopoly, in the case of an individual company, or oligopoly, for collusion between several companies, which ultimately limits the availability of competing products and gives such companies ability to set pricing independent of market demands.

It is a common function of almost every democratic government, in representing its people, to develop economic policy and laws defining competition and common rules of acceptable and ethical behavior by which companies must engage to maintain competition and police the actions of companies for compliance. Because not every company adheres to the law, deliberately or incidentally, and some attempt to stretch interpretation to gain competitive advantage and fatten profits at the expense of consumers, it is at this unfortunate point at which government steps in.

One type of anticompetitive practice occurs when individual companies make explicit or implicit agreements to limit market pressures by acting in concert or colluding. Two basic forms of agreements can occur: horizontal and vertical.

Horizontal agreements are agreements between direct competitors to limit market forces acting between them. These agreements occur between similar levels in a supply chain, such as between several retailers or several suppliers.

Vertical agreements are between different levels of a supply chain. Here, such agreements might occur between a group of suppliers or retailers. Competitive forces might be limited by an agreement restricting interaction between a retailer and other possible suppliers or a supplier with other retailers.

In the case of the next generation optical disk format, vertical agreements are in question. The two competing formats have taken steps to prevent content suppliers from dealing with the other side. This forces a choice, not between Blu-ray and HD-DVD, but between films such as