Saturday, September 8, 2007

In response to a response: HD Format War

Contrary to what a friend's reponse to my post on HD media says, I did not indicate that things might be looking up. Rather, I posed a question. Last I checked posing a question does not equate to indicating anything is. However, I will certainly endeavor to explain my rationale for acceptance of combo players, especially in light of the extremely sparse nature of my original comments which elicited a fairly impassioned and detailed response.

The main flaw I find in Alan's argument is that he apparently believes that there's only one way for the format war to end: for one format to be taken off the market. Would I rather have a single format? Certainly. Which one would I prefer? Blu-ray, hands down. But at this point, I want the war over by any means necessary. If HD players migrate to being by and large combo players then the end result is the same. Why? Because consumers want to buy one player and know they aren't screwed out of material only found on a competing format.

Is there some branding confusion? Sure. I hate to tell him though, HD in general presents a number of confusion issues to the general consumer. An alarming number think anything on an HDTV is automatically in HD - this has been documented in numerous customer surveys and articles as insane as it sounds to us. Thankfully recent studies have demonstrated an understanding of the need for special programming to have risen from somewhere around 50% last year to apparently about 86% this year. Also, all too many think regular DVDs are already HD. And even many of those who understand the difference don't feel like HD discs are enough of an upgrade over DVD to care. And therein lies the only real problem.

People don't care. It's not customer confusion creating problems, it's customer apathy. Alan mentions consumer apathy, but he directs only towards combo players when it really should be directed at HD disc formats in general. Alan cites the failure of SACD and DVD-Audio as an example of consumer confusion killing two competing formats, but it's a bad analogy. It's hard to be confused about something when no one even knows what the bloody hell your talking about. Take a poll on the street, take a poll of your family. Unless they're audiophiles (and audiophiles make up a very very small part of the consumer base), they aren't going to know what SACD or DVD-Audio is. I know what they are and I never cared. That's why those formats failed. Not confusion, apathy. For the vast majority of people CD quality is good enough. Hell, for most people lossy MP3s are good enough.

However, HD media have at least two big advantages over both SACD and DVD-Audio. One, it's much easier for the average consumer to see a difference in picture quality than it is for them to hear the difference in audio quality of a music recording over what is currently available. Two, it has an entry route that is finding it's way into consumer's homes whether they like it or not. While many people still don't have a reasonable understanding of HD, the numbers of sets sold are increasing all the time, simply by virtue of the fact that very few standard def sets are even sold now. As the technology becomes more universal, understanding too will come with time, and as discussed above, we're already seeing improvements from even a year ago. With that level of understanding, so comes a proliferation of HD programming entering people's homes through cable and satellite. And after they get used to watching a season of Lost or Heroes in HD... they have a hard time going back to standard def DVDs and at that point they start to care. The hook has been set. Now they are ready for HD disc formats, when before they didn't see it as big of a deal.

And that is a BIG key here. The whole HD migration is taking time, but it is happening. It's bound to take time, and the HD disc adoption isn't going to be a nearly over-night revolution like DVD was. The expense to change over isn't minimal, but it's coming down all the time, as technology is want to do. But we're still in the early adopter phase here.

Which, bewilderingly, is why Alan feels screwed now. Yes yes, he has a Blu-Ray player in the form of a PS3, and he feels like he's getting screwed by recent deals such as that made between Toshiba and several studios. This shouldn't really surprise him, though - we all know early adopters always get screwed. Just ask iPhone owners. But Alan's the kind of guy who already understands this, even if he is not outwardly accepting of it. Again, this is even something he touches on early in his article, but by the end he's brushing it off when it affects him directly. I'm sorry if he has to end up buying another player. I would have thought he would be expecting to in the next couple of years anyway.

When we move OUT of early adopter phase, and people start caring as discussed above, then the market needs to be ready with a winner. If that means combo players are the norm, and people walk into a showroom and the dealer says, "this plays all HD media available" then that's good enough.

Again, I certainly agree a single format would be the best outcome, and my personal choice would be Blu-Ray. But pragmatically, that may not be in the cards. The next best solution is for dual format players to become the norm. I ask you, how do we all lose if multi-format players become the norm? We don't. When dual format players are the norm, we are completely unrestricted in our choices. I don't call complete freedom of choice being screwed.


Alan Wild said...

A response to a response to a response...

1) It was not my intention to imply that consumers were apathetic to Combo players. I WAS trying to make the point that consumers were apathetic to HD Media in general.

2)SACD and DVD-Audio, while certainly appealing to audiophiles, were intended to replace the CD. That clearly has not happened. Because neither format was capable of capturing the consumer imagination both have all but died. If manufactorers and gotten behind a single format and positioned it to replace the CD as intended, we all would have something better.

3) I do think combo players are a solution. I also think Warner's Total HD Format represents a solution. However, there are no Total HD discs out today... and Total HD represents only a single studio's solution... its not clear if they will ever produce the discs or if they will license the technology to others. Combo players are simply too expensive.

Although compannies like Sony and Toshiba have big pockets... they are only so deep. If they do not start moving media in significant numbers, there will come a point when they decide to pull the plug.

If that decision point happens before combo players reach the $100 price point then we all lose. Plain and simple.

Aaron Newton said...

1) '...and it's not clear if the general consumer is even interested in a "combo" Blu-Ray/HD-DVD player. In fact, it's pretty clear that consumers, in general, don't care.' That certainly reads like the object is combo players, not HD formats. But if we agree on that, so be it.

2) I don't really think anything I said contradicts the idea that SACD and DVD-Audio were intended to replace the CD. However your statement, 'It generally creates confusion in the market and often nobody wins just like what's happened with SACD and DVD-Audio' is the point of yours I was addressing. My argument is that consumer confusion had little if anything to do with that particular format war. The market didn't want a replacement for CDs, and that's the biggest reason that both died. Even if there WAS only one format, it never would have replaced CDs as by and large, CDs are good enough for the vast majority of people. It may still be the case with BR and HD-DVD as far as mass acceptance goes. But the constantly increasing proliferation of HDTVs and HD television programming help to create an in-roads towards demonstrating to people why they do want HD discs, by getting them accustomed to that higher level of quality as the norm.

3a) If you do feel combo players can offer a solution, then I'm not really sure why you "feel differently" regarding my post in the first place as you said in the opening to your article. Like I said, I wasn't making a statement, I was merely posing a question. The title itself is a question. I think this is the real crux of our little "disagreement". If you go back and read that original blurb it wasn't "Combo Players are the answer, and this is going to solve all our problems" it was "Look more combo players coming out. Could this be the way it ends?"

3b) Yes, combo players are still too expensive, but it wasn't long ago that Blu-Ray players were $1000-$1500 alone. The first combo player was only $200 more, so yes that isn't much of a drop between, but also remember that the first one didn't properly implement HD-DVD, it just started playing the movie. You acknowledge the fact that prices start high and fall over time, but you seem to fear there won't be time for that to happen here. I think we're well past the point where both companies would give up. LaserDisc was around as a niche format for years before DVD killed it, and both HD formats have already made inroads into mass outlets that LD never did. The install base of players probably already exceeds that of LD per annum as well. They at least have enough momentum to keep this going for quite a while. The VHS/Beta format war went on for over 10 years... now I don't think this one is going to last THAT long, but it does at least illustrate the point. This could drag on a LONG time, certainly enough time for combo players to come down to reasonable levels. And when they DO get down to reasonable prices... game over, and even if there isn't a clear winner by that point, then combo players solve the problem. Yes, that's an if. But it could provide an earlier effective end then waiting out one format to give up.

Alan Wild said...

I don't think we are really disagreeing... to be honest my intention of my initial posting wasn't so much as to your respond to your as it was to post my own thoughts... your post just gave me a kicking off point.

1) I'll agree that the language of the sentence implied that I was indicating that consumers don't care about hybrid/combo players. I was trusting that the link would make the point for me rather than stating it explicitly. The linked article was to a survey about "which format will you buy" and over 50% of the individuals surveyed selected the "don't know" option.

3a) I "feel differently" in that I don't think things are looking up. I think things are worse. I've know about Samsung's hybrid player for some time now. It was initially announced over a year ago and has been delayed. I honestly thought the player was available already so the news of yet another $1000 hybrid player didn't seem like news to me.... more like the status quo.

But the Pioneer announcement royally screwed things up.

Prior to that announcement, all of sales figured was pointing towards Blu-Ray, the Blobkbuster announcement was pointing towards Blu-Ray, the Target announcement was pointing towards Blu-Ray. It looked like there actually was an end in sight for this debacle... It was one of the reasons I felt like it was time to buy the PS3 (coupled with the 5 free discs and pricing promotions). However when Pioneer and Dreamworks took their pay-day from the HD-DVD group (bad) and then made waves in the mainstream press about their decision (even worse) it leaves the consumers confused about which format to buy... and just prolongs this war.

I will conceed that if prices come down on hybrid players then we have the best of both worlds, but I don't believe its going to happen as fast as you think. They are more expensive to manufactor (because there is simply more circuitry involved) so there is less profit margin on a cheap hybrid player then on a cheap single-format player. On top of that it's not like Sony or Toshiba is going to make one any time soon so there's less combetition in the market to drive the prices down. Finally, at this stage hybrid players are basically appearling to a tiny market segment of a tiny market so the existing manufactorers aren't going to feel compelled to drop prices.

I do think it will happen. Don't get me wrong, but I'm concerned it's going to happen too late.

My gut feeling is that this "war" only has about 2 years left. After that it dies "not with a bang, but a whimper" and we simply won't have HD media at all. Which would be a real shame.

I've neglected to mention what we would have instead that I'm so worried about.

1) Nothing... we're stuck on DVDs which is fine and all, but for anyone that knows the difference DVDs underutilize your HDTV which is a shame.

2) Video on/demand or video download services with HD content. I hate this idea because it goes against my "one time cost" nature. I can buy a disc today and watch as many times as I want to, but you can better well believe that this model would be closer to "renting" where the nickel and time you at every turn. Also, I suspect it will be easier for the providers to gradually raise rates over time in this model.

Aaron Newton said...

I don't really think we're disagreeing all that much either. At least not as much as I thought we were, initially.

I was just bewildered by the suggestion that you would "feel otherwise" about a question that I wasn't answering. It was never that I thought things were looking up, it was more "where is this going to go? are things looking better?"

I'm trying as much as I can to remain somewhat optimistic about the whole thing. I'm not happy about a protracted format war, and fear it going on as long as the VHS/Beta war did. At least for these formats, common form factor makes solutions like combo players possible.

So let's hear it for Blu-Ray. I hope the $399 PS3 for X-mas comes out to be true... if it does it could be a huge turning point for BR.

Aaron Newton said...

Oh, one other bit, yeah, the Samsung combo player that was talked about last year did come out, if in somewhat limited release IIRC. That was the one I was talking about that didn't properly implement HD-DVD - they hadn't licensed HDi from Microsoft, so you couldn't get the menus and other features. It just went straight into playing the movie, and that's it. The current Samsung player was announced earlier this year. I think. The LG player was actually a bit of a surprise to me, because I'd heard mention of the plan for one a long time ago... then nothing. But that could have been because I wasn't paying much attention, mostly content to ignore the format war for as long as possible.